Racing to the Bottom
An examination of the commercial models that leading ‘seaweed sinking’ startups are employing
Removing and sequestering CO2 from the atmosphere is a necessary step in almost all our pathways to net zero by 2050. The carbon credits market could increase by a factor of 15 to $50 billion by 2030, meaning companies are racing to develop and scale carbon removal technologies in order to tap this lucrative market. As mentioned in the previous post, seaweed sinking is a technology with enormous potential scalability but is still in its infancy. Here, we assess the necessary market conditions under which each of these 4 startups’ slightly different business models will succeed.
Why is seaweed sinking promising?
Before we look at the startups, we must understand why seaweed sinking is such an important option to explore. To appreciate why we must understand the earth’s carbon cycle. As it stands, most of the widely-mentioned efforts to sequester carbon are focused on the ‘fast carbon’ cycle. The fast carbon cycle can be primarily understood as the movement of carbon through living ecosystems, such as the movement through photosynthesis, respiration and the exchange in the atmosphere biosphere and surface ocean. Planting trees and growing seaweed are commonly touted carbon-removal examples. The slow carbon cycle is the movement from these living ecosystems into geological and deep ocean reservoirs that evolve over a much longer period of time, namely thousands-millions of years. Carbon is transferred via gravity, pressure, chemical weathering and ocean currents. This was the process through which fossil fuels are made, and by extracting and burning these humans are now moving roughly 8 gigatons of carbon from the slow to the fast cycle a year as CO2. As the amount of CO2 in the atmosphere increases, as well as heating the atmosphere, more is transferred to the surface ocean in the form of carbonic acid, causing ocean acidification which destroys marine ecosystems and has huge negative impacts on biodiversity. So by sinking seaweed we are depositing carbon in the deep ocean to stay there and potentially become the fossil fuels of the year 300,002,022 AD. Find out more here and here.
Meet the startups
1. Seaweed Generation
Robot sinks seaweed in Great Sargassum Belt
Uses a robot called AlgaRay to sink an invasive type of seaweed Sargassum into the deep ocean before it reaches coasts to prevent its disbenefits. This robot will travel through a large patch of Sargassum filling up with this seaweed before sinking to below 135m to empty the collected seaweed under which point it becomes negatively buoyant, and thus sinks to the ocean floor. The ~100 million tonne Great Sargassum Belt is growing each year, and it is devastating the nearby coastal regions in West Africa and the Caribbean due to its poisonous properties, with reefs, mangroves, marine life, and even humans being affected. Aside from the co-benefits to local communities, 100 million tonnes equals 16 million tonnes of CO2 removal, which means if Seaweed Generation managed to sequester 10% of the size of today’s patch, using forecasted carbon offset prices of $50/tCO2e by 2030, presents an $80 million revenue opportunity.
Saragassum, and the limitations that are associated with a free floating, uncontrollable, seasonable biomass are not conducive to sustainable industrial manufacturing processes - Seaweed Generation
While Seaweed Generation has the potential to deliver a lot of value to the region, the nature of their product means it is quite difficult to monetise their work aside from CO2 sequestration. At this point in time, they believe they will focus on sinking Sargassum as a CDR process, but with further investment, they may explore alternative uses for the seaweed such as biocrude and explore alternative sequestration methods e.g. growing their own algae.
2. Pull to Refresh
Solar-powered seaweed sinking vessel
Similar to Seaweed Generation, Pull to Refresh uses a semi-autonomous, solar-powered Saragassum sinking vessel that could also try to tackle the multitude of issues caused by the Great Sargassum Belt, as well as sequestering carbon. As mentioned earlier there are tremendous co-benefits to sinking Sargassum, and when beached it even releases methane, which is roughly 80x more potent than CO2 over a 20-year period. With this more of the environmental, and social benefits are realised, and it does not have the same ethical challenges of growing fresh seaweed and then sinking it.
