Carbon Removal: essential driver in the race to net zero

During my recent visit to the Hydrogen Expo in Houston, where my primary focus was to explore advancements in hydrogen technologies and uncover industry challenges, I stumbled upon a concurrent event—the Carbon Removal Expo. To my delight, I was impressed by the lively discussions and enthusiastic engagement of prominent corporations and emerging startups alike. As someone who has been closely following the progress of carbon removal, I couldn't help but be impressed by the growing momentum and increasing significance of this field.

As a climate activist or a fervent advocate of green solutions, investing in carbon removal may not initially seem like a logical choice. It may even appear as if we are compromising our commitment to moving away from the fossil fuel economy. However, it is precisely because of these concerns that I feel compelled to share my thoughts and insights on this topic. I will try to delve into the current landscape of carbon removal, highlighting its significance and underscoring the imperative of investing in this transformative field.

This is a fact: Carbon removal is crucial if we want to achieve net-zero emissions and limit global temperature increase to 1.5 degrees Celsius (although this target is becoming increasingly challenging)

The latest report from the Intergovernmental Panel on Climate Change (IPCC) emphasizes the need for deep reductions in CO?, methane, and other greenhouse gas (GHG) emissions, along with achieving net-negative CO? emissions. According to the IPCC, carbon dioxide removal is essential to reach net-negative CO? emissions.

Carbon Removal not only is essential but it’s also one of the most effective ways to reach net zero.

According to the IPCC for each 2% of total investments, carbon capture reduces annual emissions of up to 20%.

Considering the above, it seems that the growth of the carbon removal market is relatively predictable. It's not a matter of if we meet the targets, but rather when we do so.

Carbon removal, or carbon dioxide (CO?) removal (CDR), encompasses both natural solutions like carbon sequestration in trees and soil, as well as technology that directly extracts CO? from the atmosphere. The amount of CO? that needs to be removed depends on the rate and magnitude of emissions reductions across various sectors. However, the IPCC estimates that by 2050, a staggering 5-16 gigatonnes (Gt) of CO? will need to be extracted annually worldwide.

To achieve the necessary scale, we basically must double our carbon removal capacity every 21 months over the next 27 years.

While I agree that the global focus should be on developing green solutions and transitioning away from a fossil fuel economy as soon as possible, we also need to face the reality that we cannot eliminate fossil fuels overnight. However, the urgency to reduce carbon emissions is undeniable. We recently witnessed record-breaking heat, and it's expected to be surpassed soon.

Carbon capture could ideally be the immediate solution to address these pressing issues, but we must accelerate its scalability rapidly.

However, the carbon removal market is currently in its early stages, with a market size of less than 1 billion USD, but projected to experience a significant growth rate with a double-digit compound annual growth rate (CAGR) by 2030.

In recent months, the carbon removal market has gained momentum . Since April, it has witnessed an impressive surge of nearly 300% in market growth. The amount of purchased CO? has increased from just over one million tonnes to close to four million tonnes today, as reported by a carbon removal analytics website. Leading the market in terms of tonnes sold are ?rsted, Drax, and CO280, with sales of 2.7 million, 2 million, and 450,000 tonnes, respectively.

According to McKinsey, the adoption of carbon capture, utilization, and storage (CCUS) technologies must increase by 120 times by 2050 for countries to fulfill their net-zero commitments. This highlights the immense scale-up required in CCUS uptake to effectively address carbon emissions.

Why is it important to remove greenhouse gases from the atmosphere? Well, it's because these gases have varying impacts as greenhouse agents.

Greenhouse gases play a role in trapping solar radiation through a process called the Albedo Effect. Albedo refers to the reflectivity of a surface, and surfaces with high albedo, like snow, ice, and certain clouds, reflect a significant portion of sunlight back into space, resulting in a cooling effect. The albedo of Earth's surface has important climate implications, as changes in albedo can trigger feedback effects. When snow and ice melt, their lower albedo leads to increased absorption of solar radiation, further warming the area and accelerating ice melt. Human activities, such as deforestation and air pollution, can alter the Earth's albedo, reducing reflectivity and contributing to warming by increasing the absorption of solar radiation.

