Voluntary Markets, Defense Budgets: What Running Tide's Collapse Tells Us

Week 23  |  May 2026

On 14 June 2024, CEO Marty Odlin posted two paragraphs on LinkedIn, announcing the shutdown of Running Tide Technologies. No extended wind-down. No pivot announcement. Just a statement that the company was ceasing operations, followed by a line that has since become the clearest diagnosis anyone has offered of the ocean carbon sector's structural problem: the voluntary carbon market is voluntary, and there simply isn't the demand needed to support large-scale carbon removal.

Running Tide had raised more than $50 million and had sold on the order of 21,000 to 25,000 tonnes of carbon dioxide removal, making it one of the largest non-engineered, non-biochar providers at the time. Its backers included Lowercarbon Capital and the Chan Zuckerberg Initiative. It had a Microsoft contract, a government permit in Iceland, and a genuine novel approach to ocean carbon sequestration. But none of it was enough.

Understanding why requires looking at two failures running simultaneously. Most coverage focused on one, but the honest post-mortem requires both.

Running Tide's business model rested on a premise that seemed reasonable in 2021 and 2022: that corporate demand for high-quality carbon removal would keep growing, that ocean-based credits would command a premium, and that early movers who built credible methodology and delivery records would be rewarded with sustainable offtake.

That premise wasn't irrational. But voluntary is the operative word here. Corporate climate commitments surged 227% in the period Running Tide was scaling. In at least one major dataset, credit retirements across the voluntary carbon market fell about 7% in 2025, even as commitments surged; other trackers show retirements returning to growth in that same period, but concentrated in a small pool of buyers. Either way, the ambition-action gap widened.

Running Tide's buyer pool never diversified beyond a handful of tech companies willing to pay for early-stage removal. Microsoft was the dominant buyer. Stripe and Shopify made first-tonne purchases. That was roughly the universe, and when voluntary demand stalled, there was no floor. No government procurement mechanism, no compliance obligation and no guaranteed offtake. The Navy doesn't rely on voluntary markets to fund autonomous vessels. Running Tide had no equivalent.

Odlin said as much, explicitly: "We've really been let down by our government. We did our jobs. We fulfilled our contracts." The indictment wasn't of the technology. It was of the capital architecture around it.

For context on the scale of that architecture problem: the US Navy's FY2026 requested autonomy budget is about $5.3 billion, a $2.2 billion increase on the prior year. ARPA-E's MARINER program, the federal government's flagship marine biomass initiative, deployed roughly $22 million across its entire life. AlliedOffsets estimates cumulative venture investment in marine carbon removal globally at roughly $209 million. Saronic Technologies, a single US autonomous surface vessel company, raised $1.75 billion in one round in March 2026. The gap is not marginal, it is structural.

Market failure gets most of the attention but the second failure is less comfortable to discuss, because it implicates the technology itself.

Running Tide's approach involved processing sustainably sourced wood biomass into buoys seeded with kelp, coating them with limestone to enhance ocean alkalinity, then deploying them to sink carbon into the deep ocean. The theory was sound. The measurement problem was not.

Odlin later acknowledged in interviews that the company struggled to distinguish signal from noise in the alkalinity impacts of its Iceland deployments. Investigative ship-tracking analyses suggested the deployed material disappeared from monitoring within hours. In a scientific field where the credibility of every tonne sold depends on the ability to verify permanence and additionality, that is a foundational problem.

This matters for how we read the closure. Odlin's "voluntary is voluntary" framing is correct and important. But researchers working on ocean carbon removal standards, including governance experts such as Wil Burns, flagged concerns that credits were being sold ahead of fully developed verification science. Some purchasers felt it was too early.

Two failures, then. The demand structure couldn't sustain the company through the development cycle, and the development cycle hit a measurement problem that the company couldn't resolve on voluntary market timelines and voluntary market budgets. The interaction between those two failures is the actual story. Either one alone might have been survivable. Together, they weren't.

Running Tide is the clearest illustration of a structural problem that shows up across ocean tech: the capital architecture designed to fund regen materials science wasn't built for what that science actually requires.

Developing credible measurement, reporting and verification for ocean-based carbon removal is not a quick exercise. The ocean is a turbulent, advective system. Alkalinity disperses. Carbon moves. Verification depends heavily on numerical modelling stacked with sensor data, rather than direct measurement. The European Marine Board has concluded that none of the current marine CDR methods have sufficiently robust MRV in place. Microsoft's own 2025 CDR Criteria document named ocean pathways as among the hardest to verify.

This verification challenge requires sustained capital over multi-year timescales. Voluntary carbon markets operate on spot demand, price signals, and buyer sentiment. The mismatch is almost total. A company developing ocean alkalinity enhancement or biomass sinking at the frontier of what MRV science can currently certify needs the kind of patient, structured capital that governments provide to defence programs, and that compliance markets create for established technologies. What it actually got was venture funding on a standard commercial timeline and voluntary offtake that evaporated when corporate climate budgets tightened.

The companies still operating in ocean CDR share one characteristic. Planetary Technologies locked in a $31.3 million guaranteed offtake through the Frontier advance market commitment for 115,000 tonnes at $270 per tonne before attempting commercial scale. Ebb Carbon secured a long-term offtake with Microsoft widely reported as covering hundreds of thousands of tonnes over roughly a decade, alongside a partnership with the Saudi Water Authority targeting megaton-scale deployments. Captura spent two years validating its technology against 20 performance metrics with Equinor before any large-scale credit issuance. None of those deals look like the voluntary spot market. They look like procurement. Running Tide had no equivalent anchor.

When reports emerged in April 2026 that Microsoft was slowing or temporarily pausing new carbon-removal purchases, the sector reacted as though a single buyer exiting had threatened the entire category. Microsoft's own line was softer - that it was adjusting the pace or volume of procurement as part of a disciplined approach, but the shock to sentiment was real. Depending on the dataset, Microsoft accounted for roughly 80 to 90% of durable CDR contracted volume in 2025. One company. One recalibration. The voluntary market has no shock absorbers.

Running Tide did not fail because kelp sinking doesn't work, or because ocean carbon removal is a bad idea. The science behind ocean alkalinity enhancement continues to advance. Planetary has issued the world's first independently verified OAE credits. Captura has an operational pilot in Hawaii. The pathway isn't closed.

What Running Tide's closure tells us is that the gap between what the science can do and what the capital structures around it can sustain is the defining problem for the regen materials sector. Not the technology gap. The institutional gap. Defense figured this out, by accident, because sovereigns don't fund national security through voluntary markets. Ocean climate technology is still learning it, at considerable cost.

Odlin's final line is worth sitting with: "We did our jobs. We fulfilled our contracts." That is not the statement of a company that failed scientifically. It is the statement of a company that the system around it failed to hold.

We turn to AUKUS Pillar 2 and specifically, the money. Three years in, Australia has released its most detailed public accounting of where defence investment is actually going through to 2035-36. The numbers are significant. What they reveal about which capability buckets are delivering operational impact now, versus which ones remain a promise on a distant timeline, is the more interesting story. We go through the primary sources so you don't have to. 

Since you have been, thanks for reading.

Cheers,

Mick

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