Integrate carbon dioxide removal into climate strategies

Science leaves no room for doubt – to tackle the climate crisis, it is imperative to drastically reduce GHG emissions. However, it is becoming more and more evident that this alone will not be enough. According to estimates, to successfully limit global warming to 1.5°C above pre-industrial levels, we will also need to remove anywhere between 5 to 15 billion tonnes of carbon dioxide from the atmosphere every year by 2050 (1). This is demonstrated in Figure 1 below. 

Figure 1: CDR in a stylized climate mitigation pathway

Carbon dioxide removal (CDR) is the set of human-induced activities through which carbon dioxide is removed from the atmosphere and durably stored (durability is explained in the section below). CDR plays a vital role in complementing emissions reduction activities, removing any residual emissions left at the point of net-zero and mitigating the effects of a global temperature overshoot beyond 1.5°C (2). They will play a particularly vital role in neutralizing unavoidable residual direct and Scope 3 emissions from agriculture and hard-to-abate sectors, such as aviation and shipping, where residual emissions are likely to be greatest. 

Today, there is an array of promising conventional land-based and novel CDR methods in various stages of development. Among these are reforestation, biochar, bioenergy with carbon capture and storage (BiCRS), and direct air carbon capture and storage (DACCS). There has been recent progress on governance and developing integrity standards for both the supply and demand side of the market, as well as substantial growth in the pipeline of CDR projects in development. However, the key to sustained, long-term market growth to achieve the required scale of removal is greater demand. As such, corporate climate strategies that include short, medium, and long-term targets for CDR are key to deploying the methods at the required scale, globally.  

Despite this progress, many companies remain unclear on the business case for early CDR investment and lack guidance on the different impacts conventional land-based and technological methods could bring toward achieving climate goals. 

What is carbon dioxide removal? 

The Intergovernmental Panel on Climate Change (IPCC) defines CDR as an activity initiated by humans that removes CO2 from the atmosphere and durably stores it in geological, terrestrial, or ocean reservoirs, or in products (2). The two defining elements of CDR are the carbon capture mechanism and storage medium. The most fundamental characteristic that defines the climate impact of a CDR method is durability. This is a measure of the permanence of storage and is largely dictated by the storage medium – the concept of permanence is explained further in the decarbonization impact section below. Ultimately, carbon is removed from the atmosphere, although different capture methods involve taking carbon directly from either the atmosphere or indirectly through biomass. Figure 2 below provides an overview of the most common CDR methods and storage mediums under development. 

Figure 2: Taxonomy of common CDR methods (3) 

Carbon capture, utilization, and storage (CCUS) and CDR are frequently confused. CCUS is an important suite of technologies that can either reduce fossil emissions from hard-to-abate sectors or lead to a net removal if the captured carbon is atmospheric. CCUS-based removals from the atmosphere are further categorized as air carbon capture and storage (DACCS) or bioenergy carbon capture and storage (BECCS), based on whether the captured carbon is sourced from the atmosphere directly or indirectly through biomass.  

Figure 3 demonstrates that CCUS applied to fossil emissions can only ever result in an emissions reduction, while CCUS applied to atmospheric or biogenic carbon can result in a net removal of carbon (after accounting for the full lifecycle emissions). Carbon utilization refers to the storage of carbon in products. The nature of the product will determine how long the carbon will be stored, thereby dictating whether a CCUS application can credibly result in a removal. For example, synthetic fuels are an important application of CCUS, though they cannot result in a removal as the carbon will be returned to the atmosphere rapidly upon combustion of the fuel.  

Figure 3: Overview of the different applications of CCUS and the resulting climate impacts (3) 

How to integrate CDR into corporate climate strategies 

The backbone of a company’s climate strategy will be a reduction of emissions in its own operations (known as Scope 1 or 2) as well as in the rest of its value chain (known as Scope 3). However, unless they can fully eliminate emissions across all scopes, companies that commit to achieving net-zero emissions are effectively committing to investing in CDR to some degree.  

Companies will need to eliminate any remaining unabated emissions at the point of net-zero with an equivalent quantity of CDR. This is also known as neutralizing residual emissions under the Science Based Target initiative’s (SBTi) Corporate Net Zero Standard (4). Irrespective of the type of carbon removal, these investments can take place in or beyond the value chain, by directly investing in projects or purchasing and retiring CDR credits from the voluntary carbon market (VCM). 

