There is no net zero without carbon removals. CUR8 is a recognised leader within carbon removals — we build diverse portfolios that champion nature and technological pathways to reach gigatonne scale and create lasting equitable and environmental co-benefits.

We've learned that organisations are best able to engage with carbon removals when the whole organisation is brought on board. This can involve engaging a much wider range of functions including sustainability, finance, marketing, and risk. This blog is the first in our carbon removal literacy series, designed to support this broader group of stakeholders to understand the role of carbon removals in a company's net zero strategy, and the associated business risks and opportunities.

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The Voluntary Carbon Market (VCM)

The Voluntary Carbon Market (VCM) has been the most impactful mechanism for financing climate action over the past 20 years. The voluntary carbon market emerged around 2006 as a way to provide additional funding to projects that support global carbon emissions efforts, and that faced scaling challenges without additional finance. A framework of registries, project methodologies, third-party verifiers and validators have enabled project developers globally to implement and scientifically validate carbon credits for sale to the private sector. To date, the VCM has verifiably avoided 4.3 billion tonnes of CO2e from entering the atmosphere and removed 144 million tCO2e from the atmosphere.

With global scientific consensus stating that we will require +10 billion tonnes of annual carbon removal from 2050, we need to rapidly scale the carbon removal market 70x over the next 26 years.

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What is Net Zero?

The Intergovernmental Panel on Climate Change (IPCC) defines Net Zero as: "Net Zero emissions is when anthropogenic emissions of greenhouse gases (GHGs) to the atmosphere are balanced by anthropogenic removals over a specified period."

The Science Based Targets initiative (SBTi) further defines Neutralisation as: “Measures that companies take to counterbalance the climate impact of unabatable (i.e., residual) GHG emissions which are released into the atmosphere at and after net-zero target date through permanent removal and storage of CO2 from the atmosphere."

If you’ve heard of “offsets,” it’s important to know that those are different from carbon removals. Offsets compensate for emissions by funding projects that reduce or avoid CO2 emissions elsewhere, but they don't directly remove CO2 from the atmosphere. Carbon removal, on the other hand, involves removing and permanently storing CO2, which is necessary for achieving net zero emissions.

Based on these definitions, remaining global carbon budget science, and predicted decarbonisation pathways, we can estimate the required scale of carbon removal by 2050. If we successfully decarbonise global emissions by 90% (from a 2018 baseline), we will need a carbon removals market that delivers 10 billion tonnes of in-year emissions removal. Understanding this scale and the current size of the carbon removals market reveals how necessary it is to invest now to build market capacity.

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A new era for the Voluntary Carbon Market

The shift in focus towards long-term net zero presents a divergent future for carbon credits based on credit type. 

Avoidance credits, such as those from forest protection, improved cookstove, and renewable energy projects, are ineligible for neutralising corporate emissions. Instead, they should be supported as contributions towards global efforts to limit further GHG emissions. For corporate neutralisation claims, whether product-based, operational, activity-related, or net zero, residual footprints must be matched by carbon removal credits: what goes up, must come down.

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What is a carbon removal credit?

A carbon removal credit is issued to a project for every tonne of carbon taken out of the atmosphere due to the project activities. The credit is issued on the chosen standard registry upon verification and validation and is transferable until retirement by an end user.

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What are the methods of carbon removal?

Carbon removal methods range from nature-based activities like tree planting to technology-based activities like Direct Air Carbon Capture and Storage (DACCS). All types of methods are important, and must be pursued concurrently as the market develops. For a carbon removal methodology to be additional and credit-worthy, it must demonstrate that the carbon would not have otherwise been removed and that it will stay out of the natural carbon cycle for an extended period.

The time the carbon is certifiably removed from the atmosphere gives the project its durability score, informing buyers of the permanence of their purchased credits. Methods that store carbon in biological forms are more exposed to reversal risks, such as fires, decomposition, and leakage. Methods that store carbon in geological sinks, like Enhanced Rock Weathering, have lower reversal risks and therefore score much higher in durability.

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How long does it take to remove carbon from the atmosphere?

