Dear CDR Companies:

Running Tide’s rise and fall tells us to discover our real customers

The well known carbon-dioxide removal (CDR) company Running Tide ran out of money and permanently closed its doors in June 2024, after raising $72 million over the last seven years. Its executives cited a lack of customers and, consequently, investment. Industry commentators mostly agree that more buyers for CO2 removal are needed. 

CDR companies need to better identify and understand their customers 

There are simple but easy-to-overlook lessons for Running Tide’s current and future competitors: CDR companies need to get clear about who their buyers are and expand that market. Or find another business model with different customers. 

Most current CDR customers are buyers of voluntary offsets, such as Microsoft and Stripe, plus government agencies such as DOE. These organizations tout their climate bona fides by producing good PR about their CDR investments. 

Offset buyers such as Microsoft are mainly accountable to their stockholders. People generally buy stocks intending to make money and retire. They have other activities intended for contributing to the world. Companies buy offsets to attract customers’ good will and attention.

Offsets and climate: a disconnect 

Buying offsets can boost profits through good publicity (a process cynically known as greenwashing).  But by definition, offsets only negate emissions—not remove CO2 that’s already in the air. In addition, technological CDR is so expensive that it has little hope of making a dent in CO2 levels even if costs drop by 90 percent, and the decades it would take for that price drop are decades we don’t have.

Running Tide, in its seven years with almost $100 million of investment, removed 25 thousand tons of CO2 in 2023, its peak year. That is less than one millionth of annual emissions. And a thousandth of a millionth of the quantity of CDR we need to restore a safe climate. Do we really have time to wait while these types of solutions scale?

Real climate solutions exist…but they’re not in the offset market

There are climate solutions already capable of removing a trillion tons of CO2.  One is particularly relevant: Nature has used “ocean iron fertilization” (OIF) repeatedly before ice ages, removing CO2 and cooling the planet long term. The potential for intentional Ocean Iron Fertilization (OIF)—which prompts CO2-eating phytoplankton to bloom, restoring the marine food web— is exciting. By some calculations it could actually scale to 60 gigatons of CDR/ year in a few years. Yet this approach receives approximately zero funding today.  

If CDR companies are serious about scaling up enough to restore a safe climate, they will need to rethink their business model, their customer base…and arguably their tech. Nature delivers OIF for free; it remains the lowest cost of the CDR approaches by far.

Customers: Who would pay to restore safe CO2 levels for the next generation?

There’s a problem expecting the market to deliver a safe climate. The natural customers for a livable planet 25 years in the future are our children and grandchildren, who don’t have money to pay for it.  Or are not even born yet. 

Most corporations have time horizons of a quarter year, not a quarter century.  The government seems similarly unlikely as a customer. After all, future generations don’t vote or pay taxes. Budget decisions must address the concerns of current customers and voters.

One set of customers might be insurance and reinsurance companies, since they stand to lose billions from climate change—or save handsomely when the wild storms, floods, droughts and heat waves recede. A challenge: the savings would affect all insurers equally, so there is no competitive advantage, thus little commercial justification to invest.

Demand and funding for a safe future climate will most likely come from families and family offices who are deeply committed to the well-being of our collective children and grandchildren. They are clear that humanity’s future well-being depends on restoring safe CO2 levels. Our job in the CDR community is to help them organize to support solutions that can actually achieve safe CO2 levels.

CDR companies might do well to develop consortiums of families and family offices who could justify investing in a safe climate for future generations. They might also consider taking Nature rather than industrial tech as the model for CDR—Mother Earth has been removing vast gigatons of CO2 for millions of years, for free. Let’s replicate and expand methods that are working right now–removing almost half our emissions.

Running Tide’s collapse shows us that the tide is shifting for the CDR community. The offset market consists mostly of corporations seeking to negate their emissions… and it’s now tumbling. It’s time to create a market of those with a real stake in funding a safe climate for future generations.

Markets are created with marketing campaigns.  We need to create a campaign to get people who care about giving our children a safe climate to invest in it.  Even if it doesn’t add to our own retirement.