· 8 min read
It was a long journey to Belém from London — but it gave me time to read the latest consultation from SBTi. I have a contrarian take: I think overall it is a good result for CDR. I think it even carries a small possibility of being transformative for corporate purchases of carbon credits.
Back to the start
In autumn of 2024, SBTi hosted workshops in New York and London with the CDR industry. They acknowledged a contradiction within their Standard: companies would be required to buy significant amounts of CDR in 2050, but nothing before that.
The proposed change they shared was exciting: SBTi would, for the first time, require members to buy CDR from 2030. These purchases would start small and ramp up until they reached the estimated residual 10% of emissions in the company’s Net Zero target year. This major shift was presented as a done deal — the workshop focused instead on implementation in the post-2030 period.
But by the time the draft Standard 2.0 was published in March 2025, the proposal had been watered down a lot. Interim CDR targets were now floated as either optional or mandatory, with SBTi indicating it was open to either result. The target amount would be calculated based only on Scope 1 emissions. And instead of a steady ramp-up, companies could just make one-off purchases every five years.
Right here, right now
SBTi has published a revised draft: a v2 of the Standard 2.0. In a typical consultation process, proposals get presented, feedback is reviewed, and then a final version is published with an explanation of the choices made. SBTi has instead consulted on a first draft, and then responded to that by publishing a new draft with a markedly different set of proposals.
However, this does read like the final draft before the Net-Zero Standard 2.0 is published. It is a bolder document: it makes radical rather than incremental changes to the overall framework. It defends the proposed changes, rather than just seeking views on different options. And it puts forward a clearer vision of how SBTi sees its role in driving climate action — one setting out a much more positive view of buying carbon credits than was the case in the Standard 1.0.
Ch-ch-ch-changes
There are five important developments for CDR.
- BVCM is dead; long live taking responsibility. BVCM was the path SBTi provided for companies to directly fund climate action within the SBTi framework. The problem was, it was niche and overly complex, and there was no real benefit for companies to spend money on it. So most didn’t. It has been replaced by clear guidance that companies should take responsibility for ongoing emissions, and not just wait to deal with their residual emissions in the far future. Until 2035, any action is voluntary, incentivised by receiving one of two tiers of labels (Recognized; Leadership). But from 2035, it will become mandatory for large companies.
- Recognized / leadership. In my view, these labels could be made a bit more sexy (marketing gurus: please provide SBTi with your ideas). To win “recognized” status, companies have two choices. Offset 1% of emissions (all Scopes) with carbon credits. Or, set a carbon price (optionally: $20/t) on 1% of emissions and spend the money raised on some form of climate action. That could include carbon credits, but is not limited to them. To win “leadership” status, companies have to set an internal carbon price of at least $80/t and then offset 40% or more of their emissions. Any leftover budget can be spent on other forms of climate action.
- 1% of all scopes. 1% of emissions does not sound like a lot. But in v1 earlier this year, the first target purchase was calculated as 0.7% of only Scope 1 emissions. The headline number now would likely be at least 5x higher due to the large Scope 3 for most SBTi members. That partially compensates for the delay in the first mandatory purchasing target from 2030 to 2035.
- Share of permanent removals. This is unhelpful for durable CDR, but not as bad as it looks. In the first consultation, SBTi presented two options for durability: “like-for-like” or a gradually increasing share of durable CDR. In v2, they have only included the latter. It is totally arbitrary: based on outdated IPCC modelling about the expected share of “novel” versus “conventional” CDR (17% durable in 2035). But SBTi does recognise this and is at pains to stress it is only included for illustrative reasons. The decision will come in a future Standard 3.0 — plenty of time for this to change.
- Disclosure. Companies choosing not to take responsibility for ongoing emissions will need to publicly disclose this and explain their rationale. Companies taking responsibility will need to report annually on how they are doing so, including the rationale for a chosen carbon price and details on the volume and type of carbon credits purchased.
Net Zero Standard 2.0 — what is it good for?
The biggest setback compared to earlier this year is that the mandatory date for buying CDR has been pushed back to 2035. But the combination of the changes described above is still an improvement on the status quo.
• Companies have to disclose whether they plan to take responsibility. That means making an active decision not to take responsibility. This may nudge many members into a decision they would otherwise have deferred.
• If they decide to take responsibility, then they will be guided down a path of either needing to directly offset emissions with CDR, or at least to create a carbon budget that could be spent in part on CDR.
• There could be a race-to-the-top dynamic if a critical mass of companies opt for “recognized” status, and, therefore, this starts to be seen as a minimum expectation for climate-conscious companies. With the option of Leadership for the most ambitious.
Membership of SBTi is voluntary. If it costs too much, members can just leave or never join in the first place. There are some reputational risks with this for a few very high-profile companies, but not for most. Normal people have not heard of SBTi, or the Net-Zero Standard, or Scopes 1 to 3, et cetera. So if you want SBTi to drive demand to CDR, then you should care about it creating costs that companies are willing to voluntarily bear.
Corporate appetite for climate action is unstable: it depends on how well the business is doing, the economic outlook, and, as we have all seen, the political context they are operating in. Having flexibility in the bad years to do less makes it more likely that a business commits to the framework. That makes it more likely that in the good years, they ratchet up their ambition.
Absolutely nothing?
Although I am more bullish about these changes than others, it is true that SBTi faces significant headwinds. These are mostly a result of moving so slowly (a year and counting) and flip-flopping on key issues like carbon credits. In particular:
• There is now a direct competitor in the form of the ISO Standard 14060 — Net Zero Aligned Organizations. ISO is newer to this space but comes without the baggage of SBTi drama and with the credibility of government-backed standard-setting bodies.
• While this consultation is running, companies have no real incentive to invest time and resources in validating net-zero targets. It’s a recipe for inertia. SBTi seems concerned about this: a section in the report exhorts companies to continue to sign up to SBTi 1.3.
• Companies with the most ambitious climate targets — the likes of Microsoft and Google — are pursuing their net zero targets outside of the SBTi framework. The Net-Zero Standard is like a currency: companies will only accept it if they expect others will too. Until the majority of corporate climate dollars are spent by SBTi members, it will not gain critical mass.
The final countdown
This latest draft is not as good for CDR as what had been trailed in the 2024 workshops. The recommendation to buy CDR now is just that: a recommendation that can be ignored by SBTi members until 2035.
However, the fundamental reframing of climate action in SBTi is a breakthrough. Companies are no longer told that best practice is to “decarbonise first, offset later”, but instead to “do both now”. If companies can see real marketing benefits from the status of achieving “recognized” or “leadership” status, this could create a completely new dynamic. Thousands of companies would have a direct incentive from SBTi for the first time to set an internal carbon price and spend money on carbon credits.
That is the stuff of dreams for the CDR industry. We should all hope that SBTi can stick the landing.
This article is also published on LinkedIn. 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.
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