Why investing in carbon removal can't wait

The climate crisis represents an unprecedented and far-reaching global challenge that demands urgent, comprehensive, and coordinated action. We face a critical moment when our actions today will shape our planet's future. Where do we stand today? What role does carbon dioxide removal (CDR) play, and how will we scale CDR to climate relevance? Read on to get these and many other questions answered. 

Where do we stand today?

2023 was the hottest year in global records, dating back to 1850. We have experienced the first 12-month period with temperatures averaging more than 1.5°C (2.7°F) above pre-industrial times, with temperatures in November last year briefly breaching 2°C. This is critical because warming levels between 1.5 to 2°C could usher in complicated consequences for societies to manage, including the passing of irreversible climate tipping points. Each fraction of temperature increase exacerbates destructive weather disasters - deadly heat waves, extreme rains, wildfires. Concurrently, global carbon emissions from fossil fuels have reached record levels in 2023, signaling a pressing need for decisive action.

The reality is that we have already emitted an excessive amount of CO2, and even if we drastically reduce emissions, we face the daunting challenge of addressing those historical emissions as well as additional, hard-to-abate emissions (e.g., emissions from aviation, cement, and shipping sectors). With approximately 224 gigatonnes (Gt) remaining to stay within 1.5°C of global warming, according to the Mercator Research Institute on Global Commons and Climate Change's CO2 clock, and annual emissions of around 40 Gt, we are on a tight timeline of less than six years to act before our global CO2 budget is depleted. 

This situation underscores the need for rapid action: not only must we drastically cut emissions, but we also need to parallelly remove CO2 from the atmosphere. Without significant reductions in emissions and increased carbon removal efforts—particularly by increasing the share of durable solutions—the world risks exceeding limits set to prevent the most severe impacts of climate change.

In this article, we’ll focus on the latter: carbon dioxide removal, or CDR for short.

What do you need to know about CDR?

All Intergovernmental Panel on Climate Change (IPCC) scenarios to stay within 1.5 or 2°C of global warming include a significant amount of CDR. According to the IPCC, staying below these warming levels and achieving global net zero by 2050 will require removing up to 10Gt of CO2 from the atmosphere every year. Afterward, and throughout the second half of the century, global emissions must stay net-negative (which means more CO2 is removed than emitted).

Carbon removal solutions are needed for three reasons:

1. To reverse the build-up of historical emissions.

2. To offset the residual emissions that are "hard to abate." 

3. To reduce the Earth's emissions from natural feedback loops exacerbated by continued global warming (forest fires, methane escaping from permafrost, and others).

CDR covers various measures, from increasing carbon in soils and afforestation to biochar carbon removal (BCR) and direct air carbon capture and storage (DACCS). We will require a portfolio of measures, which differ primarily in their durability or how long the CO2 they remove will stay locked away.

Durable CDR refers to intentional human actions to remove CO2 from the atmosphere and securely store it in places where it won't easily return to the air. We achieve this by locking carbon away for hundreds to thousands of years in geological formations, deep ocean layers, or certain materials. 

What is required to scale CDR?

To achieve the 10Gt of CDR per year we need by 2050; the industry will have to be scaled by around 5,000x compared to current levels, a compound annual growth rate of 37%. This exponential growth would exceed even the development of photovoltaics and will require dedicated efforts. We have identified three key levers: corporate demand, innovation, and policy.

Demand: The driving force for scaling CDR

For companies committed to achieving net-zero targets, more than reducing emissions is required. They need also to offset the emissions they can't completely eliminate. While almost 90% of the voluntary carbon market (VCM) still primarily consists of avoidance and reduction credits, the transition towards net zero requires a shift towards carbon removal credits - because only these can effectively offset hard-to-abate and historical emissions. The data reflects this shift, with corporate buyers increasingly opting for carbon removal credits. According to cdr.fyi, purchases of durable CDR have grown 7.3x to 4.5Mt (up from 615Kt in 2022), deliveries have grown 2x to 125Kt (up from 62Kt in 2022), and buyers have increased by 67% to 188 and - crucially - buyers who bought more than 10,000t doubled to 14. However, the pace needs to accelerate.

Entities such as the World Economic Forum First Movers Coalition, alongside buyers clubs like Frontier and NextGen, and intermediaries such as Carbonfuture, are instrumental in stimulating demand and assisting companies in their CDR investments. We expect a significant ramp-up of CDR purchases, driven largely by the increased scrutiny corporates will face on both ESG reporting and environmental claims.

Innovation: Shaping the future of CDR

The CDR industry is rapidly evolving with many exciting advancements in CDR technologies and the development of a digital trust infrastructure enabling buyers to invest confidently and suppliers to manage their CDR projects efficiently. According to cdr.fyi, 32 durable carbon removal companies attracted $577M in 2023 despite an overall downturn in climate tech investments.  

Innovation can address many challenges: first, it can provide more efficient and scalable technologies. For example, biochar carbon removal has reached a technology readiness level of 8-9 (with nine being the highest) in Europe, and direct air capture has now advanced to its third generation of technology. Second, advances in monitoring, reporting, and verification (MRV) systems can significantly reduce the cost of production, while increasing speed and trust. 

Finally, innovation in collaboration will also be needed. A prime example is the collaboration between Carbonfuture, Puro.earth, PYREG, and Syncraft, which is bringing together a range of companies to enhance transparency and efficiency at every stage of the carbon removal process. This partnership utilizes IoT technology for real-time data tracking to make certification and verification processes faster and easier. 

Policy: Building the guardrails to accelerate CDR

While corporates and the VCM are and will continue to play a central role, we will simply not be able to reach the gigatonne scale without significant, targeted government support. A good example is photovoltaics, where decades of dedicated, favorable policy led to PV being the world's most affordable energy source. Moreover, the policy can also work as a multiplier, providing the certainty and predictability needed for increasing private sector financing into CDR.

We are seeing significant progress on this front. In the U.S., billions are being invested into the scale-up of DACCS, and the Department of Energy is experimenting with direct government procurement of durable carbon removal credits. In the European Union, we are on track to become the global leader in CDR policy, thanks to recent advancements in the Carbon Removal Certification Framework (CRCF) - what will become the global gold standard for CDR certifications - alongside solid emissions reduction targets, and tangible progress in its two largest member states, France and Germany.

Conclusion

To grow the CDR industry to climate-relevant levels and achieve net zero by 2050, ‘wait and see’ is not an option. We must innovate, invest, and scale carbon removal technologies to get the world moving at the pace demanded by growing climate risks.