Interest in carbon dioxide removal (CDR) has skyrocketed during the past year. Many businesses are among a chorus of voices calling for greater action and innovation in CDR but concerningly, South Pole's 2021 net zero report exposes too many vague commitments.
In 2021, companies increasingly looked to use carbon removals as part of their corporate net zero emissions strategies. That's because we know the Paris Agreement climate targets will not be met without the large-scale deployment of CDR that complement wider decarbonization efforts. This need to address residual emissions to reach net zero, according to the IPCC, demonstrates the need for action on CDR. The other rationale is to actively reduce the concentration of carbon in the atmosphere and reach net negative emissions after 2050.
Given the scale of the challenge before us – detailed by the latest climate science – greater clarity on the role of removals for businesses and corporations is sorely needed. South Pole's survey, a yearly analysis, focuses on creating a baseline of corporate stakeholders' current views on climate targets and technologies, including removals, as part of their pathway to net zero emissions. By understanding the roadblocks on what is preventing faster and more direct climate action, we can begin building coalitions, like the CCS+ initiative, or market-based solutions, like the Next Generation CDR Facility, to scale these novel, frontier technologies.
That's what South Poles' paper, 'Charting carbon removals on the road to net zero' intends to do for carbon removals, diving deeper into the barriers holding companies back from pursuing technological carbon removals (Figure 1). Here we briefly explore how varied definitions, restricted capital, technological immaturity, limited guidance on use, lack of accounting methodologies, and ineffective regulations are hindering corporate action.
Figure 1: Barriers holding companies back from pursuing technological carbon removals
The carbon removal process involves removing carbon dioxide (CO₂) from the atmosphere and durably storing it securely in geological, terrestrial or ocean reservoirs, or in certain products, according to the IPCC. Yet the exact definition of carbon removals continues to be debated. Fundamentally, to be able to refer to 'net carbon removals', there must be a physical removal of CO2 from the atmosphere – as opposed to carbon captured from industrial processes – and this removed carbon must be durably stored.
Today, carbon removals come in many different shapes and sizes, with a growing range of possible solutions still being developed. This includes nature-based removals, such as forest restoration, afforestation and agricultural soil management, as well as high-tech solutions like direct air capture (DAC) and enhanced mineralization. These different approaches to removing carbon from the atmosphere come with a range of benefits beyond climate change mitigation. But they also come with wildly differing price tags.
However, it is still not clear how exactly removals should be used in the context of long-term strategies for achieving net zero emissions. This finding was echoed in the analysis of South Pole's survey – over 60% of respondents had either set their targets far out in the future, or had not announced any net zero target dates at all.
That's why we need more companies to begin planning and implementing long-term net zero strategies, with carbon removals embedded.
Integrating removals into long-term corporate climate action planning has been complicated due to limited guidance on how to achieve net zero emissions. When it comes to carbon removals, the Science Based Target initiative's (SBTi) guidance states that high-quality solutions that lead to 'permanent removal and storage of carbon from the atmosphere' can be used to address residual emissions, but also to mitigate emissions beyond a company's value chain. The responses of the executives surveyed by South Pole paint a similar picture when it comes to the use of removals as an instrument of last resort (Figure 2).
Figure 2: Most popular solutions and enablers for reaching net zero targets
Most sectors have yet to move from considering the possible long-term need for technological carbon removal solutions to focusing on how to implement them in practice. The South Pole survey shows that the majority of respondents are still in a planning phase. This cautious approach among most sectors can be partly explained by the relative novelty of these solutions.
The lack of clear definitions for technological removals and limited agreement on how to best use them towards meeting net zero targets clearly hinder long-term planning among companies. In addition, these barriers pose significant roadblocks for scaling much-needed climate technologies.
It is difficult to develop a clear business case without such clarity - especially when they have such a hefty price tag. These removals remain significantly more expensive than, for example, nature-based removal solutions or other existing environmental commodities such as voluntary offsets from projects that help avoid emissions. While the voluntary carbon market can incentivize investments into building up carbon removals, closing the regulatory gap is the only way to unlock the development of technological removals at the scale required by climate science.
The next few years are shaping up as the potential tipping point for technological carbon removal solutions, with more and more big businesses announcing substantial commitments to invest in carbon removal technologies. Frontrunners – businesses such as Microsoft, Stripe and countries such as Switzerland and Sweden – are shaping the global approach, while the world at large and many key sectors have yet to embrace technological removals.
The need for cost-effective technological carbon removal solutions has never been more urgent. Nature-based solutions alone will not be able to remove the required billions of tons of carbon, every year, in just a few decades. Greater clarity on the advantages and disadvantages of different removal solutions, as well as clear guidance on their use on the journey to net zero and beyond, will undoubtedly lead to more robust plans for the implementation of all carbon removal solutions.
Read more about our industry analysis in the full report: 'Charting carbon removals on the road to net zero.'