A bid to provide market support to scale durable carbon removal: New York’s Carbon Dioxide Removal Leadership Act

There is growing scientific consensus that the global community, in addition to decarbonizing the world economy as aggressively as possible, will need to remove gigatons of carbon dioxide annually from the atmosphere to hold temperatures to between 1.5°–2.0°C above pre-industrial levels. Cumulatively, this translates into hundreds of billions of tons of carbon dioxide removal (CDR) over the course of the 21st century. While the bulk of these removals would occur in the second half of the century, as Morrow, et al. concluded, “scaling up CDR capacity to the multi-gigaton scale, if feasible, would take several decades.” This emphasizes the need to mobilize quickly to deploy carbon removal now     

However, many CDR pathways, especially those that may deliver critical long-term sequestration of carbon, are currently in nascent stages of development, and as such are very expensive, at least in a world that does not accurately translate the true social cost of carbon into policymaking. Recent studies have indicated that government carbon procurement programs may be a critical component of efforts to ensure large-scale market adoption of CDR, helping to drive early stage niche discovery and penetration, and facilitating scaling up and learning, driving down costs, and opening up new markets.

The Carbon Dioxide Removal Leadership Act (CDRLA), new legislation recently introduced in the New York Legislature, may serve as a model for government carbon dioxide removal programs that seek to help facilitate large-scale deployment over the next few decades.  In this blog, we will outline the bill’s key provisions.

The CDRLA authorizes the creation of a state-run procurement program to provide market support for durable CDR. The bill directs the state to purchase no less than 10,000 tons of CDR in 2024, and increases annual removal targets by 100 percent year-on-year over the course of its initial five-year authorization. The bill is standards-based – requiring clear additionality, a minimum of one-hundred-year durability, and third-party measurement, reporting, and verification (MRV) – and otherwise non-prescriptive in terms of what CDR pathways are eligible for purchase. These approaches may include terrestrial biomass-based carbon removal; enhanced rock weathering and other mineralization; ocean-based approaches; long-lived products such as concrete and other construction materials that sequester carbon dioxide; and direct air capture.

The CDRLA would facilitate state purchases through a reverse auction (sec. 76-0103), a bidding process whereby qualified suppliers of CDR would submit bids for removal in exchange for state payments. Reverse auctions have been recognized as an effective process in the context of scaling renewable energy deployment to drive down prices and ensure reliable procurement. The bill would authorize the state to pay a maximum average price per ton of $350 for qualified projects in 2024, with this sum decreasing by 5% annually, adjusted for inflation. The state’s CDR purchases under the bill would be financed by the repeal of a corporate tax subsidy on fossil fuel used for commercial aviation, one of the “hard-to-abate” sectors identified in the state’s landmark net-zero policy, the 2019 Climate Leadership and Community Protection Act.

The bill also contains a number of provisions that seek to ensure the integrity of procured CDR in meaningfully addressing the threat of climate change, as well as to deliver the economic benefits of CDR -- estimated to be a multi-trillion-dollar market opportunity in the coming decades -- to New York. Beyond additionality, durability, and verification, the bill requires a full lifecycle assessment (LCA) of all proposed CDR projects to ensure their carbon efficiency – i.e., that substantially more carbon dioxide is removed from the process than is emitted through its implementation and execution. Additionally, the bill explicitly prohibits procurement from any CDR project that incorporates enhanced oil recovery (EOR) or otherwise facilitates the extraction or other production of fossil carbon (sec 76-0103(2)b). All CDR projects procured under the CDRLA must be located in New York state. This provision is designed to enhance the industrial development benefits of the policy.

The CDRLA could also effectively address environmental justice issues that have been raised in the context of carbon removal. For example, some justice groups have criticized offset mechanisms, which permit polluters to purchase credits generated by carbon removal approaches, as well as approaches that avoid or reduce emissions, from other entities. They contend this could prolong the lifetime of polluting sources, and thus the suffering of vulnerable communities in proximity to such facilities. Others have expressed concerns about the potential environmental impacts of siting carbon removal facilities in vulnerable communities.

The CDRLA contains several provisions designed to further principles of justice. Before procurement begins under the program, the legislation directs the state to conduct a techno-economic survey of all CDR pathways in the state with a potential scale of 0.1Mt or greater (along the lines of California’s excellent 2019 “Getting To Neutral” report). The bill further directs the state to perform a parallel survey assessing the community and social benefits and potential harms of each pathway (sec. 76-0102), with particular attention to New York’s “disadvantaged communities,” as defined in the CLCPA (which definition is currently under revision). The legislation includes a clear “do no harm” standard, and every CDR project submitted for procurement must complete an “environmental justice and equity community engagement and assessment report,” which requires direct consultation with local communities (sec. 76-0105).

One of the benefits of climate policy that leverages public procurement – over, for example, a compliance mechanism – is the opportunity to incorporate non-price factors into the state’s purchasing decisions. The CDRLA explicitly directs the state to create a procurement “scorecard” (sec. 76-0107) that factors, in addition to price, “bid preferences” for equity considerations such as benefits to “disadvantaged communities,” job creation, the employment of union labor, and agricultural or ecosystem co-benefits. The scorecard also factors in techno-economic considerations such as energy and land-use efficiency, speed of delivery, durability in excess of one hundred years, and scale potential of the CDR pathway.

It bears repeating that climate policy at every level of government must strongly prioritize reducing emissions – as has been done in New York with the state’s landmark CLCPA. However, to reach our climate goals of limiting warming to 1.5°C or even 2.0°C, billions of tons of CDR will be required as well. This gigaton-scale CDR will not be possible without significant public sector support, and the CDRLA policy framework is an innovative initial step in this direction. Passing legislation is a significant, complicated challenge at any level of government. It will be interesting to watch in the coming years as the CDRLA advances in New York and perhaps other jurisdictions. States, as is often emphasized, are laboratories for democracy – and perhaps for effective climate policy as well.

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