Enhanced rock weathering: A ‘familiar risk’ for investors

Inside the structure of Frontier’s $57 million offtake agreement with Lithos.

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Published
December 8, 2023
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A tractor in dust

Photo credit: Ed Dunens / Flickr

A tractor in dust

Photo credit: Ed Dunens / Flickr

Frontier, the Stripe-led advance market commitment targeting carbon dioxide removal, announced Thursday that it facilitated a $57.1 million offtake agreement with enhanced rock weathering startup Lithos Carbon.

San Francisco-based Lithos, which was founded in 2022, spreads ground basalt on farmland where it reacts with rainwater to convert carbon dioxide into dissolved bicarbonate, which is eventually stored as ocean carbonates. Frontier buyers will pay Lithos to remove 154,240 tons of carbon dioxide between 2024 and 2028, with more than half of that amount expected to be delivered in the first two years.

The announcement marks Frontier’s fourth CDR offtake agreement, and its first in enhanced rock weathering. Back in 2022, Lithos was one of Frontier’s first pre-purchase agreements, via which Lithos was paid up front, before delivery of the renewals. 

This is Lithos’ first deal structured as an offtake agreement, which take slightly different forms depending on the carbon removal pathway, Stripe’s head of climate Nan Ransohoff told Latitude Media.

With direct air capture, for example, it’s relatively easy to predict exact timing and quantities of carbon dioxide removed, Ransohoff said. For enhanced rock weathering, though, the rate of weathering differs based on weather conditions, which means that many projects have to rely on modeling to predict removal totals.

The Lithos offtake agreement is built around measurements from the field, using the company’s novel measurement technique (which involves monitoring changes in the geochemical profile of soil), Ransohoff said. Delivery will occur at multiple soil sampling points, and data sharing is built into the agreement.

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“We have to mash together what actually happens in the real world with financial constraints from companies that have CFOs that need predictability in their annual finances and their budgets,” she added.

In many ways, enhanced rock weathering is a low-risk project. Lithos’ main input — and therefore one of its biggest costs — is the rock basalt, making it one of the most affordable forms of CDR. Overall, the enhanced rock weathering process is significantly cheaper than setting up a huge factory, Ransohoff said, especially when you consider that the time between when Lithos needs working capital and when they’re paying it back is much shorter than for DAC

(Notably, Frontier’s Lithos commitment is significantly larger than its $26.6 million deal with Heirloom earlier this year, following the high-profile launch of the company’s plant in Tracy, California.)

Tech risks are also lower with enhanced rock weathering. “They aren’t bottlenecked by a tech breakthrough,” Ransohoff added. “Tech isn’t the crux of the risk in enhanced weathering; it is operational and logistical, which is a much more familiar risk to lenders.”

For Giana Amador, executive director of the Carbon Removal Alliance, the deal’s primary impact on the broader CDR landscape — and particularly for enhanced rock weathering — is in providing data: lots and lots of data.

“This deployment is on over 100,000 acres, across different geographies,” Amador said. “That means we're going to get a lot of really, really good data about how effective enhanced rock weathering is in different geographies within the U.S.”

Frontier’s Lithos deal will help “grease the wheels” for other private sector purchases in the future, Amador added. Understanding “regional hotspots” and where different types of CDR perform best is key for the future of the market, in part because it greatly reduces investment risk.

In this respect, there are some parallels to wind and solar, Amador said. 

”You put solar where it’s sunny and you put wind where it’s windy, and I think there will actually be a lot of that in the carbon removal industry as well,” she said. “In specific geographies I think the economics will pencil out, and the technologies will be more effective.”

Editor's note: This story was updated on December 8 to better capture the nature of Frontier’s commitments to purchase carbon removal from Lithos and Heirloom.

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