7 May, 2021, Zurich – South Pole today announced the development of the Next Generation Carbon Removal Purchase Facility together with Mitsubishi Corporation. The facility aims to procure at least US$300-800 million worth of certified carbon removal credits by 2030. The facility will purchase and retire certified carbon removal credits from nascent carbon removal technology projects that can deliver permanent carbon storage and that show the potential for significant cost reduction over time.
In addition to drastic decarbonisation efforts, the removal of carbon dioxide from the atmosphere will be required to meet the goals set by the Paris Agreement and to achieve net zero emissions by 2050. Both nature-based solutions – such as planting trees – and technological carbon removal solutions are key to meeting these goals. Advanced carbon removal technologies, such as Direct Air Capture (DAC), in combination with permanent CO 2 storage solutions, such as CO2 mineralisation or geological storage, will be of critical importance – nature-based solutions alone will not be able to remove the required billions of tons of CO2 per year* in just a few decades.
To make this future a reality, we need to build a credible carbon removal industry that does not yet exist. As of today, the cost of technological carbon removals range from US$50 to over US$400/ton of CO 2 removed. These costs are clearly above the current price levels of most carbon pricing schemes around the world that should incentivize the development of new removal solutions. In order to drive down costs, accelerate technological development, and increase the volume of robust solutions, there is an imperative to start investing in carbon removal technologies today. The Next Generation Carbon Removal Purchase Facility addresses this urgent need by supporting technological carbon removal projects through the purchase of certified carbon removals over a period of 10 years or more.
Over the past 18 months, an increasing number of businesses with ambitious net zero targets have shown a higher willingness to pay for high quality technological carbon removals. This pull from the voluntary market can make a crucial contribution to the development of a new carbon removal sector. At the same time, businesses engaging with the facility will be able to comply with ambitious net zero roadmaps, diversify their carbon removal portfolios beyond nature-based solutions – and work together to reduce the cost of technological removals over time.
“The Next Generation Carbon Removal Purchase Facility will provide a secure revenue stream for new carbon removal technologies to accelerate their development. Importantly, it will help drive down the price per ton of CO2 removed over time," says Patrick Burgi, co-founder and Director of Innovation at South Pole.“By purchasing certified removal credits from our new facility, companies with net zero commitments can diversify their carbon removal portfolios and create enabling environments for technological carbon removal solutions at scale. In this sense, voluntary carbon markets can support the Paris Agreement goals while bringing down the cost of net zero compliance globally – for companies, countries, and the planet."
The facility is being developed by carbon market pioneer South Pole in partnership with Mitsubishi Corporation. Mitsubishi Corporation will bring its deep technological and financial expertise to the facility, including access to several CO 2 mineralisation technology providers and projects, utilizing its global trading, investment and business development experience. Over the next few months, South Pole and Mitsubishi Corporation will work with potential anchor buyers to define the final set-up of the facility. The facility welcomes interested buyers to join these discussions.
“We are proud to work with leading climate action experts South Pole to bring this facility to the market. It's a perfect match: Mitsubishi Corporation's 10 business groups operate across virtually every industry in more than 90 countries, including in the investment and business development for carbon removal technologies. We intend to help a range of stakeholders - from carbon removal project owners to carbon removal credit buyers - gain access to the opportunities provided by the new facility," says Masao Koyama, Manager, Low Carbon Task Force at Mitsubishi Corporation.
In addition to CO 2 mineralisation and biochar projects, the facility's current portfolio includes the world's largest, premier DAC project under development by 1PointFive. This flagship DAC project is expected to capture up to 1 million metric tons of CO2 annually when fully operational—240 times more than any other DAC plant currently under operation or construction.
The facility will focus on serving companies with net zero targets, a market that has doubled in size in the past year. As of today, companies with net zero targets can engage with the facility through forward commitments to purchase carbon removal credits, which will be certified under leading global carbon standards such as the Verified Carbon Standard (VCS) and the American Carbon Registry (ACR) .
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Note to editors
*According to the IPCC Special Report “Global Warming of 1.5 °C" (SR15) there is an urgent need to scale up efforts to remove CO2 from the atmosphere in order to achieve the 100-1'000 Gt of CO2 removals by 2050 required to keep global warming within 1.5°C. If we are to reach net-zero GHG emissions by 2050, we will require both nature-based and technological solutions in addition to steep decarbonisation and emissions avoidance efforts (such as forest conservation for example).
More information about South Pole's work and offering on carbon removals here.
Isabel Hagbrink, Director of Communications, South Pole
South Pole recognizes that private sector climate action is essential to address climate change. To leverage this potential, South Pole focuses on working with large companies to reduce their environmental footprint while making concrete impacts on removing CO 2 from the atmosphere through direct development of climate action projects. Founded in 2006, South Pole today has about 500 staff in 18 offices globally, and has developed about 1,000 projects responsible for removing, reducing or avoiding over 100 million tonnes of CO2e to date. South Pole has worked with over 1,000 companies and organizations on their climate journeys. For more information, visit www.southpole.com or follow us on LinkedIn, Twitter, and Facebook.
Mitsubishi Corporation (MC) is a global integrated business enterprise that develops and operates businesses together with its offices and subsidiaries in approximately 90 countries and regions worldwide, as well as a global network of around 1,700 group companies. MC has 10 Business Groups that operate across virtually every industry: Natural Gas, Industrial Materials, Petroleum & Chemicals Solution, Mineral Resources, Industrial Infrastructure, Automotive & Mobility, Food Industry, Consumer Industry, Power Solution and Urban Development. Through these 10 Business Groups, MC's current activities have expanded far beyond its traditional trading operations to include project development, production and manufacturing operations, working in collaboration with our trusted partners around the globe. Decarbonization is a common interest within the company and therefore Carbon Removal such as Carbon Capture & Utilization has been a joint effort together with multiple groups within the company. With an unwavering commitment to conducting business with integrity and fairness, MC remains fully dedicated to growing its businesses while contributing to a prosperous society.
Photo by Jakub Kriz on Unsplash