If every company waits until the point of net-zero emissions to start investing in CDR, the methods may not be mature and will not be able to contribute to short-term climate mitigation. In addition, there may be a limited supply of CDR methods available for neutralization if early-mover companies have secured access early on. To help provide the market with confidence to deploy this critical solution at scale and help companies access the projects they need to achieve their climate goals, we recommend that companies: 

• Start investing in CDR today 

• Set clear short and medium-term targets CDR  

However, SBTi’s Corporate Net Zero Standard places guardrails for non-FLAG (forest, land and agriculture) sector companies that prevents them from claiming progress against interim decarbonization targets with CDR investments. Instead, investments during the net-zero transition can only be made as part of the range of activities in ‘beyond value chain mitigation’ (BVCM) to counterbalance unabated emissions.  SBTi is yet to fully define the full range of activities included in BVCM, but buying and retiring carbon credits from the VCM will be a core part (5). These can either be associated with activities that lead to a reduction of emissions or the removal of carbon from the atmosphere. We recommend that companies start purchasing quality carbon removal credits within a broader portfolio of credits that initially prioritizes projects that restore and enhance natural carbon sinks as these are more widely available at scale, more economically feasible and provide much-needed additional benefits to sustainable development goals. This should then transition to increasing proportions of technological CDR methods as companies prepare for neutralization, in line with the Oxford Principles for Net Zero Aligned Offsetting – as demonstrated in Figure 4 (6). 

Figure 4: Oxford principles for net-zero aligned offsetting (6) 

Key considerations for the responsible adoption of CDR: 

The report, “Removing carbon responsibly: A business guide for carbon dioxide removal adoption,” presents seven key principles for the deployment of carbon removal (3). These principles help companies adopt strategies that mitigate some of these risks and help maximize the climate and broader sustainability benefits of CDR: 

1. Minimize the need for CDR:  

Reduce Scope 1, 2 and 3 emissions and minimize residual emissions to as low a level of possible (4). 

2. Ensure that CDR investments are not prioritized ahead of emissions reduction: 

CDR should never be a substitute for decarbonization activities within the value chain. For companies outside the FLAG sector, SBTi’s net-zero standard does not allow companies to use any form of CDR investment (in or out of the value chain) to contribute to near-term emissions reduction targets. Instead, CDR investments can only be made as a BVCM activity. Companies are encouraged to develop a portfolio of climate mitigation solutions beyond the value chain that includes both emissions reduction and removal activities, with reduction activities initially prioritized (4). 

3. Ensure the timely deployment of CDR: 

CDR methods have a narrow window of opportunity to help stabilize the climate safely. Most will take time to start achieving material removal from the time companies make initial investments. Novel technological methods like DACCS and BECCS involve long planning periods (e.g., to develop geological storage sites). Conventional land-based methods, like reforestation, have non-linear sequestration rates and need rapid deployment to fulfil their full potential this century (7). In addition, novel technological methods typically have very high costs because of the early stage of technological development. Investment into first-of-a-kind projects and strong demand signals for novel methods can help reduce costs through innovation and learning while doing. Therefore, companies should start investing in a diverse range of promising CDR methods as soon as possible and gradually increase the proportion of novel methods over time. This will help companies contribute to short-term climate mitigation ambitions and ensure they can neutralize residual emissions at net-zero – ultimately helping to safely stabilize the climate. 

4. Understand the differences and wider implications of CDR: 

CDR methods can also have a variety of positive or potentially negative side impacts. Examples include competition for resources and consequences for biodiversity and local communities. Many projects are specifically designed with many positive side impacts that contribute to the Sustainable Development Goals (SDGs), which are labeled as core benefits for Natural Climate Solutions (NCS). These can be essential for companies aiming to develop a CDR portfolio that contributes to their broader sustainability agenda. To make informed purchasing decisions, it is critical to understand the attributes, ramifications, and particular investment needs of different methods. This is also needed to justify different price points. Some of the co-benefits and potential risks are covered in the subsequent section on impact. 

5. Proactively develop a diverse portfolio of methods:

Rather than investing in a single or limited set of methods, a portfolio of different methods will allow for synergies and counteract the trade-offs between different solutions. This will also allow for an optimum portfolio within the available budget. Section 5 of the report also contains guidance on how to proactively plan a CDR portfolio (3). A summary of this is provided in the implementation section below. 

