Scaling carbon removal: The case for carbon removal at scale

This is article 1 of 3 in the Carbon Takeback Obligations Series. 

As the Intergovernmental Panel on Climate Change (IPCC) concluded in its Sixth Assessment Report, deployment of atmospheric carbon dioxide removal (CDR) is "unavoidable" if the net-zero emissions objectives of the Paris Agreement are to be attained during this century. CDR options include so-called "nature-based" approaches, such as afforestation and reforestation, techniques to enhance sequestration of carbon dioxide in soils and production of biochar, an approach which entails subjecting biomass to heat in a low or no-oxygen environment to lock up carbon for centuries or more, as well as "industrial" options such as direct air capture, bioenergy with carbon capture and storage and marine-based carbon removal options.

Why the world needs removal at a very large scale

Moreover, while the drafters of the Paris Agreement envisioned that reaching net-zero emissions by mid-century could meet the treaty's temperature targets, recent research indicates this is no longer the case. The first international conference on the topic of temperature "overshoot" concluded that while holding temperatures to 1.5°C above pre-industrial levels remains the long-term objective under the Paris Agreement, exceeding that limit is inevitable at this point. In point of fact, globally averaged temperatures may consistently exceed 1.5°C above pre-industrial levels by as early as 2030.

Returning temperatures to below this critical temperature threshold after "overshoot" will require the world to reach "net negative emissions." This necessitates a robust commitment to both aggressive decarbonisation and deployment of carbon dioxide removal approaches, perhaps at a very large scale. Of course, the larger the overshoot, the greater our commitment to uncertain and potentially risky carbon dioxide removal will need to be, underscoring the need to accelerate global greenhouse gas emissions reductions.

A recent report projected the need for at least four gigatons of annual carbon dioxide removal by 2050. However, the central range in that study was 7-9 gigatons annually by 2050. Moreover, some studies project the need for as much as twenty gigatons of yearly removals in the latter half of this century.

A widening gap between need and policy

Unfortunately, there is currently a woeful gap between the scale of CDR that the world community needs to avert potentially catastrophic climate change and what current policies are likely to yield. One recent study concluded that there is a gap of more than 50% between CDR pledges by Parties to the Paris Agreement in their Nationally Determined Contributions (NDCs) and what would be necessary to hold temperatures below 2°C, with a much greater gap for achieving 1.5°C. Moreover, many of the NDC pledges made by the Parties under Paris are not currently backed by legislation or other legally binding mechanisms. Also, given recent emissions trends, projected needs for removals are probably substantial underestimates.

Virtually all of the current demand for durable removals (processes that can lock away carbon for centuries or thousands of years) is derived from the voluntary carbon markets (VCMs). VCMs are decentralised markets where companies, organisations, and individuals engage in the purchase and sale of carbon credits to offset greenhouse gas emissions.

However, this market is extremely small, pegged at approximately 46 million tons of contracted removals to date. Moreover, Microsoft, which has purchased approximately 80% of the contracted cumulative volume of carbon removals to date, has recently indicated that it may "adjust the pace or volume" of its carbon removal procurement, sending chills throughout the voluntary markets. While the first quarter of 2026 was the largest opening quarter on record in terms of durable carbon removal purchases, it still reflects a substantial dip from mid-2025 levels. The lack of buyer diversity, coupled with substantial cuts in government funding for carbon removal in the United States, has created a "trough of disillusionment" in terms of the viability of carbon removal markets.

Frontier's recent announcement of an additional $915 million commitment to carbon removal procurement, bringing that buyer coalition's total commitment to $1.8 billion, is a welcome demand signal. However, these procurements will be spread over offtake contracts extending as far as 2040, and even this figure pales in comparison to the demand needed in the United States alone by 2030. For instance, the Rhodium Group has concluded that demand-driving policies must induce at least $20 billion in annual revenue support for carbon removal by 2030 in order to be on track for gigaton scale removal by mid-century. Indeed, looking to the future, a recent analysis indicates that buyers may retire only 30-50 million tons of carbon annually through VCMs in 2030. This constitutes less than 5% of the carbon removal needed in 2030 to meet IPCC scenarios consistent with holding temperatures to 1.5°C.

There is currently a "lack of robust demand signals for CDR." Scaling the CDR sector to a fit-for-purpose level in 2050 and beyond will require durable policy support to engender long-term certainty, clear demand signals, and an environment conducive to scaling up multiple CDR technologies. Such policies can also help crowd in private investment into innovation, ultimately lowering costs.

A critical component of such support includes quantity-driven market-based instruments that fall under the broader rubric of "market-pull policies," anchored in compliance markets. We believe that one particular market-pull approach, termed a "carbon takeback obligation" (CTBO), could be an effective compliance-based mechanism to facilitate adequate scaling of carbon removal to meet societal needs. Implementation of a CTBO could ultimately ensure that carbon dioxide removal is able to play the robust role that it must in climate policymaking.

What is a Carbon Takeback Obligation?

A CTBO establishes a "mandatory link between carbon sequestration and fossil fuel extraction." In its most distilled form, the overarching message of a CTBO is if you take it out of the ground, you also have to put it back. As such, it imposes a legal requirement that the carbon dioxide emissions associated with fossil fuels extracted or imported into a region or a nation are ultimately compensated for by geological storage equivalent to the emissions of that fossil carbon. Although most CTBO discussions focus on fossil fuels, the framework's logic extends to geological carbon in all its forms. Cement production, for example, releases carbon dioxide locked up in limestone through the process of calcination. Framing the obligation around geological carbon sources, rather than fossil fuels alone, reinforces the core principle that carbon taken out must be put back.