The XPrize nominated company is able to apply this same technology to growing and cultivating kelp forests on trellises and also sink these into the deep ocean, meaning they are not limited by the size of existing patches. The semi-autonomous and solar-powered nature of the vessels means the onboard people and energy costs can be avoided, and if they manage to avoid maintenance costs and a short life cycle, they can likely achieve strong margins.
3. Seafields
Man-made Saragassum patch
The UK-based company are developing the technology to scale growing seaweed in a patch similar to the Great Sargassum Belt in size and in the way the ocean currents are leveraged, with a target of ~60,000km², which is between West Virginia and Croatia in size. Although still developing their product on a smaller scale, the sheer scale of their ambitions has enormous carbon sequestration potential, amounting to ~400 megatonnes, just over 1% of the world’s emissions in 2022. If managed effectively, they also have the ability to pivot to harvesting seaweed due to their highly localised nature of production. This slight hedge would prove useful if other methods of seaweed cultivation are unable to keep up with the 11% CAGR of the seaweed market over the next 10 years.
Their primary hurdles to overcome (aside from building a verifiable and scalable technology) are twofold: 1. operational challenges and costs and 2. legal challenges. Firstly, in order to monitor and use a patch Seafield’s anticipate they anticipate needing around ‘2000 on-site staff’, for whom they would ‘provide terrestrial, city-standard facilities and homes to thousands at a time’, which would require enormous investment. Secondly, the idea of mass offshore seaweed sinking farms has legal challenges, and as it stands ‘there are no international or U.S. federal laws dealing specifically with the use of the oceans for carbon dioxide removal, but various general environmental and other laws could apply to projects depending on how they are conducted’, which depending on the emerging consensus could hinder plans to build a seaweed forest.
4. Running Tide
Biomass buoys that grow seaweed before sinking
The largest and perhaps the most established of the seaweed sinkers, Running Tide has been operating since 2017 and now operate the largest capacity macroalgae hatchery in North America. Aside from engaging in 4 other ocean health projects, e.g. Shellfish population restoration, the Maine-based company builds buoys that sequester carbon in 3 different channels: 1. Macroalgae 2. Limestone (ocean-alkalinisation) 3. Terrestrial biomass (sticks, branches etc). The buoys are made of terrestrial biomass, and limestone and are seeded with kelp. They will sit on the ocean surface with growing algae until eventually limestone dissolves (enhancing ocean alkalinity) and the buoys (with fully grown kelp) will become negatively buoyant and sink to the bottom of the ocean to join the slow carbon cycle. The scale of their ambition is huge, with CEO Marty Odlin aiming to sequester ‘one billion tons of CO₂ by 2025’.
The simplicity of the multi-pathway technology has a huge sequestration potential per unit and the input materials are also likely to be cheap, meaning once (if not already) the manufacturing of the buoys and distributing them is scaled and refined, the only major hurdles that wait Running Tide are the demand for CO2 credits and regulatory approval on sinking seaweed.
Hurdles
The technology is not yet proven however in its ability to effectively sequester carbon, and it would take further research to understand the net impact of it and whether it is truly feasible as a negative emission technology. Furthermore, the ocean floor is not merely an empty desert, but its own ecosystem, and thus the disbenefits of sinking tons of seaweed need to be researched more and understood better.
As kelp piles up on the seafloor, it could choke off dense communities of species that live within ocean sediments. And it could attract and repel different creatures, altering the chemistry and biodiversity of delicate deep-water ecosystems - MIT Technology Review
In the event the technology is proven and feasible, the various startups will face differing tail- and head-winds, and will need to hedge against differing scenarios. Government policy has at this time benefited the US companies (Pull to Refresh and Running Tide) due to the IRA incentives, but it is also possible that the UK will follow suit with a similar package. Even the local Caribbean governments wanting to dispel the Great Sargassum Belt may choose to provide grants to the Sargassum sinkers. Aside from regulation and policy, the businesses success are largely determined by market forces, with £ per ton of CO2 and opportunity cost of seaweed playing an enormous role in both the monetisability and the investability of these projects.