6. Conduct due diligence to ensure CDR investments are of high quality and integrity: 

Companies should ensure any removal projects they invest in satisfy minimum quality and integrity criteria, as well as potential additional criteria about benefits to nature and people. They should also conduct sufficient due-diligence assessments. This will ensure companies maximize broader sustainability benefits and minimize the following risks:  

• The reputational risk from ‘greenwashing’ accusations caused by investing in low-quality projects 

• The financial risk associated with projects not being able to withstand future price and demand fluctuations 

• The operational risk associated with the removal not occurring as planned 

• The risks that may result from political uncertainty (8) 

7. Consider managing permanence differences: 

Ensuring permanence is key to a high-integrity CDR project. High-integrity crediting schemes put measures in place to ensure that all high-integrity removal projects remove carbon from the atmosphere permanently. The concept of permanence is explained more in section 1b below. However, different CDR methods have fundamentally different permanence levels. The implications of this and steps companies can take to manage the permanence equivalence are covered in the impact section below. 

Climate impact

Targeted emissions sources

• Scope 1: Companies that count CO2 removal in their Scope 1 inventory include, for example, those that own and operate the entire removal process. For example, for a BECCS project this would include the biomass supply chain, processing, capture process, CO2 transport, and storage process. A company that only owns part of this process can also claim a Scope 1 removal upon contractual agreement with the rest of the value chain (10). 

• Scope 3: Companies that do not own or operate the entire removal process, but rather part of it, can only account for the removal in their Scope 3 inventory (10). 

• Beyond value chain: Companies that purchase carbon removal credits will not be able to count the associated removal as part of their Scope 1 or 3 activities and will have to report separately (10). 

Scope 1 and 3 land-based CDR activities are a core part of the net-zero emissions pathway of companies in the FLAG sector. As covered above, for companies outside the FLAG sector, CDR cannot be used to claim against interim targets under the existing SBTi corporate net-zero standards. Any CDR activity can only count as a ‘Beyond Value Chain’ activity, though in practice, this could be associated with investment both outside and within the value chain (11). 

Scope 1 and 3, and removal beyond the value chain, will all be key for companies to neutralize residual emissions at the point of net-zero (pending further clarification from SBTi).  

Decarbonization impact

Ensuring permanence is key to a high integrity CDR project. High-integrity crediting schemes by the Integrity Council for the Voluntary Carbon Market (ICVCM) put measures in place to ensure that all high integrity CDR projects remove carbon from the atmosphere ‘permanently’ – that is, initially for 40 years, but potentially up to 100 years (9). This means that GHG emission reductions or removals from the mitigation activity must be permanent within this duration. Where there is a risk of reversal (where CO2 is inadvertently returned to the atmosphere), measures are put in place to address those risks or compensate for any reversals, such as through buffer pools (9). 

However, removing carbon from the atmosphere and storing it for 40-100 years does not contribute to lowering cumulative fossil CO2 emissions in the atmosphere and therefore long-term temperature change. CO2 can persist in the atmosphere for thousands of years, and therefore fossil emissions can only be fully neutralized by a removal if the carbon is stored for geological timescales – greater than 100,000 years (12). This does not mean that CDR methods with more temporary storage durations have no value – they can significantly contribute to the delay of climate impacts and reduce peak warming (13). They are also fundamental to counterbalancing land-based emissions as part of the short carbon cycle (14). 

However, for companies claiming the full neutralization of fossil emissions at net-zero, with a removal, ultimately, they will have to rely only on the most durable methods. While permanence rules for neutralizing residual emissions at net zero across voluntary and compliance markets have yet to be agreed upon and defined, companies in the meantime may consider proactive voluntary approaches to managing the permanence equivalence of different methods, such as stacking or like-for-like offsetting (15, 16). However, this is not required if companies are not actively making fossil emission neutralization claims from CDR investments, such as those making CDR investments to complement short-term climate mitigation on the transition to net-zero as a beyond-value-chain activity. (3). 

Business impact

Benefits

The following are compelling reasons for companies to start investing in CDR today: 

• With the growing potential of the CDR market and high future potential demand, CDR represents a significant business opportunity for investors, or those companies involved in the value chain (such as suppliers of biomass and chemical absorbents for Direct Air Capture). 

• Integrating CDR is a key part of any realistic climate strategy. Companies who aspire to be climate leaders should consider setting short-term CDR targets, within appropriate guardrails, as part of a wider high-integrity strategy.  

