13 August 2023 |

A carbon-negative supply chain pioneer


I have now been at this climate tech coverage thing long enough to update previous writing on companies. Almost a year ago, I penned a deep dive on Running Tide, an ocean-based carbon removal company. At the time, I outlined their tripartite approach to carbon removal in the ocean:

  • Gravitational: Sinking woody waste biomass to the bottom of the ocean
  • Chemical: Adding alkalinity enhancement to improve the ocean’s ability to uptake CO2
  • Biological: Growing algae to remove CO2 as well via photosynthesis

This week, Running Tide announced it began delivering its first carbon credits from real-world, open-ocean operations earlier this year. While I’ve covered ocean-based carbon removal companies extensively, these are the first ocean-based carbon removal credits I’ve seen delivered

0 to 1: The first carbon removal credits from the ocean

I sat down with Jordan Breighner, SVP at Running Tide, earlier this week to ask him, well, what took so long? I suspected that permitting was part of the answer, which he confirmed. Running Tide was ready to deliver carbon removal as early as last year. What took more time was getting the final sign-off on a first-of-its-kind permit from the Icelandic Foreign Ministry to carry out this work off their coastline (specifically, ~200 miles south of Iceland in the North Atlantic).

Via Running Tide: A glimpse into the ocean-based carbon removal operation in the North Atlantic

Running Tide was rigorous about the process; they conducted a third party environmental assessment of their project’s impacts, and instituted an independent science review board. The ministry gave that sign-off in April and Running Tide’s first deployment happened on May 15th. Shopify took delivery of those first carbon removal credits.

The difficulty of getting sign-off from the ministry points to permitting as an enduring challenge for ocean-based carbon removal companies. Regardless of the science, regulators and citizens alike will always be cautious (rightfully so!) of companies that want to add chemicals to and sink what’s ostensibly waste in the ocean. That said, having navigated the challenge once, ideally Running Tide’s learnings will make it easier for each umpteenth permitting process, not just for themselves, but also for other good faith actors in carbon removal. 

The other component of Running Tide’s work that takes longer than doing the carbon removal itself is building the ‘operating system’ to measure what’s happening beneath the waves accurately. 

At present, Running Tide’s deliveries are 100% based on sinking woody waste biomass to the bottom of the ocean to sequester carbon. Next year, they plan to layer in the more complex elements described above and in our earlier piece, such as ocean alkalinity enhancement and eventually algae growth. 

But even when it comes to sinking wood, there’s lots to measure. Jordan noted they deployed over 300 different sensors while sinking biomass to measure, model, and verify that the buoys they use and biomass they sunk will fall to the bottom of the ocean (ensuring durability). This depends on everything from location and ocean currents to buoy float time and more. 

Via Running Tide: Some of the company’s verification hardware, including a camera buoy that captures sinking locations and rates (top), a trajectory buoy for location capturing (right), and an accel buoy for capturing location and sea surface roughness (left)

Running Tide’s first deployment amounted to 275 tonnes of carbon removed after netting out emissions from its supply chain (more on this in a bit) and crediting conservatively. They’ve continued their carbon removal operations in recent months; we don’t know the total tally they’ve delivered at this point, though I imagine it’s in the four-digit, thousands of tonnes range. This alone happens to make it one of the largest carbon removal companies in the world right now, considering how nascent carbon removal deliveries are.

As tracked by CDR.fyi, actual deliveries of publicly reported, durable carbon removal are dominated by biochar providers. Few carbon removal providers offer even a five-digit removal capacity at current. If you can deliver 10-20,000 tonnes of carbon removal in any year, you’ll end up on the leaderboard. If we knew Running Tide’s exact data, they’d likely feature on the below:

From CDR.fy’s mid-year report on voluntary carbon markets and the carbon removal industry

A carbon-negative supply chain pioneer

In the grand scheme of climate change, these numbers are also barely a drop in the bucket. So why is Running Tide’s update newsworthy of this newsletter’s ‘Deals in Focus’ section?

For one, the company also announced it raised a $54M Series B round last year, led by LowerCarbon Capital, to do this work. But that’s not what I’m after here either. What’s most interesting for me is how Running Tide is pioneering the concept of a genuinely carbon-negative supply chain. 

Running Tide is doing more than pioneering ocean-based carbon removal. Considering the sophistication of their operations and that the company’s number one incentive is to reduce CO2, they’re pioneering how to think comprehensively about carbon-negative supply chains. 

What do I mean by that? Well, as it starts delivering its carbon removal credits, I confirmed with Jordan that Running Tide actively nets out all the emissions from its supply chain against its carbon removal deliveries. 

This is critical not only because it means Running Tide’s service is actually a net carbon remover but because the accounting, measurement, and emissions reduction work the company is doing should become a leading example for other companies worldwide to copy. 

First of all, like any company with a sophisticated supply chain, Running Tide has to think about how to measure emissions accurately and reduce them at every chink of the chain. Emissions tracking is typically spend-based; you log what you spent on fuel, for instance, and someone’s software platform spits out an emissions estimate based on public data. 

Running Tide wants to operate more granularly and accurately than that, however. For instance, when operating boats to move materials, they take stock of how much fuel they burn and the fuel class to calculate emissions. They then also evaluate levers like ship speed to try to run the ships as efficiently as possible. 

Similarly, Running Tide keeps track of the emissions associated with things like the production of alkaline minerals they source from Britain. Given that all of this counts against their primary product, more than any other company in the world, Running Tide has concrete incentives to reduce emissions across its operations. They’re highly incentivized to build a comprehensively carbon-negative supply chain from the forest floor to the ocean floor. 

In some cases, this might look like investing in an electric forklift. In others, it could involve completely changing where they source certain materials (like their alkalinity), even if it comes with a higher dollar cost and no improvement to material quality. Said differently, Running Tide is incentivized to make sustainable purchasing decisions almost no other company would. 

The net-net

As ‘cool’ as the philosophy of a carbon-negative supply chain is, and as valuable as Running Tide’s ocean-based measurement systems may become for other applications, all of their carbon removal work still needs to scale to the order of 7 (or 10) figures in terms of tonnage. That’s probably the only thing that would fully justify the mammoth amount of funding they’ve raised and the new regulatory frameworks surrounding ocean-based carbon removal work they’re initiating in places like Iceland.

Of course, as visualized above, it bears remembering that almost none of the most successful companies of the past decades – across both hardware and software – delivered the bulk of their value in their first ten years of existence. Carbon removal is still a nascent industry; it will likely take another decade to see whether companies’ and investors’ early bets pay off. 

Plus, with the DOE providing $1.2B in funding to various carbon removal projects across the country this week, public sector tailwinds for the space seem here to stay as well.