Tag: Rubicon Carbon

Five years ago, Will Kain and his team at Westchester-based Avnos started work on a system that would suck carbon and water out of the air. 

Then, the data center boom came. 

In a race to ramp-up their artificial intelligence prowess, giants like OpenAI, Microsoft Corp. and Google have built out energy- and water-guzzling campuses that power the technology at record speed. 

But resource-intensive AI data centers have strained the environmental commitments these hyper-scalers made just years prior. Many of their aggressive, time-bound goals – set just before the AI race kicked off – centered on reaching carbon neutrality or negativity by around 2030. 

Instead of scrapping these promises, Big Tech has increasingly turned to the voluntary carbon market, where companies buy credits to compensate for the harmful greenhouse gases they send into the atmosphere.

The ripples coming off the tidal wave of AI build-up are lifting up Avnos and a handful of other L.A.-based companies working to mitigate industrial carbon dioxide emissions. 

“As the data center space has moved fairly quickly over the last 12 to 18 months … that has brought our technology very much into the strike zone,” Kain said.

Though most of the company’s backing so far has come from the aviation, renewable energy, and oil and gas industries, AI infrastructure is its next, highly promising frontier. 

Avnos’ novel water-positive carbon removal technology, known as hybrid direct air capture, hits on two key data center pain-points: carbon dioxide emissions from natural gas generators, and the inordinate amount of water needed to prevent the centers from overheating. 

The startup uses the low-grade heat data centers produce as an energy source for its carbon removal process, creating excess water to cool the facilities down. 

At pilot centers in Bakersfield and Bridgewater, plus an upcoming facility sponsored by Shell and Mitsubishi Corp., Avnos is working on scalability and cost reduction. While the company has yet to release details of any agreements it has signed with data center operators, and permitting hurdles have slowed deployment down some, Kain said its tech is “on the way.”

“We’re trying to go fast to scale and to keep up with the size of the opportunity that we see in data centers in particular,” Kain said. “We’re quite proud of the fact that we are in that group of CO2 removal technology companies that are making real deliveries and building real assets.”

Data centers revive carbon market

Carbon credits – and the voluntary carbon market as a whole – have had a bumpy ride in the court of public opinion. 

Once heralded as the golden ticket to corporate climate action and emissions reductions, credibility and trust in the credits fell several years ago after some of the industry’s largest players, including reforestation offset registry Verra, were exposed for false emissions reductions claims on so-called “phantom credits.” 

In November 2024, a study by the science journal Nature estimated that less than one-sixth of the carbon credits issued to date delivered real emissions reductions.

A slump in climate tech funding followed, killing some ventures in the carbon finance scene – including Marina del Rey-based Catona Climate, which filed for bankruptcy in late 2024 amid financial distress and loss of investor confidence.

Beleaguered as it may be, the carbon market is proving necessary, to some Big Tech companies, in today’s AI age. 

Behind the contest for cutting-edge AI models is a rapidly growing need for the high-powered facilities used to run and train them. 

The U.S. has more than 4,000 active data centers, according to a December report from the report from tech business coalition the American Edge Project. Roughly a quarter of California’s 288 facilities are found in the L.A. area, concentrated in Downtown’s One Wilshire Building and the industrial enclave of Vernon. 

Nearly 3,000 more centers have been announced or are under construction as Goldman Sachs analysts expect AI hyper-scalers to spend $527 billion on AI infrastructure this year. 

The build-out comes with a significant land and environmental footprint. 

When it comes to energy and water, AI-focused data centers are much hungrier than those that have powered digital services from emails to streaming for decades. 

A typical AI data center consumes as much electricity as 100,000 households – and the largest ones under construction today will consume 20 times that, according to the International Energy Agency. 

Much of this comes from behind-the-meter natural gas generators that provide reliable, around-the-clock power untouched by grid constraints. At the rate AI infrastructure is now expanding, researchers estimate that these generators will emit 24 to 44 million metric tons of carbon dioxide by 2030 – the same as putting 5 to 10 million new cars on the road. 

The sheer amount of power AI needs is pushing corporate net-zero targets further out of reach. As tech companies search for solutions, an influx of demand for high-integrity, verified credits is catalyzing the carbon market’s renaissance.

A shift to removals

At the root of the carbon market’s trust crisis were avoidance and reduction credits, which claimed to prevent emissions but faced fierce criticism for being temporary, hard to prove or not as impactful as promised.

In the controversy’s wake, tech leaders are turning to more stringently screened credits, often in the form of carbon removals. Companies pay contractors like Avnos to capture carbon dioxide at a pollution site and securely store it for upwards of thousands of years. 

While removals made up only 5% of all credits sold in the carbon market last year, that share is expected to grow to 35% by 2030, according to business consulting firm Grand View Research.

A new wave of demand for high-quality credits has given rise to agencies like Isometric, which certifies carbon removal projects for a slew of high-profile buyers, including Microsoft, Google and Shopify. The registry checks whether projects claiming to remove carbon from the air are valid and sells companies claims for the tons removed.