• If companies do not start materially investing in CDR, the short-term climate benefits of NCS removals may not be materialized, and the market for novel solutions will not be sufficiently developed for the solutions to be widely available to companies for compliance and/or neutralization purposes. 

• The market is predicted to be supply-limited by 2030. Companies may lose out to early movers in accessing the projects they wish to invest in.  

Costs

The costs and market prices of different CDR methods vary widely. Figure 5 below demonstrates the range of market prices currently seen for some of the most common CDR methods.  

As demonstrated in the figure, there is an order of magnitude difference in prices between some conventional, land-based methods and some novel methods, such as DACCS, because of the high development and operational costs associated with these latter technologies. Fortunately, there is significant potential for the prices of novel methods to fall through innovation and learning-while-doing. In addition, companies can balance some of the higher costs by developing a diverse portfolio with a range of different methods. 

Figure 5: Market Prices for Common Carbon Dioxide Removal Methods (3)  

Impact beyond climate and business

Co-benefits

CDR projects can bring a wide variety of co-benefits. Broadly speaking, CDR can provide an opportunity for direct climate mitigation cash flow to the Global South from the Global North, as many of the projects are expected to be located there. High-integrity conventional, land-based CDR methods, such as reforestation and soil carbon sequestration, can bring additional benefits (known as core-benefits for Natural Climate Solutions), such as: 

• Preserve and enhance local and global biodiversity and ecosystem services 

• Flood protection 

• Support local communities and indigenous peoples 

• Additional climate benefits beyond GHG mitigation, including increase in albedo and cooling effects from evapotranspiration (17) 

Novel methods can also bring a wide range of co-benefits, including: 

• Improved crop yields from the addition of biochar and materials for enhanced weathering 

• Creating high-skilled jobs and supporting local communities 

• Potential for CDR projects to help develop local infrastructure 

• Additional economic benefits, such as those resulting from the energy generated by a BECCS project. 

The potential co-benefits of CDR vary greatly between methods, and are thus key parameters companies can use to assess and prioritize them. This is explained further in the section on key parameters (3). 

Potential side-effects

Despite the critical role of CDR in tackling climate change, over-relying on it would be a risk. This may decelerate actions to reduce emissions and pose a heavy burden on economies, societies, and natural ecosystems because of their use of important resources, including energy, materials, and land. Moreover, some CDR methods have potential negative side effects that can require project developers to put in place robust safeguards – a core requirement of any robust certification scheme for high-integrity projects. The key principles for responsible CDR investment introduced in the Approach section will mitigate some of these risks and help companies maximize the climate and broader sustainability benefits of CDR. 

Much like co-benefits, the potential negative side effects can vary greatly between methods. As such, these are also key parameters that companies can use to assess and prioritize them. This is explained further in the section on key parameters. 

Typical business profile

Conventional, land-based CDR can be an integral part of a net-zero transition for any company in the FLAG sector. For companies outside the FLAG sector, the ultimate dependence on CDR will be dictated by the level of residual emissions at the point of net-zero. The hard-to-abate sectors are likely to have the highest levels of residual emissions, and will mostly depend on CDR. However, all companies are likely to need to invest in CDR to some degree.

Key parameters to consider

CDR methods vary greatly across a wide range of attributes. It can thus be challenging for companies to assess and compare the different methods on a like-for-like basis, especially when comparing conventional land-based with novel CDR methods. 

For companies to adequately compare and prioritize different CDR methods, they should consider the following performance criteria (3, 18): 

• Feasibility:

  • Technical feasibility is a measure of the technology readiness level (TRL). TRL is used as a proxy in the absence of clear data for a probability to overcome technical limitations. illustrates the wide variation in technical feasibility across CDR methods.

  • Economic feasibility is a measure of the market price of removal in relation to the social cost of CO2. Given the current lack of economic incentives to invest in CDR, the social cost of CO2 provides a useful reference point to contextualize the affordability of different methods. The social cost of CO2 is an indication of the value of damage from emissions. The reference value of USD $185/t is based on a robust peer-reviewed study (19).

  • Governance feasibility is a measure of the incentives and barriers to deployment, apart from techno-economic feasibility. It considers the feasibility of monitoring, reporting and verification (MRV), public acceptance, governance, and other implementation barriers (evaluation details in the appendix).

• Climate change effectiveness is an evaluation of the effectiveness of a CDR method in mitigating climate change on a net removal basis. This considers the mitigation effect, timeliness, and durability of storage. The integrity principles for carbon crediting schemes may put in place measures to try to manage some of the differences in climate impacts, though we recommend companies be fully aware of these different characteristics.

