CDR is VIP
Very Important Policy
CDR News
Luxembourg looking at a negative emissions tariff, video discussion break down from OpenAir Collective
Who pays for DAC? Potential revenue streams
A bill in the NY state congress on carbon removal!
Nerd rating: 1 (1 to 10 scale on the technical density of the post)
Why should you care?
I think it’s a valid question. In a world of noble causes, catastrophes, and climate change, why should you care about carbon dioxide removal? We have finite attention spans, and the opportunity cost of CDR information may be taking up valuable space filled with Succession fan lore or the latest set of conspiracies regarding the newest Taylor Swift album. Depending on your point of entry into the CDR world, your reason may be very different. That is one thing I truly love about this sector. There is a reason for each person to care. There is some bit of information, a particular technology, or your particular pathology that you can find value in. Whether you are climate concerned, a policy wonk, or an investor, there are compelling arguments as to why you should be paying attention to the CDR space. And of course, maybe you are all of these things or none of these things. Hopefully, you find a string in the arbitrary categories below that you can pull.
Climate Concerned
We will start with those concerned about the climate. Whether you are the most vocal, ardent supporter of climate change mitigation, you just wished it wasn’t so hot in the summers. It is straightforward; we must have CDR to avoid the more extreme outcomes of climate change. As the IPCC itself as stated:
“In order to limit warming to 1.5°C above pre-industrial levels, the world would need to transform in a number of complex and connected ways. While transitions towards lower greenhouse gas emissions are underway in some cities, regions, countries, businesses and communities, there are few that are currently consistent with limiting warming to 1.5°C. Meeting this challenge would require a rapid escalation in the current scale and pace of change, particularly in the coming decades. There are many factors that affect the feasibility of different adaptation and mitigation options that could help limit warming to 1.5°C and with adapting to the consequences.”
I want to draw especially attention to the “more extreme outcomes” portion of that last paragraph. When discussing, reviewing, and criticizing climate change models, and the scenarios they produce, it is essential to play with the same facts related to the terms: possibility and probability. We seek to balance the mitigation of the worst climate effects with the flourishing of human beings worldwide. We balance the case of the scenarios with the probability. Or at least we try.
The below graph from the Climate Action Tracker is a clear and beautiful representation of our historic global greenhouse gas emissions and scenarios to different levels of warming. Notice the ambition gap. We currently do not have the policies in place to meet 1.5C. This gap doesn’t need to be filled in the philosophical sense; it needs to be filled in the literal sense. We need the deployment of technologies that can decrease emissions, and that can take emissions out of the air, ala, CDR.
Source: Climate Action Tracker
The figure below from the United Nations Environment Programme in 2017 details the extent to which we will need CDR to hit net zero or gross negative CO2 emissions by mid-century to stay below 2.0℃, and what we need to go net total greenhouse gas (GHG) negative by the end of the century. This is one pathway amongst many, but all paths point to a similar conclusion: we will need CDR at scale.
Both of these graphs are global emissions, which is an important note. All emissions matter, but not all countries emit the same. However, this discrepancy is often used to point fingers, namely at the USA, India, and China. That’s not what I’m doing here. I want you to know this is a total world endeavor. We need global cooperation to meet these targets.
I don’t want to belabor this section with a deluge of graphs, figures and units that would have to be explained and then quickly forgotten but I do think it is important to recognize the current scale.
From a recent report,
“Without action to deliver 1 Gigatonne (Gt) of negative emissions globally by 2025, keeping global warming within the Paris Agreement target of 1.5°C cannot be achieved,” said the report by the Coalition for Negative Emissions (CNE), and consultancy firm McKinsey.
Currently, the pipeline of projects in development, not even in service, globally, is 150 million tonnes.
Policy Wonks
Before starting on the fascinating area of policy development in removal, I should note that I hate the phrase policy wonk. I know I have used it twice now, but we need to develop a better name for people who care about the intricacies of public policy. Wonk is overused to the point of being meaningless. Anytime anyone expresses a shred of interest in a public policy position, someone invariable refers to them as a wonk.
