Carbon dioxide removal (CDR) technologies have taken the driver’s seat in the race to address climate change. Boston Consulting Group (BCG) announced last week that it will purchase 40,000 metric tons of CDR using direct air capture (DAC) to remove carbon dioxide from the atmosphere. Last month, banking giant JPMorgan Chase announced its plan to spend $200 million to offset 800,000 tons of their carbon dioxide emissions using industrial CDR. Earlier, McKinsey, in partnership with Meta, Alphabet and others, committed $900 million to CDR technologies.
This is a worrying trend. Industrial CDR is neither a cost-effective nor a realistic track to limit warming to 1.5 degrees Celsius. Focusing on sucking greenhouse gases from the air rather than on preventing emissions in the first place is a sadly misplaced effort — akin to treating symptoms without curing the underlying disease.
Investments in CDR technologies increased a staggering 60-fold between 2019 and 2022, yet only 1 in 10 companies are achieving their self-specified goals for reducing greenhouse gas emissions.
The recent investments by major companies in CDR might be a signal that more and more companies plan to count on CDR technologies to meet their net-zero targets.
Indeed, according to a New Climate Institute estimate, 24 companies that together produced about 4% of global greenhouse gas emissions in 2019 will achieve their long-term net-zero pledges only if they offset 23–45% of their combined 2019 emission footprint. Much of these offsets are currently being met by forestry and land use, but as demand outstrips supply in the coming decades, industrial CDR technologies supposedly will be used to fill in the gaps.
How realistic is that? Let’s assume that we successfully reduce emissions to 4 billion metric tons of CO2 per year by 2050. To remove that excess CO2 through DAC, we would need 4,000 DAC facilities, each capable of removing 1 million metric tons. That means building 150 such facilities every year from here on in — three every week.
Currently, there have been only 19 DAC plants built in the entire world. Even if all the existing planned DAC projects scale up, they would only remove about 5.5 million tons of CO2 per year by 2030 — or roughly 1/1,000 of what's needed to offset a mere 4 billion metric tons.
It’s about time (and money)
Building DAC or other CDR technologies is time-consuming and highlights the unprecedented challenge of scaling up these solutions within a limited timeframe. Based on experience with other forms of carbon capture, this industry is vulnerable to massive delays, cost overruns, and failures. A recent study that examined 13 flagship carbon capture and storage projects showed that 10 of them either failed or significantly underperformed in meeting their intended capacities.
Further, the cost of industrial CDR is enormous. As an example, JP Morgan Chase agreed to pay Climeworks $800 per metric ton to sequester CO2 from the atmosphere ($20 million for 25,000 metric tons). True, investments and government incentives stand to reduce the cost in the future. However, far better, faster and cheaper is to simply avoid the emissions in the first place.
The bottom line
The bottom line: if we’re going to solve climate change, we have to prioritize decarbonization over CDR. Businesses first and foremost must address the root cause of climate change, which is the excessive emission of greenhouse gases.
Companies urgently need to identify their emission hot spots and implement targeted solutions to mitigate them before embarking on buying offsets. An important resource in this pursuit is the recently launched Project Drawdown Roadmap, which identifies a set of “emergency brake” and “low-carbon system” solutions that can be promptly adopted to substantially reduce carbon emissions within the next two decades.
For instance, if a company replaces its natural gas furnaces — a major source of scope 1 emissions — with heat pumps, it can reduce its heating-related emissions by up to 80% in the next decade. On top of emissions reductions, the lifetime operating savings from this shift could potentially exceed 10-fold, making it a win-win for the climate and the business.
Complement, not replace
It is paramount to emphasize that CDR should complement rather than replace rigorous emission reduction. For every million dollars directed toward future CDR technologies, billions should be concurrently allocated to curbing emissions.
Granted, CDR is necessary if we are to limit warming to 1.5 degrees Celsius. However, it is not sufficient. There is a limit to how much nature can absorb and how fast CDR technologies can scale up, Businesses must swiftly implement "emergency brake" solutions and invest in transformative low-carbon systems for a substantial reduction in carbon emissions within two decades before turning to CDR to close the final gap.
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