Inside Charm Industrial’s multimillion-dollar bid to remove CO2 with plants

After every corn harvest, America’s farmers reap roughly 100 million tons of ​“stover” — the stalks, leaves, silks and husks that remain after the golden-kernel crop is gathered. Some residues are typically left behind to nourish the soil. The rest can be used to generate energy or produce biofuels for cars, trucks and, increasingly, airplanes.

But Charm Industrial wants this corn detritus for entirely different reasons.

The San Francisco-based startup is using leftover corn stover and other types of biomass waste to remove carbon dioxide from the atmosphere. Its machines heat up plant matter — which contains carbon — and turn it into a dark-brown, viscous material known as ​“bio-oil.” Charm then injects the CO₂-rich liquid into underground disposal wells, where, ideally, the material will stay trapped for centuries or longer.

The company claims to have removed some 6,200 metric tons of CO₂ since completing its first bio-oil injection in 2021. That’s barely a blip compared to the planet-warming emissions that countries generate every year just by burning fossil fuels. But it still amounts to more direct carbon removal than any other venture in the world says it has achieved.

Climate scientists have warned that, to avert the worst impacts of climate change, the world will need to first dramatically slash greenhouse gas emissions, while also withdrawing potentially billions of tons of carbon from the atmosphere each year by 2050.

Major corporations and investment firms are now pouring huge amounts of money into the fledgling carbon-removal field in an attempt to both get in early on a potentially huge market and also claim reductions in their own corporate emissions. Flush with this funding, startups are exploring a variety of expensive, unproven concepts — including direct air capture, enhanced weathering and aquatic carbon removal — in the hopes of developing large-scale climate solutions.

Charm has managed to catch the crowd’s attention owing to how quickly it is moving to advance its ​“bio-oil sequestration” approach.

In May, Charm signed a $53 million deal with Frontier, a coalition backed by Stripe, Alphabet, Meta and other tech giants that aims to spend nearly $1 billion on permanent carbon removals. Under the offtake agreement, the first for Frontier, firms will pay Charm to permanently remove 112,000 metric tons of carbon between 2024 and 2030. A few days later, U.S. banking giant JPMorgan Chase announced it had agreed to pay Charm for nearly 29,000 metric tons of carbon removal over five years.

Earlier this month, Charm announced it had raised $100 million in Series B funding in a round led by the venture capital firm General Catalyst, making it one of the most well-capitalized startups in the space. The investment will help Charm to refine and scale the technology it uses to make bio-oil and to accelerate injections of the tarry liquid beneath the U.S. Corn Belt. Charm said it hopes such developments will help slash the price of removing CO₂, which today is roughly six times higher than what is considered to be economically feasible.

“What Charm is doing is fairly unconventional in terms of thinking about the role of biomass in carbon removal and storage,” said Daniel Sanchez, who runs the Carbon Removal Lab at the University of California, Berkeley and is a principal scientist at the firm Carbon Direct.

“They’re the fastest out of the gate, which I think is why they’re leading here [on funding],” he said of Charm.

Yet for all the momentum, it’s far from certain whether bio-oil sequestration — or carbon removal techniques in general — can play a meaningful role in addressing climate change. For Charm in particular, several key questions remain over whether it can safely and economically scale this novel approach.

The startup is still relatively early in the process of refining its technology and establishing its biomass supply chain. Researchers say more work is also needed to understand the potential risks of bio-oil leaking into groundwater or the likelihood that the carbon will escape back into the atmosphere. In future decades, rising competition from biofuel-hungry transportation and chemical industries could potentially constrain the available supply of agricultural and forestry residues and push up prices for raw materials.

Crucially, there still isn’t an independent system for evaluating bio-oil sequestration projects. While Charm says it takes rigorous steps to document and publicly share its every action, both the startup and outside experts are pushing to develop a third-party verification scheme to ensure that when the company claims it’s permanently removing CO₂, it actually is.

Charm’s financial backers are betting that the startup, helmed by co-founder and CEO Peter Reinhardt, can overcome such challenges as it simultaneously ramps up operations.

“They’re learning fast and iterating quickly,” said Nan Ransohoff, who leads Frontier and also heads the climate program at Stripe, a digital-payments company. ​“That gives us a lot of confidence that they’ll continue to do this in the future.”

Semi-charmed beginnings

Charm Industrial didn’t initially set out to pump dense, dark bio-oil underground.

