Since net zero exploded into the public consciousness several years ago, large companies have had to change the way they think about climate action. Vague plans to bring down emissions over time have been superseded by the expectation that companies will eliminate their carbon footprint by 2050 or before.

This has led to new interest in carbon dioxide removal (CDR), a set of approaches to clean up carbon dioxide already in the atmosphere. The last two years have seen a substantial effort to make CDR solutions a reality. Major public and private investments have been committed to research and development of CDR solutions, accompanied by a proliferation of start-ups connecting removals suppliers with prospective buyers. In tandem, governance protocols are being developed to measure, account for, and certify the use of removals.

Corporates are beginning to play a key role in this landscape – signalling future demand to CDR developers, as well as committing finance up front. However, with CDR having developed so rapidly, the appropriate role for corporates is not fully understood. Best practice for corporates has not yet been defined, and increasingly, fracture lines are emerging across different communities. Companies working towards net zero must navigate this governance gap.

Below, we provide an overview of the most salient questions being asked by corporates navigating the new world of CDR, and unpack what needs to be done to address them [1].

1. When and why do I need to use CDR?

CDR is often associated with offsetting, but there are some important distinctions. For companies, CDR can be used as a tool to compensate for emissions that prove particularly hard to cut, to meet their net zero obligations. In the longer term, it could be used to remove historic emissions already in the atmosphere – though for now the standards around this are unclear.

Some sectors will face major challenges to cutting some of their emissions before 2050. These ‘hard-to-abate’ emissions include ‘process emissions’ – inherent to production processes in sectors like cement and steel – as well as emissions from fossil fuel-burning sectors that face major technological (and financial) barriers to decarbonisation, such as aviation and shipping. CDR will be needed to ensure these sectors able to achieve net zero.

Meanwhile, some companies plan to use CDR to achieve net negative emissions. In both cases, companies will need to reduce their emissions as much as possible, and embed the ‘mitigation hierarchy’ to uphold integrity in their climate strategies. Integrity in the use of CDR will be critical – this is explored in point 5.

2. What CDR solutions should I choose?

CDR encompasses a range of solutions that clean up carbon in different ways. Some are biological – for example using soils to remove carbon – some are geochemical – like reacting CO2 with rocks – and others are engineered, like direct air capture (DAC). Some of these are well-established, but others are technologically immature, and need support to get to scale.

These solutions all have different risks and benefits, meaning different solutions will be prioritised by different buyers. Many companies seek out solutions that align with their values and brand, or with ESG targets.

Which solutions are most effective in addressing climate change is increasingly the subject of debate. ‘Permanence’ is considered a priority, but permanent CDR solutions are not yet widely available. Other groups emphasise the importance of solutions with co-benefits for nature, or those that generate economic value by utilising removed carbon in products. The Oxford Principles recommend companies ‘shift to long-lived storage’ over time, meaning nature-based and carbon utilisation approaches could act as a bridging solution. But companies will need to ensure carbon stored in nature now is shifted to permanent stores later on. Beyond this, there is little guidance about which solutions different emitters should adopt.

3. How should I spend money?

Companies can spend money on CDR solutions in different ways – particularly as different solutions will need different types of finance. Approaches include the following:

• Sourcing verified removal credits from third parties,

• Supporting the development of early-stage technologies, either by directly investing in start-ups, or entering into purchase agreements to buy future removals,

• Insetting, in other words identifying ways to remove carbon within the value chain.

Each type of funding has different risks and benefits. For example, buying credits could allow companies to make verifiable claims towards their net zero targets, but these credits are not yet widely available, and prices may change unpredictably as demand increases. Meanwhile, the investment approach is essential to help new solutions develop, but companies may not be able to use these investments towards their climate targets.

4. What standards and rules do I need to be aware of?

Many companies will seek to observe standards so that any claims made about their CDR activity are credible. These will include standards on the supply side – such as measurement protocols like the GHG Protocol for removals (currently in development), which ensure removals are accurately quantified, securely stored, and additional – and on the demand side – such as target-related standards like the SBTI Net Zero Standard, to ensure corporate climate targets have been achieved in a legitimate way.

In the near term, these standards will likely be voluntary and could be relevant internationally, but over time mandatory frameworks could emerge at regional and national level. These will ensure companies take effective action, make accurate claims, and align private sector action with national climate ambitions.

Currently, a comprehensive set of standards for corporate CDR does not exist, partly because the space is new and these are in development, but also partly because many aspects of good practice have not yet been decided on – as per the permanence debate. Such standards tend to emerge through collaborations between scientific and civil society bodies negotiating priority values and trade-offs.

5. How can I demonstrate integrity?

If companies do not know how to proceed with CDR decision-making, CDR development at large will struggle to move forward. But delivering CDR quickly and unsystematically, without clear best practice, may create more risks than benefits – it may even be worse for the climate.

Research from Carbon Removal Centre has revealed that many societal groups are concerned about CDR going awry – but that in parallel, many companies are actively concerned about greenwashing. Many seek information about high-integrity, best-practice CDR strategies.

Why do companies care about integrity when it comes to CDR and net zero? For a couple of reasons. Firstly, CDR has provoked concern among stakeholder groups about the ‘moral hazard’ – the idea that making CDR available to emitters will limit how ambitiously they abate their emissions at source, which may put 1.5 °C at risk.

Secondly, CDR will have wider impacts, including on local communities and the environment. This CDR sector will need to grow from a nascent state to one that could rival the scale of the world’s largest industrial sectors – yet there is substantial uncertainty surrounding the issues that might arise from such rapid, large-scale deployment. Companies that drive forward specific carbon removal approaches are likely to be held accountable for these uncertain impacts.

At present, no one can fully understand what a best practice strategy looks like – it is not known how different approaches will play out. But given the urgency of the net zero challenge, decisions about CDR need to be made in the very near term. Best practice will therefore be ever-evolving. It is important that this is recognised both by companies themselves, and by those holding them to account.

6. What are the next steps?

Opening up a participatory dialogue with a wide range of stakeholders is a crucial way of better understanding the current and future issues associated with corporate CDR, to promote integrity in the face of the governance gap. In this way, stakeholders from across CDR value chains, from local communities to labour unions, as well as specialist commentators like social and environmental NGOs and policy thinkers, can proactively articulate their concerns for the future. This can inform corporate strategy, policy development, and be integrated into the design and deployment of the various options.

Given the evidence gaps around CDR, creating new knowledge through a participatory and anticipatory process can allow the key opportunities, and acceptable risks and trade-offs, to be defined. Carbon Removal Centre is currently working to develop a platform to enable this, and welcomes any group with an interest in CDR to get in touch.

Done right, carbon removal represents an enormous opportunity to advance climate and other sustainability goals. These will be to the advantage of the people, the planet, and in turn, the companies that drive this vision forward. Let’s harness this critical moment in time to learn from the past, establish new rules of the game, and build a CDR sector that genuinely works for all of us.

Energy Voices is a democratic space presenting the thoughts and opinions of leading Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

Footnote

[1] Findings are part of a project run by Carbon Removal Centre, which has engaged directly with the corporate sector to better understand these issues and questions, speaking to nearly 100 companies over the last 18 months.