Gaining ground: A passerby is seen near JPMorgan’s New York headquarters. The bank’s purchase in May is one of the largest corporate buys of carbon removal and could be a huge boon to the nascent industry to pull carbon out of the air. — AFP
NEW YORK: JPMorgan Chase and Co made waves in May when it announced it would purchase US$200mil of carbon dioxide removal.
Though it’s a relatively small investment for a bank of JPMorgan’s size, it’s one of the largest corporate buys of carbon removal and could be a huge boon to the nascent industry to pull carbon out of the air.
Brian DiMarino, managing director and head of operational sustainability at JPMorgan, was the driving force behind the precedent-setting move in the financial services industry.
The flow of money could help the industry scale up in the coming decades, which it will likely need to do if the world is to avoid catastrophic climate change.
Tech giants like Microsoft, Stripe and Spotify have led the way to date, but DiMarino is staking out JPMorgan’s claim as a financial leader.
He’s making a name for himself within the carbon removal world, not just for the amount of money he’s pumping into the field but also for engaging with the community working on the nascent and unproven technology.
That engagement earned him a spot on the stage at carbon removal startup Climework’s Direct Air Capture Summit in Zurich in June.
“We’re trying to lead in this space, and that’s intentional,” DiMarino said. But, he added, “over time, if we do our job right, we shouldn’t have to buy any more carbon removal”.
Beyond setting the bank’s carbon removal purchasing strategy, DiMarino’s team is responsible for measuring, mitigating, and managing the firm’s operational emissions, from its branches to its data centres.
DiMarino is excited about the carbon removal pathways and other climate technologies JPMorgan is relying on as part of its decarbonisation journey, and emissions associated with its investment and lending activities.
At JPMorgan his entire career, DiMarino landed in sustainability and ended up running the carbon removal purchasing programme after spending most of his time in financials.
“For most of my career at JPMorgan I was in financials and became the chief financial officer of a big part of our commercial real estate portfolio.
“We started to get into the renewable energy space, did some power purchase agreements and that was the first glint I saw of: ‘Hey, I could spend some more time in this space’.
“So I went to our chief operating officer and said: ‘Hey, I think we could be doing more here.’ The firm was starting to build up some work around sustainability anyway. It was a bit of the right place at the right time.
“We set up operational sustainability two years ago, although the firm’s been buying carbon offsets since 2007 in smaller formats. We’ll have just about 20 people on the team by the end of the year.
“In two years, we’ve really grown the team and the book of work, and I think it’s testament to how much JPMorgan’s investing in this space across the firm,” he said.
While carbon removal is a largely untested industry far from mass commercialisation, investing in this field should be a priority for everyone, DiMarino said.
“We’re in the midst of a climate crisis. We’re very focused on absolute emission reductions, but carbon offsets and carbon removal are a super important part of the puzzle because we have to manage what’s being emitted and already in the atmosphere today.
“These technologies are the way we’re able to do that, so we have to invest in them, help them scale and show that they’re valuable.”
He added that one of the ways to do that is by putting the name of JPMorgan behind it and being willing to bet on this space.
As a buyer, he vets carbon removal technology and leans on a group for technical and scientific input.
“We have a really great partnership with carbon management firm Carbon Direct, so they’re one of the primary groups that we go to to look into this stuff,” he said.
“We do our own diligence, we do research and we read whatever third-party papers we can get,” he added.
“We try to understand the technology and then bring these things to Carbon Direct. We’ll take their input, but sometimes we’ll even go to other third parties, like independent researchers.
“Everything’s important. As far as new tech and what’s coming, some of it’s not even tech. Some of it is sort of old technology, like enhanced rock weathering,” said DiMarino. — Bloomberg
Q: What forms of carbon removal are you keeping an eye on besides direct air capture? Any other pathways that are promising and worth keeping an eye out on?
A:
Blue carbon is also interesting to us, although there’s less understanding about the leakage risks of ocean-based carbon removal. It’s very different from geologically stored carbon, where we know it turns to rock and we can drill core samples and see it.
Q: What are the biggest obstacles to the carbon removal industry scaling?
A: One is demand. We regularly talk about a supply-constrained market, and that’s because these technologies are still trying to scale. But if the demand isn’t there today, investors don’t show up to finance these companies, and the companies never get to commercial scale. So we need demand and supply to tick up together, and I don’t think that we’re seeing as much demand as we need to see yet.
Capital is super important as well. Obviously, if it doesn’t show up, you’re not going to scale these companies. The economy is shifting, and we’re seeing capital dry up a little. We don’t really have time for that from a climate perspective.
The other thing is infrastructure and human capital. This is an industrial-scale revolution we’re going through.
This is not someone sitting at a computer typing code. This is steel and pipelines. It’s pumping bio-oil and sequestered carbon underground.
Q: You want to electrify the world. Where are all the electricians? You want to build offshore wind? Where are all the deep-sea marine divers?
A: Besides carbon removal, what other climate tech solutions is JPMorgan relying on or placing bets on in its decarbonisation journey?
Decarbonising commercial real estate is really hard. We want to make sure that we’re controlling things at a very specific level, so dispersed battery storage. If we can install batteries where we have solar panels, can we over-peak the panels, collect the excess energy, and then use that overnight to keep the building off the grid longer? It’s not all lithium-ion.
We’re looking at zinc bromide, redox batteries, and stuff like that. Some of this stuff gets a little bit out of left field, like when there are companies that are using agricultural waste.
There are 14 million tonnes of that stuff produced in the United States every year, and it has no real use. They can use that to produce renewable natural gas.
Q: For certain industries, decarbonisation challenges are obvious. For tech, it’s data centres, for example. What’s the biggest challenge when it comes to decarbonising banking?
A: Data centres are actually a pretty big part of our operational footprint, making up about 35% of our operational emissions. They’re super intensive, and quite honestly, with things like artificial intelligence and things getting more digitised, they’re only getting bigger.