When the company was formed in early 2018, its four engineers-turned-founders primarily focused on converting plant waste into ​“biochar.” The charcoal-like material can be buried beneath fields to improve soil health and reduce water runoff, a technique that Indigenous peoples have used for centuries. Biochar can also be used to store CO₂ in the ground, though for how long is a topic of fierce debate.

At the time, Reinhardt was also serving as the CEO of Segment, a software startup, and had been buying carbon offsets from forestry projects to help address Segment’s greenhouse gas emissions. ​“I was really disappointed with the quality and actual carbon impact of what was available,” he recalled. ​“So that was the original inspiration for starting Charm with some friends.”

To make biochar, Charm built a machine known as a ​“pyrolyzer.”

Organic waste, such as corn stover or wood chips, is heated at high temperatures in the absence of oxygen. The decomposed biomass takes three forms: a solid residue (biochar), a viscous fluid (bio-oil) and a synthetic gas (biogas). Engineers can tweak the temperatures and speeds, with ​“slow pyrolysis” yielding more biochar and ​“fast pyrolysis” delivering more liquid and gas. Pyrolyzers are typically self-heating, meaning that, after being kick-started by a fuel like diesel, they can run using their own biogas.

Charm also tried reforming bio-oil into hydrogen, but it struggled to build a business around both concepts. Then the team learned that Stripe was pledging to spend at least $1 million per year to purchase ​“negative CO₂ emissions” from providers developing credible, if still very early-stage, solutions.

That’s when Charm co-founder Shaun Meehan ​“had a really big breakthrough around bio-oil sequestration,” Reinhardt said.

Bio-oil is about 42 percent carbon and 24 percent water by weight, plus a mix of acids, sugars and other organic compounds. The watery part, he noted, is essentially the same ingredient used to give barbecue sauce and other foods a smoky flavor.

For decades, the U.S. National Renewable Energy Laboratory and other institutions have tried to turn ​“pyrolysis bio-oil” into useful products, such as transportation fuels or asphalt materials. But bio-oil has a relatively low energy density, and purifying and refining the material is an expensive and energy-intensive process.

Meehan saw a potentially more effective use for the crude-like byproduct: injecting it underground as a form of permanent carbon removal — something that hadn’t ever been tried before, according to the startup and other experts.

Charm applied for Stripe’s initiative, and in May 2020, the bio-oil startup was selected as one of four ​“high-potential” projects. Stripe paid Charm roughly $250,000 for 416 metric tons of carbon removal, or the emissions equivalent of 5.5 tanker trucks’ worth of gasoline. Another one of the winners was Climeworks. The Swiss startup recently built the world’s largest direct air capture facility in Iceland, which can draw up to 4,000 metric tons of CO₂ per year.

With Charm’s first customer in hand, the startup began putting its new ideas to the test. 

Pumping plant CO₂ underground

Some critics have argued that Charm’s approach is not, strictly speaking, carbon removal.

Unlike a direct air capture plant, which uses fans and filters to scrub CO₂ from the sky, Charm is avoiding emissions from agricultural waste that would otherwise be burned or left to decompose, experts told reporter Emily Pontecorvo in Grist. Preventing emissions, they argue, is different from removing emissions that already occurred.

Still, the idea of using plants is broadly gaining acceptance in carbon-removal circles. In 2021, a team of U.S. researchers — including Sanchez — coined the term ​“biomass with carbon removal and storage,” or BiCRS. In this hybrid approach, plants suck up atmospheric carbon through photosynthesis; technology is then deployed to store that carbon, be it in the form of biochar, bio-oil, bioplastics or other long-lived products.

Regardless of debates on nomenclature, Charm is pushing to scale up its carbon sequestration capacity fast.

In 2021, Charm completed its first pilot injection at a waste disposal well in the Midwest. Since the start of this year, Charm has increased its rate of carbon removal fivefold, and the company is now sequestering bio-oil a couple of times a week, Reinhardt said.

Charm pumps the liquid into injection wells regulated by the U.S. Environmental Protection Agency. Depending on the jurisdiction and purpose of a particular injection, the company uses different classes of wells, of which there are six. However, the startup says it is primarily focused on using Class 5 wells, which are less deep than other well types and can involve filling salt caverns left behind by oil and gas companies.

Charm’s team has hit several speed bumps as it’s grown its operations. Last year, on a frigid farm in Kansas, a team of engineers began field-testing the company’s first and only large pyrolyzer, which fits inside a white shipping container. The machine’s biomass processing system struggled to chomp through an especially dense batch of corn stover, and the team spent weeks resolving the problem.