  • Effect assesses the net effect on the climate, considering the likelihood of realizing removals and the reversal risk once the method is implemented. It also includes other climate effects, where applicable, such as albedo (surface reflectivity) change.

  • Timeliness evaluates the ability of the methods to remove carbon within the necessary timeframe to materially contribute to mitigating climate change. It considers flexibility, controllability, and the speed at which the method can be scaled up. Flexibility and scalability can help avoid a dangerous temperature overshoot. Controllability can help stop unexpected negative impacts that may arise.

  • Durability evaluates the characteristic timescale for storage, assuming no premature disturbance (refer to earlier definition). CDR methods differ widely in duration of storage, from centuries to tens of thousands of years.

• Side impacts are the collateral environmental, economic, and social effects of CDR. They can be positive or negative. Positive side impacts are referred to as core-benefits for Natural Climate Solutions (NCS).

  • Environmental side impacts exclude climate change mitigation. They include impacts related to land-use change, such as for BECCS, afforestation, and reforestation, which may affect biodiversity (both positively and negatively).

  • Economic side impacts exclude costs. They may include by-products, energy generation, new market opportunities, and economic diversification. BECCS, for example, has positive side impacts – energy market opportunities and economic diversification from energy generation, and possible negative side impacts, such as impact on food prices if the biomass supply competes for food production.

  • Social side impacts include positive and negative effects on societies, such as economic factors, impacts on climate adaptation, and food and energy security. For instance, although soil carbon sequestration is expected to produce economic benefits through higher agricultural yields and income, its social benefits are even higher because benefits could be more evenly distributed to smallholder farmers.

1. Negative emissions - Part 2: Costs, potentials and side effects. Fuss, S, et al. 2018, Environmental Research Letters, Vol. 13, p. 63002 

2. Intergovernmental Panel on Climate Change (IPCC). Climate Change 2022: Mitigation of Climate Change: Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. s.l.: Cambridge University Press, 2022. 

3. Removing carbon responsibly: A guide for business on carbon removal adoption - World Business Council for Sustainable Development (WBCSD) 

4. Science Based Targets Initiative (SBTi). SBTi Corporate Net-Zero Standard. 2021. 

5. Public Consultation on Beyond Value Chain Mitigation(BVCM). 2023 

6. University of Oxford. The Oxford Principles for Net Zero Aligned Carbon Offsetting. 2020. 

7. Energy Transitions Commission. Mind the Gap: How Carbon Dioxide Removals Must Complement Deep Decarbonisation to Keep 1.5°C Alive. 2022. 

8. Natural Climate Solutions Alliance. A Buyer’s Guide to Natural Climate Solutions Carbon Credits. 2023. 

9. Integrity Council for the Voluntary Carbon Market (ICVCM). The Core Carbon Principles. 2022. 

10. Greenhouse Gas Protocol. Land Sector and Removals Guidance DRAFT. 2022 

11. Science Based Targets Initiative (SBTi). Forest, Land Agriculture Science Based Target-Setting Guidance. 2022. 

12. Fossil fuels in a trillion tonne world. Scott, V., et al. 2015, Nature Climate Change, Vol. 5, pp. 419- 423. 

13. Temporary nature-based carbon removal can lower peak warming in a well-below 2°C scenario. Matthews, H, et al. 2022, Communications Earth & Environment, Vol. 3, p. 65 

14. The meaning of net zero and how to get it right. Fankhauser, S, et al. 2022, Nature Climate Change, Vol. 12, pp. 15-21. 

15. Bellona. Addressing differences in permanence of Carbon Dioxide Removal. [Online] 2022. https://bellona.org/publication/addressing-differences-in-permanence-of-carbon-dioxide-removal. 

16. Robert Hoglund. Can temporary and permanent carbon storage be compared? [Online]  Can temporary and permanent carbon storage be compared? | by Robert Höglund | Medium 

17. Natural Climate Solutions Alliance. Natural Climate Solutions and the Voluntary Carbon Market: A Guide for C-suite Executives. 2022. 

18. Negative-emissions technology portfolios to meet the 1.5°C target. Rueda, O., Mogollón, J and Scherer, L. 2021, Global Environmental Change, Vol. 67, p. 102238. 

19. Comprehensive evidence implies a higher social cost of CO2. Rennert, K., et al. 2022, Nature, Vol. 610, pp. 687-692.