An overview of carbon dioxide removals

Our collective failure to act quickly enough on reducing emissions means that to avoid catastrophic climate change we are increasingly reliant on carbon dioxide removals (CDR). CDR means exactly what it sounds like: intentionally removing molecules of CO2 from the atmosphere, reducing the atmospheric CO2 concentration, to then store it durably.

Constantly, this process happens naturally around us: the ocean absorbs CO2, CO2 is involved in chemical reactions like rock weathering and most famously of all - trees and plants absorb huge amounts of CO2 during photosynthesis. 

Human activities that contribute to enhancing these natural carbon stocks are widely implemented (e.g. reforestation practices). But the scale of the problem we’re facing means that we cannot fully rely on nature to absorb enough CO2. Therefore, the need to develop and scale technological CDR (also referred to as “engineered CDR”) has arose.

Carbon markets are one of the key mechanisms to fund both nature-based and technological CDR activities. However, without wide policy support and greater investment, the current extent of funding is unlikely to achieve the necessary scaling of novel, mostly technological, CDR solutions. Moving forward, data transparency will be key to unlocking both public support and carbon finance.

Emissions context - a recap

In the past two centuries, the concentration of CO2 in the atmosphere has risen from 280 to over 410 parts per million (ppm), and this number continues to increase rapidly. The IPCC, which combines the work of leading global scientists, estimates that to limit climate change to 1.5 degrees we not only need to reduce emissions rapidly but reach net negative emissions around 2050.

To hit this goal, it is estimated the scale of CDR should be as high as 10 billion tonnes (Gt) a year by 2050, but the final figure would really depend on the speed at which we reduce emissions.

On the one hand, there is no doubt that even with emission reductions occurring far faster than we have ever achieved before, some emissions are unavoidable. This is particularly the case for industries without developed, scalable low-emission technologies, such as aviation and cement.

On the other hand, it is critical that CDR does not distract or deter nations and companies from reducing emissions. As the emission pathways above demonstrate, cutting emissions should be prioritized; CDR should be reserved to compensate for, at a minimum, truly unavoidable emissions and to enable net negative emissions in the latter half of this century when we are likely to have overshot 1.5 degrees.

Types of CDR

CDR solutions include a variety of activities. Although there is no single way of classifying CDR activities, we often differentiate between two broad categories: nature-based and technological CDR (or a combination of both). 

These are some of the main activity types under each of them:

CDR state of play

Currently, CDR removes about 2 Gt of CO2 from the atmosphere every year and conventional nature-based CDR solutions (IFM and ARR) are responsible for 99.9% of it. 

Novel CDR solutions only account for 0.002 Gt removals of CO2 each year; mainly through BECCS and, in a smaller proportion, from biochar activities. 

Other novel solutions like DACS are yet to make a meaningful contribution: as of 2022, there were 19 DACS plants active, capturing a total of 10,000 tonnes of CO2 annually.

But the growing interest in novel methods indicates these proportions are set to change in the coming years. Also, two main challenges associated with nature-based CDR have contributed to growing interest in technological CDR:

1. Land use. Scaling forest-based removals to the level needed by 2050 would need huge areas of land. Even reforesting land equivalent to the whole of the US is unlikely to be enough. There are huge competing pressures for land use, particularly coming from the need for agricultural land to feed the world’s growing population. BECCS also requires land to grow biomass, so its scale is similarly limited. 

Novel technological approaches to CDR such as DACS have the potential to require much smaller amounts of land to achieve removals at the necessary scale.

2. Permanence. Carbon stored in vegetation is vulnerable to being converted back to CO2 if the vegetation dies. Climate change and human disturbance are increasing the risks to forests through fires, droughts, floods and disease. 

Technological CDR solutions can provide longer and more certain permanence, or durability, of the stored carbon. 

Despite these challenges, we cannot forget that, when done well, nature-based CDR approaches can bring a wide range of co-benefits such as contributing to combating the global biodiversity crisis. 

In addition, technological CDRs are very complex. For example, a significant challenge with DACS is the high costs associated with it. Beyond the costs of research and development, DACS plants require expensive materials and use huge amounts of energy. 

