Racing to Net-Zero: A Captivating but Distant Ambition

(Photo by iStock/Olivier Le Moal)

There is wide agreement among policy makers that in addition to reducing our ongoing greenhouse gas emissions, carbon dioxide removal (CDR) will eventually play an important role in solving the climate crisis. This means removing already-emitted carbon dioxide (CO₂) from the atmosphere, and CDR includes everything from natural processes—like using soils and trees to absorb CO₂—to more technical, engineered solutions like deploying direct air capture machines that suck CO₂ out of the air.

More recently, companies such as Microsoft and Swiss Re have been drawn to CDR as a way to more credibly meet their net-zero goals. The reasoning is simple: A traditional carbon offset only prevents additional CO₂ from entering the atmosphere (instead of removing already-emitted CO₂). As a result, since it does not physically undo the emissions of the purchaser, there is no quantity of traditional offsets that can, at scale, get the world to net-zero. A world with carbon emissions can only be net-zero with CDR.

For this reason, interest in CDR has been rapidly rising. When the Science-based Targets Initiative (SBTI) launched the world’s first corporate standards on achieving net-zero by 2050, they required companies halve their greenhouse gas emissions by 2030 and reduce emissions by 90 percent by 2050, and recommended CDR for the balance. Similarly, Oxford University’s Principles for Net-Zero Aligned Offsetting recommends that companies prioritize reducing emissions, but where offsetting was needed, to shift away from traditional offsets to CDR. Globally, the IPCC anticipates that CDR will play a critical role in achieving Paris Agreement targets, estimating billions of tons per year will need to be removed by midcentury to avoid the most catastrophic effects of climate change.

At present, however, the CDR market is still nascent. McKinsey estimates voluntary carbon markets will grow as much as 15-fold to $50 billion by 2030, but Forest Trends estimates that only 10 percent of available offsets support CDR projects, with the balance supporting traditional emissions reduction projects. More to the point, there is significant variability in the cost, quality, and societal implications of these emerging solutions. And while many smart people are studying the technological, financial, policy, and societal implications of engineered CDR solutions, we are still years away from final answers.

Over the last two years, Giving Green—a nonprofit dedicated to identifying the best ways donors can address climate change—has researched a variety of CDR pathways to identify the most effective CDR solutions that are currently available for purchase.

Our conclusion: There is an extremely limited supply of reliable, permanent carbon removal available, and what exists is extremely expensive. Therefore, it’s unrealistic for most companies to achieve true net-zero using carbon removal in the short term.

Calculating CDR Impact

In 2021, Giving Green teamed up with CDR expert Na’im Merchant to conduct a landscape analysis of carbon removal options. Our approach was simple: We put ourselves in the shoes of a buyer seeking guaranteed, permanent carbon removal that could be purchased and delivered within three years. (This is more or less what corporate buyers looking to make good on a net-zero commitment, such as Microsoft, SwissRe, and others, are asking for). We sourced carbon removal options from multiple sources, such as the call for proposals from Stripe and Microsoft, a database from the nonprofit CarbonPlan, the carbon removal marketplace Puro.earth, and more. 

Unfortunately, while there are many organizations attempting to remove CO₂, each solution comes with a host of new problems. Many of them (such as most nature-based solutions) offer only temporary carbon removal, while more permanent solutions (such as direct air capture) are still very expensive, and have limited capacity. Meanwhile, a multitude of CDR companies promote promising but still-unproven technology that will take years to validate and scale.

In the end, Giving Green was able to recommend only two providers: Climeworks and Charm Industrial. These organizations stood out because they have proven technology, remove carbon permanently, and actually have capacity to remove more CO₂ with more funding (at least as of late 2021). But even these options are expensive (~$600/ton) and have limited capacity. After digging deep into carbon markets, evaluating multiple CDR approaches, and kicking the tires on individual CDR projects, we found that carbon markets and CDR solutions are not well-positioned to help most companies achieve net-zero in the near term. There is just too little supply and reliable removals are too expensive. We therefore suggest that companies focus on directly reducing their emissions and helping fund research and development for emerging CDR solutions.   

Nature-Based Approaches

Because trees, as we all learned in grade school, absorb CO₂ through the process of photosynthesis, protecting and growing forests has a positive climate benefit. If we save or plant more trees, we can remove more CO₂. Sadly, today we see rapid deforestation of around 10 million hectares per year, an area roughly the size of Portugal (or, a net loss of 4.7 million hectares of forests each year). For this reason, companies like Apple, Amazon, Netflix, and others have committed hundreds of millions of dollars to nature-based projects to help achieve net-zero goals, funding projects dedicated to protecting and planting trees in order to negate a portion of corporate GHG emissions.

However, supporting forest projects is not as straightforward as it might seem. Take, for example, a project that uses proceeds from the sale of carbon offsets to protect a parcel of forested land from being cut down. First and foremost, were the trees in the forested area ever at risk of being cut down in the first place? It’s hard to know (and measure) the counterfactual, which has serious implications. The overestimation of the counterfactual in these forest offset projects were the subject of a recent expose that found that an estimated 30 million tons worth of CO₂ offset credits (valued at $400 million) were over-credited as part of California’s offset program. Projects like these are also subject to leakage: If a project developer protects trees in one forested area from being cut down, loggers can simply clear more forest in unprotected areas to make up for it.