Side note: If you want to learn more about Climate Change and its complexities I cannot recommend enough the Terra.do flagship course Learning for actions. I joined Terra two years ago and since then it has been a great journey on learning about climate change and engaging with a community of thought leaders in climate (special thanks to Savita Singh who helped me navigating through some of the most complex issues about carbon removal)

When it comes to greenhouse gases, there are three crucial properties to consider: the wavelength of energy they absorb, the amount of energy they absorb, and how long they persist in the atmosphere.

Greenhouse gases absorb energy in the infrared region of the spectrum, which is associated with heat. They capture more than 90 percent of the atmospheric energy within a narrow segment of the energy spectrum. However, the absorption energies differ for each greenhouse gas.

Let's take methane as an example. It has a warming potential of 72 over a 20-year period. This means that releasing one ton of methane into the atmosphere would have the same warming effect as 72 tons of carbon dioxide over the next 20 years. While methane, nitrous oxides, and fluorocarbons have much higher warming potentials compared to carbon dioxide (CO2), CO2 remains the primary driver of long-term climate change due to its abundance and long atmospheric lifespan.

From this understanding, we can see that if we want to address the immediate impact of greenhouse gases, targeting methane, for example, is a crucial approach. Although CO2 is the main contributor to long-term climate change, addressing methane emissions can have a significant effect on reducing the short-term warming potential of greenhouse gases.

It is now evident that the implementation of carbon capture is imperative to safeguard our lives and those of future generations from the perils of climate change. However, we are confronted with a significant challenge. The technologies in this field are still in their nascent stages and currently lack the necessary scalability required for widespread adoption.

There are three main types of technological carbon capture today (with many more in development): industrial-point-source CCUS, direct air capture and storage (DAC+S), and bioenergy with carbon capture and storage (BECCS).

While BECCS will be critical as the net-zero transition progresses, particularly as attention further shifts to scaling carbon removal from the atmosphere and nature-based solutions reach their capacity I’m now focusing on CCUS and DAC. How do these methods differentiate?

• DAC+S removes CO? from the ambient air, including historic emissions, reducing overall atmospheric levels. It utilizes large-scale facilities with specialized filters or sorbents to capture CO?, which can then be stored underground for long-term storage (Climeworks is a great example)
• CCUS focuses on capturing CO? from stationary sources like power plants or industrial facilities, preventing its release into the atmosphere. The captured CO? in CCUS can be utilized in industrial processes or stored underground. Industrial CCUS is most important for short- and midterm decarbonization because the technology is ready today and has the potential to capture large volumes of CO? emissions from hard-to-abate industries that have few other decarbonization options. DAC+S has the potential to unleash decentralized carbon removals at scale in combination with a multitude of revenue-producing technologies from sustainable aviation fuel (SAF) to hydrogen production. BECCS will be critical as the net-zero transition progresses, particularly as attention further shifts to scaling carbon removal from the atmosphere and nature-based solutions reach their capacity.

Several challenges must be overcome before industrial-point-source CCUS can reach scale, especially around policy and regulatory support, cost, and public acceptance. Based on the current CCUS project pipeline, approximately 110 million tons per annum (MTPA) of CO? are expected to be captured annually by 2030. To achieve the net-zero commitments pledged by 64 governments at COP26, approximately 715 MTPA are required by 2030 and 4,200 MTPA by 2050.5 More than 25,000 global industrial CO? emitters across 11 industrial sectors could be decarbonized through CCUS.