For a plant built today, it is estimated to cost between $125-335 to remove each tonne of CO2. In contrast, nature-based removal credits trade at around $15/tonne.

Given the current potential of available solutions in comparison to future needs, both nature-based and technological CDR will be essential tools on the road to global net zero. We should continue to implement and expand traditional nature-based CDR and, in parallel, invest in innovating and scaling technological CDR.

Policy support for CDR

Many countries have indicated their intention to use CDRs to achieve their climate goals. Over 90 countries have set net-zero targets - the ‘net’ indicating a reliance on CDR to some extent. 

Also, within the Paris Agreement context, countries have explicitly communicated their intentions to rely on CDR through their Long-Term Strategies (LTSs). Out of the 62 LTSs that countries have voluntarily submitted, 95% have included a role for CDR. 

But in order for CDR to reach the levels we need, significant investment and wider policy support are needed. This can include stimulating demand, funding R&D, or providing financial incentives to develop, implement and scale removal technologies. 

Luckily, across the world, there are already an increasing number of policy interventions to support CDRs. 

These are only some examples of the multiple initiatives emerging around the world —

International

International carbon markets, established through Article 6 of the Paris Agreement, can provide significant funding for CDR. In particular, Article 6.4 can play a key role in the CDR space, not only by channeling the most needed finance but establishing a precedent for the global standardization of CDR activities. 

Although the final rules for Article 6.4 are yet to be defined, CDR has already secured its space within the mechanism and decisions on removals and accepted methodologies are expected at COP28.

US

The US has been a global leader in supporting and hosting DACS projects in particular. The 2022 Inflation Reduction Act (IRA) updated the existing 45Q tax credit scheme and resulted in  DACS receiving even greater tax credit benefits. Also, the Government has committed to invest $3.5 billion over 5 years in technological CDR through its Regional DACS Hubs program.

EU

The EU’s flagship removals initiative is the voluntary Certification Framework for Carbon Removals (CFCR). It establishes criteria for high-quality removals and aims to incentivize uptake. The current proposal recognizes carbon farming, permanent storage (e.g. BECCS, DACS), and storage in products.

The European Commission envisions that CDR will allow the EU Emissions Trading Scheme (ETS) - its compliance carbon cap and trade system - to achieve a net-negative cap by 2045. The CFCR is seen as the first step towards the inclusion of CDRs in the EU ETS and a report is expected in 2026 on future legislation on this matter.

UK

The UK Government is showing increasing interest in CDR, for example, noting an increasing role for CDR after 2025 in its Sixth Carbon Budget published in 2020 and committing to invest £20bn over 10 years in CCS and CDR initiatives. 

In March 2022, the UK Government announced a call for evidence to explore the role of UK ETS as a long-term market for CDR, including the potential inclusion of nature-based removals. The government has stated its position that the UK ETS is an appropriate long-term market for CDR. 

Future needs

These policies are a positive step towards scaling CDR but further efforts from both the public and the private sectors are needed. Governments should continue to increase direct support for novel and technological CDR approaches while creating incentives for private-sector investment in CDR. 

One of the key aspects to ensure scalability is to build trust in the industry, which can only be achieved, among others, through data transparency. It is important to remember that technological CDR credits face quality risks just like other carbon credits but currently there is a lack of data to assess the impact of projects. This problem needs to be solved to unlock better financing from both the public sector and carbon markets.

For this reason, Sylvera hasn’t yet rated any technological CDR projects. Our analysis concluded that there is not sufficient data available for biochar and DACS projects to produce a full Sylvera rating. Therefore, we have published white papers to help project developers and buyers understand how we would approach assessing biochar and DACs projects.

Technological CDR is a nascent market, but in the interest of developing trust and achieving maximum climate impact, improved data transparency should be a priority going forward. 

‍For information about how Sylvera conducts quality assessments of other CDR projects, see our rating frameworks for ARR and IFM (hybrid CDR and avoided emissions). You can also delve deeper into the heart of CDR in our latest briefing ‘Navigating the Carbon Removal Landscape: Understanding Tech-based CDR’.