The existing global market for products using carbon as an input is valued at US$6t, according to the think tank Carbon180. Carbon-negative building materials, plastics, textiles, and carpet tiles—which capture more CO2 than is emitted producing them—are entering this market. Companies have a growing opportunity to incorporate carbon removal into their product strategies, supply chains and operations.
Nature-based carbon removal, such as regenerative agriculture, reforestation and afforestation, seek to harness and restore nature’s ability to remove CO2 from the atmosphere. The carbon sequestered in the soil or trees provides the basis for verified carbon removal credits. Revenue from the credits supports agricultural producers, while carbon removal projects provide additional environmental benefits (e.g., protecting local watersheds) and long-term social value (e.g., protecting traditional cultures and livelihoods). By supporting carbon removal projects, companies can help forge a sustainable legacy in many vulnerable communities they serve and operate in.
Financing carbontech’s growth
Scaling while reducing costs is a key challenge, but a number of large corporations are partnering with carbon removal companies to accelerate development, and carbontech innovators have raised over US$2b in venture financing according to the Circular Carbon Network. One indicator of carbontech scale-up is the US$100m financing round received by the Swiss direct air capture company Climeworks at the end of 2020.
It is likely that financing of carbon removal will be supported by the implementation of national climate plans and green recovery programs. According to the United Nations Environment Programme’s Emissions Gap Report 2020, 126 countries representing 51% of global greenhouse gas emissions have adopted or announced net-zero goals. The share of covered emissions will rise to 63% if the United States joins this group as expected under the US$2t Biden-Harris climate plan, which includes negative emissions technologies in its proposed investments. Similarly, carbon removal will likely benefit from the €1t to be spent on decarbonization under the European Union’s Green Deal.
Creating value from carbon
Carbon removal is driving a broader question in sustainability thinking: is carbon neutrality an adequate ambition? For heavy emitters, carbon removal provides another tool to accelerate the transition to carbon neutrality. But, for many global companies, the ability to capture and revalue carbon opens a path to going a step further, becoming carbon negative, removing more CO2 from the atmosphere than they are responsible for. Microsoft, Ikea and AstraZeneca are among the companies that have committed to using carbon removal to achieve the ambition of carbon negativity.