Halfway through the CDR startup-decade

Five years ago, on New Year’s Eve 2019, I was engrossed in researching a new topic: carbon removal, or negative emissions, as I was referring to it at the time. That reading turned into my Oxfam discussion paper Removing carbon now. I had just bought my first tonnes of biochar credits from the pioneers Ecoera. At the time, I didn’t guess CDR would become my new full-time career.

Being part of the birth and formative years of this industry and ecosystem has been the most rewarding and interesting thing I have ever done. There have been (and still are) many interesting questions to answer and so much to learn: about new technologies, the science behind them, policy solutions, market dynamics, and social acceptance. It is a Klondike for someone who loves solving novel problems. And the people in this sector are amazing — purpose-driven, entrepreneurial, energetic, and hopeful.

Making friends in this wonderful community has been one of the most rewarding experiences of the last five years. I wish I had selfies with many more. From left to right: Cara Maesano Eli Mitchell-Larson, Zeke Hausfather, Charlie Renzoni, Quentin Servais Laval, Tank Chen, Julio Friedman, Steve Smith, Maurice Bryson, Maria-Elena Vorrath, Peter Olivier, Moh Suthasiny, Garrett Boudinot, Lennart Joos.

The sector got off to an impressive start. 477 CDR suppliers are registered on CDR.fyi, thousands of researchers are working on removal-related questions, and we know a lot more about what works in CDR now than just five years ago. Around $5 billion have been invested and almost 13 million tonnes sold. CDR has been covered extensively in all mainstream media and the subject of many high-level policy discussions.

I think many in the sector feel there is a big risk we will face a crunch in the next 1-2 years.

But I think many in the sector feel there is a big risk we will face a crunch in the next 1-2 years. Voluntary demand is not picking up fast enough, investor appetite may be waning, and policy is too slow to matter much for most of today’s CDR startups.

To me, the by far most important thing for CDR in 2025 is the Science-based target initiative’s updated Net Zero standard. It will include new guidance on CDR and neutralization as part of companies' net zero pathways. As I’ve argued for years, SBTi should introduce mandatory interim targets for durable carbon removal. The next wave of removal buyers need to be explicitly told to buy, or else they simply won’t. If the SBTi comes out with clear mandatory guidance on durable CDR it would start to unlock unprecedented corporate demand.

For policy and compliance markets we can hope the new US government does not pull back CDR support, but few are betting on any new large-scale initiatives. I would not be surprised if the EU launched a CDR procurement initiative similar to what the US Department of Energy has done. But I would not expect it to be massive. EU ETS integration won’t happen until after 2030, and there is not much else significant on the compliance table to hope for.

I have little doubt that CDR eventually will become a hundreds-of-billion-dollar industry, but the journey is slow. My advice to CDR startups is to focus on survival. Conserve capital, extend your runway, and work on ways to reduce the cost of your tonnes without relying on large-scale deployment. Not everyone will be able to raise a Series B/C or secure a Microsoft-scale offtake agreement, and we will see many consolidations and shutdowns in the next couple of years. But as a sector, I hope that we can avoid:

• A loss of talented people who have built experience in removing carbon

• Leaving promising CDR ideas untested (avoiding this is one of the Milkywire CTF objectives; we have a call for proposals for CDR suppliers open now)

• Burning investors. We don’t want to repeat Cleantech 1.0 where everyone lost money and have a CDR investment dead decade

Tinkering with smaller deployments and not jumping into megatonne deployments right away can be a good thing.

Not rushing into massive scale-ups has a silver lining though. Tinkering with smaller deployments and not jumping into megatonne deployments right away can be a good thing. It is risky for venture-backed companies of course, but it gives science a chance to catch up with technology, which is crucial for some methods (like ERW). Waiting a few years is not a bad thing for the planet either if it means we start scaling up better and cheaper approaches. We do not want to begin massively scaling up suboptimal designs with the risk of creating lock-in, path dependency or public backlash due to side effects. I would rather see us sustainably reach 5 Gt/yr by 2060 than shoot for 2050 but fail due to trying too hard with early approaches.

In my opinion, the 2020s remain the “CDR Startup decade," where we figure out what works. Scale-up is for the 2030s, and the 2040s are for massive "Soak-up," reaching gigatonnes.

Credit to my friend Alex Farsan for coining "soak-up" and creating this nice alliteration.

Happy New Year, friends. Cheers to everyone who is fighting to make CDR happen.

This article is also published on the author's blog. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.