The early stage nature of carbon removal technologies, such as DAC+S and CCUS, presents challenges in developing viable business models and addressing the cost of implementing carbon removal processes. Public incentives are crucial in this regard to support the deployment of these technologies. Relying only on breakthrough innovations in carbon capture and expecting corporations to willingly absorb the additional costs is unrealistic. It is imperative to identify sustainable revenue streams to make these technologies economically feasible. One approach is the use of carbon credits, creating a "currency" that can be bought and sold by those actively reducing atmospheric carbon and purchased by those contributing to emissions (Interesting company to track is Watershed). However, relying solely on carbon credits may not be sufficient to avert the climate crisis. This model has been criticized for allowing companies to continue "business as usual" by assuming that purchasing credits absolves their harmful practices. Additionally, the reliability of certification agencies and the carbon equation itself pose challenges. Thus, alternative incentives are needed to facilitate carbon removal. Potential business models include optimizing existing manufacturing processes, generating new revenue streams by utilizing CO? as a feedstock, and exploring commercial uses of captured CO?, such as producing polymers or synthetic fuels. While sequestration remains an important part of the equation, productive utilization of CO? offers revenue-generating opportunities to offset capture costs. By diversifying revenue sources and exploring innovative applications, the scaling of CCUS and DAC+S technologies can be supported, requiring collaboration among governments, investors, and industrial players to drive the necessary investment.

The issue is that currently, revenue streams without subsidies that are crucial for scaling the CCUS industry are not yet well established. Estimates indicate that achieving the necessary scale for CCUS by 2050 would require an annual investment of around $130 billion. Given this significant investment requirement, it is unlikely that governments alone would be willing or able to cover all the costs involved. To provide perspective, the needed investment by 2050 is comparable to the annual investments in global liquefied natural gas (LNG) ($120 billion), electric-vehicle (EV) charging ($140 billion), and hydrogen ($140 billion).

In most CCUS business cases, the prevailing assumption is that captured CO? will be transported and sequestered locally, effectively treating the CCUS industry as a waste-disposal operation. However, this process is expensive, requiring complex infrastructure and ongoing measurement, monitoring, and management.

Several challenges needs to be consider here:

First, to qualify for carbon credits, the captured carbon must be sequestered for an extended period. Then, the carbon capture process itself requires significant power and again to qualify for carbon credits the source of energy should be clean.

Apart from that carbon credits have still a great potential and play the role of a catalyst of this new market.

But more interestingly, and what makes me optimistic about this market though is that there is a growing interest in leveraging the utilization of CO? and generating revenue by selling it as a product. As CCUS scales, sequestration and storage will remain an integral component (see Charm Industrial). Nevertheless, established companies and ambitious startups are increasingly exploring productive applications of CO?.

For instance, there are already commercial offerings of CO?-based polymers, particularly in the realm of polyurethane foams and polycarbonates (ex. Covestro) although the overall volume of polymers produced from CO? remains relatively small compared to the required quantities. There is potential for cement and aggregates to act as permanent storage for large amounts of CO? by initiating a reaction between the captured CO? and minerals in the cement and aggregate mixture (see Heirloom or Carbonaide). Many start-ups are currently working on demonstrations to build confidence within the more traditional Oil and Gas and construction industries. For example, the combination of CO? or other greenhouse gases such as Methane with hydrogen can be used to produce synthetic gasoline, jet fuel and other by-products offering further possibilities for utilization (for example M2X Energy is tackling the problem of gas flaring through a modular solution that transforms methane into a low carbon methanol that can be utilized for different types of industrial applications.)

M2X Energy but also companies such as Carbon Clean are focusing on building modular systems to target different types of use cases and to scale more rapidly.

I have been collecting and tracking several other companies in the space. If you want to know more, reach out!

Disclaimer: The views and opinions expressed in this article are solely my own and do not reflect the official stance or perspectives of any company or organization. The information presented is based on my personal knowledge, experience, and research. Readers are advised to conduct their own further research and consult relevant sources for a comprehensive understanding of the topics discussed.