By 2022, emissions had increased by 5%, or 2 billion tonnes, compared to 2015. However, emissions must decrease by 40-60% by 2030 to meet the Paris climate targets. It is clear the rest of this decade is crucial for climate action.
Complementary to the efforts to decarbonize the global economy, carbon dioxide removal (CDR) solutions are needed for three reasons: to offset the residual emissions that are "hard to abate" (i.e. emissions from the aviation, cement and shipping sectors); to reduce the Earth's emissions from natural feedback loops that are exacerbated by continued global warming (forest fires, methane escaping from permafrost, etc.) and to reverse the build-up of historical emissions.
Scaling carbon removal: the challenge at hand
Achieving global net zero by 2050 requires removing up to 10 billion tonnes of CO2 from the atmosphere every year, according to the Intergovernmental Panel on Climate Change (IPCC). Afterward, and throughout the second half of the century, global emissions must stay net-negative (more CO2 is removed than emitted).
However, the current scale of CDR is only 2 million tonnes. This highlights the pressing need to scale durable CDR by a factor of 5,000. We need to rapidly innovate, implement, and scale up carbon removal technologies to get the world moving at the pace demanded by growing climate risks. Achieving this goal hinges on companies and governments investing in carbon removal solutions today, ensuring their cost-effective deployment at scale tomorrow.
The role of transparency in scaling carbon removal: a business imperative
Trust in carbon removal hinges on transparency in today's evolving carbon market. It safeguards reputations, minimizes financial risks, ensures project quality, enhances market efficiency, and prepares companies for future regulations:
- Reputational and financial risks: Transparency throughout the carbon removal process empowers companies to protect their reputation, reduce financial liabilities, and enhance credibility.
- Carbon removal project quality: Transparent reporting and verification frameworks are crucial to guarantee the quality and trustworthiness of carbon removal projects. They empower companies to invest with confidence and align with sustainability goals.
- Carbon market imperfections: Uncertainty around availability, access, and prices in the carbon removal market underscores the need for transparency. Clear market insights enabled by transparent mechanisms help companies make informed decisions and enhance market efficiency.
- Preparation for compliance markets: Businesses should gain expertise in carbon removal ahead of forthcoming regulations. This proactive and transparent strategy not only readies them for compliance markets but also demonstrates their commitment to sustainability, bolstering their reputation.
Using digital technology and standards for enhancing transparency and safeguarding reputation
In carbon removal, transparency is achieved through the combined efforts of organizations responsible for setting the rules (independent third-party standards) and those overseeing the process (independent auditors) and robust Monitoring, Reporting, and Verification (MRV) systems.
Third-party standards represent an essential building block for the quality of carbon removal – they define and uphold quality and frequency criteria and provide governance with a clear separation of duties. On the other hand, MRV systems ensure accurate tracking and monitoring of the amount of CO2 removed and stored. They provide precise data collection, real-time monitoring, and efficient reporting, which enhances transparency, reliability, and accountability in the carbon market and builds trust in carbon removal initiatives. Combined, they ensure quality, verifiability, and reliability in carbon markets.
By ensuring their carbon removal investments incorporate digital MRV systems and adhere to established third-party standards, businesses can attain the transparency needed to protect their reputation, minimize financial risks, and confidently navigate the sustainability landscape.
Key attributes that an MRV system should embody to foster maximum transparency and trust in carbon removal include:
- Evidence-based validation of the authenticity of carbon removal initiatives: Carbon removal involves storing carbon long-term, so specific evidence is necessary. An MRV system must gather data on net carbon removal, project locations, storage evidence, custodian (or ownership) attestations, and environmental and social impacts, offering a transparent overview of CDR efforts.
- Integration with third-party standards and auditors: Third-party standards provide a transparent framework for evaluating the quality and effectiveness of CDR projects. As MRV systems integrate these standards, they produce records of carbon removal credit value that are auditable and transparent, underpinned by independent quality criteria. Furthermore, by providing data for independent third-party verification and auditing, MRV systems reinforce the transparency and trustworthiness of carbon removal credits, thereby preventing greenwashing.
- Robust accountability and stakeholder transparency: An MRV system must maintain records of storage locations and contracts, ensuring clarity and responsibility among removal suppliers, landowners, and credit buyers and providing comprehensive, transparent information about how the carbon journey fosters effective collaboration and value-sharing among stakeholders in carbon removal value chains, empowering them to make well-informed decisions.
- Digital tracking and monitoring: Using digital technology, including automation and digital data management, not only enhances transparency in project tracking and monitoring but also streamlines assessments and adjustments throughout the CDR project lifecycle.
The good news is that the CDR industry is already building such systems. Carbonfuture MRV+ is one system available in the CDR market today that is working to deliver all the capabilities outlined above.
5 key recommendations for confident carbon removal investment
For corporate buyers looking to invest confidently in carbon removal and prepare for upcoming regulations, it is recommended that they follow these steps:
1. Invest in high-durability technologies: Prioritize investments in carbon removal approaches that offer both durability and verifiability, such as direct air capture and storage (DACS), bioenergy with carbon capture and storage (BECCS), biochar carbon removal (BCR), and enhanced rock weathering (ERW).
2. Insist on comprehensive transparency: Demand the use of digital tracking systems that provide visibility into the entire lifecycle of carbon removal projects.
3. Prioritize verified and certified carbon removal credits: Give preference to carbon credits that undergo rigorous third-party validation using digital technology. Support the establishment of digital certification systems.
4. Engage in transparent marketplaces: Participate in digital marketplaces that offer transparency in carbon credit transactions, including public reporting of prices and volumes. Additionally, support and invest in developing market infrastructure comparable to financial markets to ensure the scalability and efficiency of the carbon removal sector.
5. Consider multi-year offtake agreements: These agreements offer financial stability and can be leveraged to secure debt financing, which is crucial for achieving capital efficiency and scaling carbon removal initiatives.
An urgent call to action for businesses
Carbon removal isn't merely a choice; it's a strategic imperative for businesses, essential for their future and the well-being of our planet.
Reaching corporate net-zero commitments presents a substantial challenge, and the ability of companies to remain competitive, manage risks, access capital, and secure long-term success depends on it.
Investment in carbon removal today is critical, not only to remove emissions immediately but also to build market capacity to achieve net zero. To enable businesses to make confident investments in carbon removal, adapting robust digital MRV systems linked to third-party standards is imperative. These tools are already available, and the urgency to take action is immediate.
This article was originally published on the World Economic Forum. 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.