There has never been a better time and place to be in carbon removal policy. The momentum in the space can be measured in the billions. The infrastructure act recently passed in the United States specifically delivered $3.5 billion to one carbon removal technology, direct air capture (DAC). The department of energy (DOE) will use that money to create four regional DAC hubs. These will serve as demonstration projects to drive down costs curves, soft costs and increase learning rates. Alongside the hubs, the DOE can give our prizes of $100 million and $15 million for commercial and pre-commercial DAC facilities. AND there’s billions more for carbon management infrastructure, pipelines, storage, and monitoring reporting verification (MRV) to ensure the carbon stays where we put it.
And that is just one bill. The build-back better act (BBBA) has monies associated with carbon storage in the form of a tax credit called 45Q with a direct call out for DAC and money associated with the government procurement of low-carbon materials.
And that’s just the federal government of the US! As noted in the CDR news above, the state of NY introduced a bill to procure carbon dioxide removal services. And that is huge. The carbon market is limited, and having a fixed contract with a state government can de-risk technologies for investment.
The EU has had a head start on removal, as our transatlantic neighbors have a carbon pricing system. They are now working on putting together a carbon dioxide removal certification scheme (Not all removals are created equal—more in a later post on standardization of CDR technologies) and Luxembourg is creating a negative emissions tariff!
Japan has created a “Moonshot” program to accelerate money and research into carbon removal technologies. Countries around the world are taking carbon removal seriously, and this trend will only continue.
And that’s just international government work! There is a growing ecosystem of policy organizations looking to carbon dioxide removal policy (Carbon180, Clean Air Task Force, ClearPath, RMI, WRI, NRDC, and the list goes on). Some have traditionally worked on carbon removal policies; some are gaining expertise as the policy space becomes more fertile, but all are working towards a carbon removal future.
My takeaway from the momentum is threefold:
1. As stated earlier, we need it. CDR policy has been historically underserved compared to renewable energy policies. As the need for removals becomes more apparent, developing policies that encourage rapid deployment is more pressing.
2. CDR policy is to be used as a tool alongside emission reduction policies. We cannot remove our way out of severe climate scenarios, and we cannot emit our way out either. These two strategies must work together to achieve the best results.
3. It has bipartisan support. This makes it for me. Very few issues can reach across the aisle, and carbon removal is one. It has environmental benefits; it creates jobs, spurs innovation, fosters stewardship of the land, and the suite of technologies plays well across the country, i.e., Ocean sequestration in the North East vs. soil management for farms in the Great Plains.
Investors
For my entrepreneurs, investors, and tech nerds, it’s also effortless for you. You can do well by doing good. The amount of money flowing into carbon dioxide removal is growing, and the calls for more money are loud, really loud.
The business ecosystem for CDR is growing partly because of national-level incentives, like the innovation money for DAC hubs in the latest infrastructure bill in the US and from the pull of private industry. Companies like Stripe, Microsoft, Shopify, and BCG are leading the way in purchasing tonnage from a wide variety of CDR technologies. You’ve even got individuals like Elon Musk offering $100M in prize money for CDR technology. Right now, CDR has venture capital firms investing hundreds of millions.
The CDR business space is maturing, which will accelerate, especially with a literal or de facto carbon price. Currently, revenue streams are limited to private purchases, storage-based federal tax incentives, and products that use carbon as a feedstock. So, you can make money by creating CDR tech, investing, and even making products from the same carbon that is captured, like vodka. Seems like the rare, win+win+win.
Next week: Scandal, Controversy and Healthy Skepticism
Learn
https://longitudinal.blog/co2-series-part-2-co2-removal/ incredible blog post
Follow
https://twitter.com/cleanaircatf for policy
https://twitter.com/CarbonEngineer for business excellence
https://twitter.com/klaus_lackner the OG of CDR academia
Thank you Jack, very pertinent info to build on for everyone interested in solving this issue. VP