Isometric Chief Executive Eamonn Jubbawy said AI is the registry’s biggest customer, driving a four-fold increase in tons of carbon dioxide certified from 2024 to 2025.

“These companies want and need (carbon removal) in order to be able to stick by the commitments they’ve made,” Jubbawy said, “and to be able to build out these data centers in a way that’s in line with their ambitions, for them to be clean.”

Removal credit supply isn’t keeping up with the amount of tons hyperscalers want to buy and write off, Jubbawy said, so they sign long-term commitments to buy credits for a number of years – often 10, 15 or 20 – at a set price. 

Internal environmental commitments and the desire to be seen as industry leaders aren’t the only factors driving first-movers like Microsoft, which accounts for 70% of all carbon removal offtakes announced to date. They’re also planning for the “eventuality” of a globally regulated scheme, Jubbawy said, that could require the world’s top polluters to remove the carbon they emit. 

“[Tech companies] want to start securing the supply today at pre-agreed prices and pre-agreed terms that you can plan around, and also secure (right of) first refusal to buy more if you need it,” he said. “That’s how this market has started to develop. It’s heavily forward-driven.”

Signaling demand

For help sourcing and buying credits, some companies work with carbon credit investment and management firms like Marina del Rey-based Rubicon Carbon. Founded in 2022 at the seed of the carbon market’s reckoning, Rubicon has seen massive uptake from tech giants, namely Microsoft and ByteDance, the Beijing-based company that developed the video-sharing platform TikTok.

The firm has locked in the sale of up to 18 million tons of carbon removal credits to Microsoft over two decades. Part of the agreement will have farmers in Uganda plant trees to suck carbon dioxide out of the air and store it in their trunks and soil. Though the effectiveness of nature-based credits has been heavily scrutinized, they’re a critical part of Rubicon’s vetted carbon removal portfolios, said Zander Sebenius, the firm’s vice president of project investments.

Clients demand a rigorous integrity check before buying credits, Sebenius said, so Rubicon runs the projects it sells by an in-house scientific team. It also partners with Isometric to give buyers access to the registry’s pre-certified credits. 

“We’re able to give customers exposure to those different types of both engineered and nature-based credits in a way that they may not be comfortable purchasing otherwise without our stamp of integrity,” he said.

Try as it might to source renewable energy and reduce pollution from the get-go, the AI industry has hard-to-avoid emissions built in from its need for immense, uninterrupted power. Other industries that rely on energy inextricable from fossil fuels, like aviation, are also in the market for removals, Sebenius said.

Some tech companies, knowing their emissions footprint will only grow with time, banded together in 2022 to collectively buy more than $1 billion in permanent carbon removal credits by 2030. 

Frontier Climate, an advance market commitment from Stripe, Alphabet, Shopify, Meta and McKinsey Sustainability, gives upfront funding to early-stage carbon removal suppliers and commits to buy credits in the future. The aim, the group has said, is to show researchers, entrepreneurs and investors evidence of demand and a growing market for removals.

Microsoft’s mega-deals serve the same goal. 

“We send strong demand signals through long-term offtakes ​to unlock a virtuous cycle of innovation, financing, and deployment,” a Microsoft spokesperson told Reuters. “By anchoring large-scale projects, we both drive new supply while leaving headroom ‌for other corporate buyers to enter.”

One of Microsoft’s recent commitments has Houston-based waste management company Vaulted Deep looking for ways to sell carbon removal credits from its partner Advantek’s San Pedro facility. Operating since 2008, Advantek’s Terminal Island Site at the Port of Los Angeles processes roughly one-fifth of the city’s wastewater biosolids. It claims to be the largest carbon removal facility in the world but has never turned its durable, 10,000-year-plus removals into credits sold on the voluntary carbon market. 

Capital influx from a 5-million-ton, 12-year deal with Microsoft could change that, said Julia Reichelstein, Vaulted’s chief executive.

“We’re working now to explore if we can actually mint carbon credits on additional tonnage that the city is sending us for the purpose of doing the carbon removal,” Reichelstein said. “(The Microsoft deal) is definitely helping drive growth and basically giving that green light to also build new facilities.”

The bulk of Vaulted’s carbon credits have come from its waste storage site in Hutchinson, Kansas. Since late 2023, the facility has issued credits representing more than 40,000 tons of carbon, making it the sixth largest supplier of removal credits in the world, according to reporting platform CDR.fyi.

Signal Hill-based Ship & Shore Environmental, which manufactures air pollution control products, also expects a “major boost” to business from AI infrastructure, said president and co-founder Anoosheh Oskouian.

Ship & Shore wants to put the same emissions control systems it sells to semiconductor manufacturers and biofuels centers on data centers’ gas-fired generators.

AI’s demand for off-the-grid energy has also pushed Ship & Shore into the renewable energy space. The company is helping develop an agriculture waste processing plant in Temecula that’ll sell clean power directly to a nearby data center, Oskouian said. 

“It is an exciting time to have all this technology made available, and that is the way the future is going,” Oskouian said. “But, more than ever, there’s a requirement for our type of company to be involved.”