No method can instantly remove carbon: they all have process-specific drawdown speeds. Nature-based projects typically have the longest drawdown timeframes, while high-tech solutions may be able to sequester carbon in hours to days. Drawdown speed can vary at a project level due to local conditions. 

Additionally, the crediting process, including monitoring, validation, and approval at the registry, may add a further 6-12 months to the overall timeline.

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How do I assess the quality of a carbon removal project?

Key factors to consider include:

• Durability: The length of time carbon remains sequestered, with a longer certified durability score indicating a higher integrity credit.
• Delivery risks: Potential issues that could affect project implementation or credit issuance, e.g. developer experience, project finance, political or natural risks.
• Additionality: Ensuring the carbon removal would not have occurred without the project implementation.
• Measurement, Verification, and Validation processes: Rigorous monitoring, reporting and verification practices with third-party checks in place to confirm project claims.

CUR8 specialises in a robust due diligence process around carbon removals and helps carbon removal buyers when assessing project quality.

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Who is investing in carbon removal?

As of July 2024, there are around 350 known buyers of durable carbon removal who have committed $3.3bn for 14.6m tonnes of carbon removal, across methods with 100+ year durability. Durability refers to how long the carbon stays removed.

The top 50 buyers account for over 90% of all purchased volumes, with Microsoft leading, having purchased 8.2m tonnes. Other top ten buyers include Spotify, Amazon, Airbus, Swiss RE, and JP Morgan Chase.

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Why are they buying carbon removal credits?

Motivations for buying carbon removals include:

• Achieving net zero goals: Companies use carbon removal to balance unavoidable emissions in their net zero strategies.
• Neutralising hard-to-abate emissions: Addressing emissions from sectors where direct reductions are challenging.
• Aligning with net zero activities: Supporting broader climate action beyond direct company operations.
• Making catalytic market contributions: Early investments help scale up the carbon removal market for future needs.

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What are the advantages of investing early?

By purchasing carbon removals now, organisations can:

• Secure favourable suppliers: Establish relationships with high-quality projects before demand increases and volumes sell-out.
• Gain commercial advantages: Benefit from lower prices and better terms in early-stage markets. Prices are expected to rise, and supply may become scarce as demand increases. Early investment helps secure favourable terms and positions companies as leaders in sustainability efforts.
• Utilise the balance sheet effectively: Strategically allocate resources for long-term sustainability goals. Spread the cost of net zero delivery and develop a ring-fenced sustainability budget.
• Educate internal stakeholders: Build understanding and support for carbon removal within the organisation.
• Demonstrate climate leadership: Position the company as a forward-thinking leader in sustainability. Secure reputational advantages associated with the pioneer carbon removals buyers.
• Future-proof business models: Prepare for upcoming regulations and changing market expectations. Demonstrate to shareholders, employees and customers that your business has a vision for sustainable growth.

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How do I invest with confidence?

• Set company principles in line with net zero goals: Separate workstreams for the Measure, Reduce and Remove pillars of Net Zero, challenge and report on your progress annually. Establish clear guidelines for carbon removal investments aligned with overall sustainability strategy.
• Build a removals project investment portfolio, optimising for durability: Diversify investments across different removal methods, and select for highest durability and lowest non-delivery risks within each method category.
• Seek support in assessing project integrity and mitigating delivery and investment risks: Engage experts to evaluate projects and develop risk management strategies.

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Conclusion

The carbon removal market is poised for rapid growth and evolution. As companies and organisations increasingly recognize the vital role of carbon removal in achieving net zero, early movers have the opportunity to shape the market, secure favourable terms, and establish themselves as climate leaders. However, this journey is not without challenges. Careful consideration of project quality, investment strategies, and long-term commitments is essential. By embracing carbon removal technologies and supporting their development, we can accelerate efforts to reverse the effects of climate change. The time to act is now – the decisions we make today will have far-reaching impacts on our ability to address climate change and create a more resilient world for generations to come. To de-risk your net zero future, get access to the best suppliers, volume discounts, and industry leading insights, contact CUR8.

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