A conversation with Michelle You, co-founder and CEO of climate software company Supercritical

In the last few weeks, it seems like the nascent carbon-removal market has gotten just about every boost it could possibly get.

To wit: A Stripe-led coalition announced $925 million in advanced market commitments, signaling to startups (and, maybe more importantly, investors) that there is at least a near-billion dollar industry here. Speaking of investors, Climeworks raised $650 million, the biggest-ever carbon-removal round, and Lowercarbon, a climate-focused venture firm, announced a $350 million carbon-removal fund. In the US, federal regulation to incentivize carbon removal was also introduced.

Zoom in: For the second installment of our Twitter Spaces series on climate tech, we chatted with Michelle You, co-founder and CEO of Supercritical, a UK-based software startup that is taking a unique approach to helping scale carbon removal tech.

• Supercritical, which is less than a year old and as of last summer had raised $2.7 million in pre-seed cash, aims to help carbon removal scale by first automating carbon accounting for clients, and then making it easy for them to purchase high-quality carbon-removal credits.
• The company focuses specifically on the tech industry, which emits more CO2 than the aviation sector.

“We saw there was this exponential explosion of net-zero commitments over the last five years,” You said. “So we saw that demand from business was the fastest way to drive money, and demand toward carbon removal, and we see the carbon-accounting piece as the next necessary stepping stone for business to know what to buy.”

Mix and match: Since there are many ways to pull CO2 from the air and no method has yet reached industrial-level scale, Supercritical offers at least five removal methods—afforestation, biochar, enhanced weathering, bio-oil sequestration, and direct air capture (DAC)—and multiple suppliers per method. All suppliers are vetted by the company’s climate team before making it onto the platform, You said.

The company then packages credits up into what You called “blended” portfolios that are tailored to a client’s budget. Supercritical mixes higher-cost credits like DAC in with lower-cost ones like afforestation, leading to an average cost of $130 per tonne for its clients, per You.

• This can allow clients to help fund more experimental, higher-cost techniques without breaking the bank.

“I think the story of carbon removal is it’s just so early,” You said. “We need 1,000, 5,000 more startups to start to figure out which ones will win out in the end, and which ones will scale up. And we’re just at the beginning of that story.”

Speaking of scale…

You said that, in her experience, demand for carbon removal services has begun to outstrip supply. We heard a similar sentiment from carbon-removal execs last month, who told us that demand from private companies was accelerating. Put that together with the advanced market commitments from the Stripe-led Frontier Fund, and it’s clear that the number of potential buyers is growing quickly.

So, what about suppliers? You said one challenge to meeting demand at the moment is that at-scale carbon-removal tech requires a ton of money and time to build out.

• Permits are also a constraint for solutions like DAC, which aim to store carbon underground. For example, there’s currently only one operational sequestration site in the US, per the EPA.

“There’s a capex problem of building a carbon-removal facility—that takes years, that takes a lot of money—but the demand for carbon removal can move as quickly as the speed of thought,” You said. “Once it becomes something that everyone agrees on and thinks is the way to go, then that demand can just explode overnight without the capital or real-world facilities built to keep up with it.”