Stacy Kauk thinks carbon offsets are so 2019. Kauk is in charge of getting the e-commerce platform Shopify to carbon neutrality, which the company first achieved four years ago. After shutting down its data centers and switching to Google Cloud, Shopify turned to offsets, but found quality was inconsistent. Kauk is now at the vanguard of figuring out how to make a market for carbon removal, the hot new alternative. The company created a "sustainability fund" in 2019 and has spent $33 million so far on things like direct-air capture, embedding carbon in concrete and planting trees via drone. It's also working with Stripe, Alphabet, Meta and McKinsey on a pooled $925 million commitment to create a market for removals. This interview has been condensed and edited for clarity. Talk about your motivation for investing in carbon removal. Is it that you think that there's going to be high enough demand that you need to get in now? There's three reasons we're in now. The [Intergovernmental Panel on Climate Change] is clear. Even if we stopped emissions today, we're going to need carbon removal. The second part is the increasing regulatory scrutiny that we're starting to hear in different jurisdictions around corporate climate commitments, corporate climate pledges, what does it really mean? And then what we also know as an early buyer is that there's not much to buy. If I were to crystal ball it, there will be limited supply in future years when companies are starting to feel the need, from regulatory requirements or otherwise, to buy those high quality tons. So we are kind of future-proofing our business. Do you envision that you could also be a developer and a seller of them? That's a super interesting question, because that remains to be seen. You have some companies who don't allow you to trade them, you buy them and they retire them for you. And then we have others that are like, 'No, we're going to make this so properly defined and traceable and tractable. We're going to put it on the blockchain,' or whatever other solution that they want to trade it, and so right now, it's very unclear what that's going to look like in the future. We could hedge our bets here; since we're one of the first players in the market with large sizes of contracts and a small corporate carbon footprint, we will have extra. So what that means in 2030, I don't know. Hopefully, those things become clearer. You signed a letter last month calling for an independent standards body for carbon removal. And then there's the Net Zero Asset Owner Alliance guidelines saying members shouldn't use removals to count toward certain buckets of their commitments until 2030. So do you see what you're doing as trying to create a market now, and then starting in 2030 it should be able to count toward companies' actual reductions under their net-zero targets? I truly see it as a false dichotomy between emissions reductions and carbon removal. We should be focusing on Scope 1 and Scope 2, which is decarbonizing the major sectors and electrifying everything. But we're also going to have this piece of unabatable emissions that are going to continue to happen, and we've already gone too far; we need to undo historical emissions. So we need carbon removal, too. What needs to happen is if we can be very clear around quantification, monitoring, reporting and verification of carbon removal, what is truly additional, is a ton really a ton. If we can do that in a transparent way, where you're going to only have the high-quality projects on the market that are indeed delivering the climate benefit you're paying for, if we do that, that's going to be expensive. Maybe emissions reductions for some of these large emitters are actually going to be cheaper per ton and it makes no sense to buy your way out with carbon removal. So carbon removal should be something that we use alongside emissions reductions that we're going to need in the long term. They shouldn't be at odds right now.
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