Most CTBO proposals contemplate targeting the upstream segment of the fossil carbon supply chain, meaning the producers and importers of fossil carbon, including (but not necessarily limited to) oil and gas extractors, coal mining companies, producers of cement, and fossil fuel importers. The universe of obligated parties would thus be far smaller than that encompassing the vast number of downstream emitters, though its precise size would turn on program design. A program administered at the refining or processing stage, for example, would encompass far fewer entities than one imposed at the point of extraction. Part 2 of this series says more about key design choices like these, though ultimately they remain areas requiring further consideration.

Moreover, because a CTBO is implemented at the source of the supply chain, this framework focuses on producers' responsibility rather than that of downstream entities. As such, a CTBO operates as a form of extended producer responsibility (EPR) for fossil fuel emissions.

The polluter pays principle

EPR, in turn, is premised on the polluter pays principle, a cornerstone of many pollution-related regulations at the domestic and international levels. For example, in the United States, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly referred to as "Superfund," requires parties responsible for the production of hazardous waste to either clean up this waste, or pay others to do so. While CERCLA liability is broadly retroactive and extends beyond originators of hazardous waste, reaching current and past owners and operators of contaminated facilities, as well as transporters, its animating principle is that those responsible for creating a hazard, rather than consumers or the general public, bear the primary costs of mitigation. As of 2026, multiple states have imposed extended producer responsibility mandates on various product categories, requiring producers to fund recycling or collection of wastes from products ranging from electronics to packaging.

Forward-looking applications of the polluter pays principle contribute to the pursuit of economic efficiency by requiring that environmental damages are internalised into a polluter's production costs. Moreover, the principle comports with notions of corrective and distributive justice by requiring those who cause environmental harm to bear the costs of remediation rather than taxpayers or future generations.

How a CTBO would work

To implement a CTBO, a government-established storage certificate system would oblige fossil fuel suppliers to takeback a portion of their carbon emissions through the development of carbon removal and/or carbon capture and storage (CCS) projects, or pay others to do so. Each year, these fossil fuel producers and importers would be required to demonstrate that a set percentage of the carbon they extract or import has been permanently stored, by surrendering a corresponding number of storage certificates. To optimise economic efficiency, certificates could be packaged as an asset class or carbon storage unit, thereby facilitating transferability to other regulated entities.

Most CTBO proposals contemplate a phased-in mandate, with a very low required storage fraction at the outset. For example, if a CTBO were imposed in 2026, it might start out by requiring a storage fraction of 1%, rising to 10% by 2030, approximately 50% by 2040, and reaching 100% by 2050. A trajectory of this nature would be designed to align with the mid-century net-zero targets of the Paris Agreement and many national plans.

A similar approach is reflected in California's proposed Carbon Dioxide Removal Market Development Act. That legislation (SB 308) would have directed the California Air Resource Board to establish interim carbon dioxide removal targets beginning no later than 2030 and to ensure the State achieved carbon dioxide removal equivalent to 100% of statewide greenhouse gas emissions by 2045. Although the bill ultimately stalled, its advancement through the California Senate suggests that policymakers are increasingly willing to consider phased carbon removal requirements over multi-decade implementation horizons.

The case for phasing it in

To be sure, a phased-in approach has multiple advantages. First, with CDR infrastructure currently at a nascent stage of deployment, it would not be practically possible to sequester the entirety of 40 billion tons of annual emissions from unabated fossil fuel use overnight. Additionally, a phased-in approach would send signals to the marketplace that could help to support long-lived capital formation in critical carbon capture and removal infrastructure, including transport, injection, and storage. At the same time, it could be designed to avoid imposing abrupt price shocks that could be detrimental to national economies, potentially engendering a political backlash against the policy. It's also likely to substantially flatten costs before obligations reach "full strength" through learning-by-doing. Finally, this approach would also give governments time to ramp up carbon removal capacity and lower long-term costs of removal through approaches such as targeted tax incentives and procurement. By guaranteeing long-term demand, early on, and by de-risking first-of-a-kind projects, these interventions would help attract the private capital needed to expand storage, transport, and injection capacity well before obligations approach full strength.

CTBO costs would likely be comparable to achieving climate goals through the imposition of a global carbon price, or potentially even lower if one factors in policy risks attendant to a politically or administratively determined carbon price. In addition to streamlining carbon management objectives, a CTBO simplifies carbon accounting by eliminating downstream supply-chain tracking of carbon emissions, in contrast to conventional life cycle assessments.

Building the case now

Of course, it would be foolhardy to believe that a CTBO could be quickly adopted and fully implemented in major economies. In the United States, federal climate regulation has been sharply curtailed over the past year and a half, and public support for climate policies has cooled. In Europe, oil and gas industry groups have pressed to relax Article 23 of the European Union's Net-Zero Industry Act, which requires oil and gas producers to contribute toward the development of 50 million tons of annual carbon dioxide injection capacity by 2030.

However, the time to begin building the case for a CTBO in policy circles and the public sphere is now. As Felix Schenuit recently observed, "increasing recognition of likely temperature overshoot pathways, and their potentially irreversible impacts, can be expected to create a renewed CDR momentum in the 2030s." It will be important, when such inflection points arrive, to have socialised a clear vision of fit-for-purpose carbon removal compliance mechanisms that are perceived as fair and effective. We believe that a CTBO, premised on imposing primary responsibility for cleanup on those who inject fossil carbon into the economy, is such an approach.

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