Even projects that take the added step of planting new trees—which theoretically have greater CDR potential—have their own problems. A recent study of 400 tree plantations planted in India between 1980 and 2017 found no change in tree canopy cover across the plantations studied. This was possibly due to low survival rates of planted trees and tree planting where canopy cover was already dense. Additionally, trees planted in northern forests may actually contribute to warming, thus reducing any positive carbon removal effects they have, through the albedo effect: dark conifers absorb a lot of heat relative to what otherwise would have been highly reflective snow cover. 

Nature-based CDR solutions that do overcome these challenges must still contend with yet another problem: permanence. Carbon absorbed by trees is not eliminated, only converted into tree matter and fixed to the soil. However, if a tree dies and decays—or burns—that carbon will be released back into the atmosphere. This is not an abstract risk. Over 150,000 acres of forested areas along America’s West Coast previously used as forest carbon offsets burned to the ground this past summer alone. Projects that claim to store carbon in soils by encouraging farmers to adopt regenerative farming practices face a similar problem. Carbon stored in soils can be released as soon as those farming practices are changed.

While preventing deforestation and protecting our natural world is undeniably a key part of fighting the climate crisis, we found it was difficult to determine the true impact of any individual forest offset project. And while companies like NCX and Pachama are using satellite imaging and algorithms to address some of the gaps we identified in measuring impact, the main concerns around counterfactuals and permanence remains. With an average price of $4-6/ton for a forest offset, they are a tempting solution for individuals and companies looking to negate their carbon footprint. Sadly, this may end up doing more harm than good, as a ton of CO₂ emitted is not likely to be counterbalanced by a ton of CO₂ purchased from a forest offset project.

Engineered CDR

A bevy of tech entrepreneurs are raising rounds of venture money to experiment with the latest in CDR technology, from machines that suck CO₂ out of the air and mineralize it into rock to others that convert plant biomass into stable biochar or bio-oil. These technologies can measurably remove CO₂ from the atmosphere and store it away for millennia, overcoming many of the measurement, causality, and permanence challenges we see with nature-based projects.

However, according to a crowdsourced database of CDR purchases, only around 20,000 tons of CO₂ have been removed this way through 2021. Giving Green recommended two CDR providers that make a considerable amount of that capacity: Climeworks, which recently launched a new plant in Iceland, and Charm Industrial, which converts waste biomass into bio-oil and pumps it underground. But while 20,000 tons may sound like a lot, it is a drop in the ocean of the billions of tons of CO₂ that will need to be removed from the atmosphere—every year—by 2050 to meet climate goals. More than that, these nascent CDR technologies are expensive, ranging from $600/ton to as much as $2,000/ton.

There is hope these technologies will come down in cost the same way solar panels or batteries have over the last decade, but plans for deploying new CDR facilities are still years out. Moreover, a number of unanswered questions remain to be answered. How much energy will be required to operate these engineered solutions? How much land will they occupy? What societal implications will large-scale deployment of engineered solutions have? And how do we ensure that captured CO₂ is safely transported and stored?

Here and Now

In the face of the daunting challenge of climate change, where does all our research leave individuals and companies looking to meet their climate goals? We agree with SBTI and the Oxford Principles that companies using CDR to achieve net-zero goals should do so through permanent CDR. However, it is still unrealistic for most companies to purchase enough CDR to achieve net-zero, and it remains unclear when this will become possible. We therefore believe it would be prudent for companies to re-align their short-term sustainability claims away from net-zero and towards more realistic goals. We instead offer two concrete suggestions.

First, companies should prioritize their sustainability efforts on reducing their greenhouse gas emissions in the present. Reducing emissions is a guaranteed way that a company can reduce their contribution to global warming, without engaging with the uncertainties of offsets. The US Government’s Environmental protection agency has a guide to help businesses get started.  

For companies that want to do more, engaging the CDR market is a great option. But because of their high cost—and dismally limited supply—most companies are just not going to be able to use permanent CDR to get to net-zero. For this reason, we recommended that companies enter the CDR space not in the spirit of “negating” their current carbon footprint, but instead to provide catalytic early funding to promising new CDR companies and technologies. This is the approach taken by Microsoft with their Climate Innovation Fund and Stripe’s carbon removal purchases. Hopefully this tactic will help improve the CDR technology and lower costs, allowing it to play an important role in getting to net-zero in the decades ahead.

What we wouldn’t recommend to companies is simply buying bargain-bin carbon offsets from offset brokers. These offsets mostly have very little effect on GHG emissions, and corporations who use them can’t credibly claim they have achieved net-zero.

Giving Green will continue to assess promising CDR projects and approaches, highlighting permanent CDR solutions that demonstrate scalability and lower costs, as well as nature-based efforts that have overcome the gaps we have identified. We believe corporate buyers can play a critical role in funding CDR companies that have demonstrated potential for measurable, additional, scalable, and permanent carbon removal.

Read more stories by Daniel Stein & Na’im Merchant.