But the company’s biggest bottleneck relates to its capacity for producing bio-oil. So far, Charm has mainly bought bio-oil from other companies, including biochar producers that make the liquid as a byproduct.

To fulfill huge orders from Frontier and JPMorgan Chase, Charm says it expects to build around 10 new mobile pyrolyzers, which it hopes will run for longer stretches of time, churn through greater amounts of biomass, and yield much higher volumes of bio-oil than existing equipment. The company will also need to get its hands on much more corn stover from farmers in the Midwest–Great Plains regions.

In November, the startup opened a second office in Fort Lupton, Colorado to continue R&D on its biomass-processing systems and accelerate its pyrolysis testing and operations.

“The thing we’re going to be most focused on the next two years is operational scaling,” said Paul Kwan, managing director of General Catalyst, which led the $100 million funding round.

Counting the carbon 

As Charm scales up operations, it also risks generating more of its own greenhouse gas emissions in the process. 

Today, trucks and handling equipment that haul biomass from farm to pyrolyzer run on diesel. Still more diesel vehicles move bio-oil to injection wells, where pumping, blending and other operations add more emissions. The thermal conversion process that turns biomass into bio-oil can also generate carbon and air pollution.

Charm calculates emissions from every step and publishes them in an online registry, which reads like the shipping tracking history for a FedEx package.

Consider a recent order that Charm fulfilled on behalf of JPMorgan Chase. Charm claimed it sequestered 24.3 metric tons of CO₂ on April 11. But, after subtracting its emissions, the startup said it delivered only 19.3 tons of ​“net” carbon removal. Charm said it could eventually reduce its footprint by using electric trucks and improving the conversion process.

Another key challenge for Charm — and for any fledgling carbon-removal company — is that the rules about how to properly monitor, report and verify its activities are largely still being written. Often, the third-party entities that establish protocols for voluntary carbon markets don’t have the time or resources to create rigorous guidelines for new, fast-evolving approaches, especially if only one or a few companies are using them.

As a stopgap of sorts, Charm has collaborated with the science-focused consulting firms Carbon Direct and EcoEngineers to develop methods for analyzing and reporting life-cycle emissions from bio-oil sequestration. Last year, the companies published a preliminary protocol that’s meant to lay the groundwork for future standards.

The idea is to ​“separate good practice from bad practice and provide confidence to investors,” Julio Friedmann, Carbon Direct’s chief scientist, wrote in an August blog post. This is especially crucial for Charm, because its entire business model rests on selling ​“tons” of carbon removal to buyers like the Frontier coalition — a practice that depends on providing a trustworthy product.

“It really needs a proper certification scheme,” said Hans-Peter Schmidt, who heads the Ithaka Institute, a nonprofit research foundation for carbon strategies in Switzerland. Schmidt was the lead author on a 2018 paper that analyzed the merits of pyrolyzing biomass as a way of keeping carbon dioxide out of the atmosphere.

He said that, when it comes to bio-oil, ​“It really depends on how and where you store it. There is a risk of leakage. There is a risk of environmental harm. It’s nasty stuff.” Schmidt noted that he supports Charm’s efforts to pioneer a new carbon-removal approach. ​“But I would like to see more independent assessment of it,” he added.

Ultimately, for Charm to succeed in removing substantial amounts of CO₂, the company will need to not only limit risks and optimize technology but also significantly drive down its costs. Reinhardt said the company aims to lower its per-ton cost of CO₂ removal from $600 to $50, below the U.S. Department of Energy’s own goal of achieving a cost of $100 per metric ton.

Government programs, including the 45Q federal tax credit, could help Charm meet that goal, though currently such incentives are only available for one particular approach: direct air capture. As Charm expands its operations from pilot-stage to commercial scale, the company expects to further reduce the expense of procuring, transporting, heating and injecting biomass. Under Charm’s deal with Frontier, buyers could pay roughly $470 per ton on average over the course of the contract — if federal incentives and Charm’s scaling plans become a reality.

Sanchez, the Carbon Direct scientist, likened the $53 million Frontier deal to ​“winning the lottery of carbon-removal purchasing.” That’s because ​“there are only so many people that are going to be willing to pay the price point that you need to scale a nascent technology and get truly durable carbon removal,” he explained.

Ransohoff of Frontier noted that the coalition’s offtake agreement with Charm is only its first and that Frontier plans to sign more deals as quickly as possible to accelerate a variety of carbon-removal concepts.

“We’re essentially hedging,” she said. ​“We’re building a portfolio of different pathways that, collectively, we hope will get to a climate-relevant scale.”