The Case for Buying Carbon Removal Today
by Robert Höglund, co-founder at CDR.fyi
Alongside deep emissions reduction, carbon dioxide removal (CDR) is needed to reach net zero emissions. The IPCC SR15 is clear – at a minimum, we are going to have to remove billions of tonnes of CO₂ every year.
In the last couple of years, interest in CDR has skyrocketed, but the number of real tonnes removed from the atmosphere is still meager. We recently published the CDR,fyi Year in review, an annual report to highlight the progress and bottlenecks we’re facing to scale carbon removal to gigaton scale. The report is based on the CDR.fyi reporting platform, the largest open registry for high-quality (100+ year permanence) carbon dioxide removal.
There is a ton of good news – 2022 was a big year for carbon removal. The CDR market grew 500%+ last year, driven in large part by new “pre-purchase” agreements like Airbus. The Inflation Reduction Act created new incentives for carbon removal, and there are more funding opportunities available for CDR with the likes of LowerCarbon Carbon Removal Fund, Advance Market Commitments like Frontier Climate, and growing buyer’s clubs like NextGen.
Despite all the momentum, high-permanence carbon removal is still in its infancy. The number of buyers is still very low: only 16 companies bought more than 1,000 tonnes in 2022, and the number of big buyers is not growing very quickly. To scale CDR from tens of thousands of tonnes to billions (per year!) will require corporate buyers to act now.
Why are so few companies buying durable carbon removal at scale? Fear of backlash, lack of incentives, cost, and transaction friction create barriers to entry for potential corporate buyers.
If everyone waits with buying carbon removal it will fail to scale and to drop in costs. The CDR sector is a strong seedling that has taken root, but without the right conditions, survival is not guaranteed.
We believe that investors, founders, policy-makers, and the MCJ community can focus on three broad areas of impact to ensure the success of CDR market:
Scale buyers. We need more companies, individuals and countries to pre-purchase carbon removal, and celebrate those that do. Companies that will need removals in the future should spend a portion of climate budgets on it today.
Adapt Standards. Influence climate standards like the SBTi to incentivize carbon removal by requiring companies to set interim targets for carbon removal. SBTi has announced that they are going to publish more on this topic.
Develop MRV. Finally, we need to speed up the Monitoring, Reporting, and Verification developments to get tonnes and pre-purchases on registries to increase trust and transparency in the market. All delivered tonnes must be put on a public registry (alongside delivery & verification metadata) and to avoid double-counting and ensure accurate accounting.
2023 has the opportunity to be another breakout year for carbon removal, and we’re excited to see more corporate buyers and ESG teams join the market.
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✨ JUST ANNOUNCED! ✨ Climate Career Week January 23 - 27: 5️⃣ days of free virtual events curated to help you discover climate career opportunities. Check out the lineup of great guest speakers, including MCJ Partners Yin Lu and Cody Simms (among other leading climate founders, investors, and experts). RSVP for sessions here.
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🥞 Ash Glover-Ganapathiraju is the founder at Ojaswe Co., a social enterprise focused on making planet-friendly food approachable, accessible, and fun. Her first product is a delicious Vegan, Gluten-free & Dairy-Free Chilla Pancake Mix.
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