JPMorgan’s latest investment in carbon-removal technology is one of the most significant commitments from a company to fight climate change.
Key Details
- The largest bank in the U.S. has agreed to invest more than $200 million in carbon-removal technology in an attempt to reduce the bank’s overall carbon footprint.
- Endorsement and investment from JPMorgan is a significant boost to environmentally minded companies that have only been able to remove small amounts of carbon.
- As the clean-energy industry gains new momentum, JPMorgan’s investment will also give it an advantage in the growing sector, The Wall Street Journal reports.
- “We’re jumping in the pool all in,” JPMorgan’s head of operational sustainability Brian DiMarino says. “This is us putting our weight and our capital behind something we believe is truly important to bring to market now.”
Why it’s news
Carbon removal is becoming an increasingly important topic as some scientists warn that transitioning away from fossil fuels is too slow to reverse the carbon problem. Instead, scientists have suggested that carbon removal is an important part of solving the problem.
In addition to supporting carbon-removal efforts, JPMorgan is continuing with its commitments to reduce its emissions output. It has pledged to switch from natural gas and other carbon fuels to cleaner alternatives by 2030. By 2030, the company plans to have reduced its emissions from 2017 by 40%.
JPMorgan’s latest investment may help the bank win over new businesses in the growing carbon-removal industry. While this sector is still young, it has the potential to develop into a much larger and more influential business opportunity—similar to the clean-energy sector.
As an emphasis on carbon-removal companies grows, the new industry is attracting billions of dollars from government investment. Sometime this summer, the U.S. will announce the recipients of $3.5 billion in funding for direct-air capture hubs. The Inflation Reduction Act also included credits for direct-air capture devices.
JPMorgan’s investment will fund around 800,000 tons of carbon removal. It is the second-largest purchase in the carbon-removal industry’s history, The Wall Street Journal reports. The investment will neutralize the equivalent of emissions from 160,000 vehicles.
Microsoft announced the sector’s largest-ever deal last week when it agreed to fund the removal of 2.8 million tons of carbon.
Both companies have paid for the service in advance, though the carbon removal will take years. By paying ahead of time, JPMorgan and Microsoft hope to accelerate this new industry’s growth.
However, there is some question about whether or not carbon-capture technology is beneficial. In one study, researchers found that after taking into account all of the energy needed to capture the carbon emissions, carbon capture systems could only reduce global net emissions by 10% to 11%, The New York Times reports.
Critics worry that companies may rely too much on carbon capture and neglect to focus on emission reduction and decreasing dependency on fossil fuels.
