The following article has been co-produced with GreenPoint Partners, a New York private equity firm that focuses on the intersection of sustainability, real assets and technology. The Elucidate team are thankful for the opportunity to work closely with such a successful and pioneering company, and we hope to bring more co-produced articles in the future.

Note: This is not part of The Climate Project. Henry will be releasing a separate article on Carbon Removal as part of his series, so stay tuned for that!

For good reason, our ears are becoming increasingly drenched with talk of climate change. Wildfires rage through Australia, floods terrorise South Asia, droughts sap East Africa, El Niño chokes Central America. Climate change’s destructive potential is no longer theoretical. It is a real-life nightmare impacting different communities right now.

The UN Intergovernmental Panel for Climate Change (IPCC) has conceded we can no longer prevent climate change. Instead, we must fix it before it’s too late.

Prior to the industrial revolution, our planet had an atmospheric carbon concentration of 280 parts per million (on average, 280 of every million molecules in the atmosphere were carbon dioxide). In the 21st century, we have an atmospheric carbon concentration of over 420 parts per million. The earth’s natural carbon cycle cannot regulate such high concentrations of atmospheric carbon nearly fast enough. And reducing emissions to net-zero doesn’t fix the extra 140 carbon molecules per million still up there.

So, even if we never released another ounce of carbon again, the effects of climate change would still be devastating for our societies. At this stage, only in the best-case scenario of peaking emissions within the next 3-years would we be able to keep temperature rises below the COP26 target of 1.5˚C. Temperature rises above this level will lead to unprecedented natural disasters and habitat destruction.

It is no longer sufficient just to reduce emissions to net-zero by 2050. We need to go net negative. In fact, most 1.5˚C pathways involve both ending almost all greenhouse gas emissions and permanently capturing and removing up to 50% of current annual emissions per year by 2070.

The latest reports from the IPCC advocate for both aggressive carbon removal and the rapid adaptation of our societies to the changing climate.

To bypass the worst changes to our environment, we need to start sucking the carbon back out of the air. And we need to do this on an enormous scale.

In addition to outlining the problems associated with this grand challenge, we will dive into a few solutions we see as promising technologies in this nascent market.

What is Carbon Removal?

Broadly, there are three processes capable of capturing and storing atmospheric carbon dioxide: biological, geological, and technological.

1. Biological carbon removal is the absorption of carbon dioxide by living organisms through photosynthesis. The captured carbon is then stored in vegetation, soils and oceans. This is often achieved through tree-planting, but more innovative natural approaches such as kelp and algae farming are becoming very popular.

2. Technological carbon removal is exactly what you think it is — using modern, science-backed, solutions to draw carbon molecules from the air. For example, Direct Air Capture (DAC) is the process of sucking in atmospheric carbon dioxide (through huge fans) and producing a concentrated stream of carbon or carbonate solution. The benefit of DAC is that the carbon removed can then be used to make plastics and polymers. One start-up, Aether, even converts captured carbon into artificial diamonds.

3. Geological carbon removal is the process of storing carbon in underground geological formations (often drained oil wells or sections of porous rock). If this carbon is captured from a point source such as industrial or power plants, it is Carbon Capture & Storage (CCS). However, geological storage can follow carbon removal from the atmosphere through DAC as well.

These methods vary significantly in cost per tonne sequestered, as displayed in the following graph. However, as we will see, cost is just one factor contributing to the success of a carbon removal process.

Carbon Markets & Carbon Credits

You may ask: is anyone actually incentivised to capture and remove carbon? After all, if this is going to work, there need to be strong economic incentives in place. So far, the solution we have come up with is carbon markets.

Now there are two types of carbon markets you are going to need to know about:

1. Involuntary carbon markets, where credits represent the right to emit one tonne of carbon. Governments control the supply of credits in the system, thereby setting a cap on the emissions for that particular nation or region. In theory, they gradually reduce the supply of carbon credits overtime to limit emissions.

2. Voluntary carbon markets, where emitting companies satisfy ESG-conscious investors and consumers by voluntarily buying credits from net removers of carbon to gain ownership of negative emissions. For voluntary markets to incentivise investment into carbon removal, there needs to be a natural demand for credits from emitters. Only when enough capital is on the line will enough managers take carbon offsetting seriously.

Almost daily a new enterprise is pledging to be carbon neutral over the next 50 years. Some of the largest companies in the world have already done so, including Amazon, Microsoft, Visa, Coca-Cola, and Mercedes-Benz. As this movement accelerates, demand for voluntary carbon credits and their price will increase significantly.

The Problems

However, carbon removal technology is still extremely nascent. As it stands, there are many problems that mean we will struggle to achieve the scale necessary to keep temperature rises below 1.5˚C.

These problems can be split into four broad buckets: the economic problem, the market problem, the method problem, and the greenwashing problem.

1 — The Economic Problem

The most glaring problem with carbon removal is how expensive it is.

As of 2021, DAC costs between $250 and $600 per tonne. To put this in context, the price of a one-tonne carbon credit has yet to exceed $100 in any major carbon market. Why invest in carbon capture when the cost of removing a tonne of carbon is greater than the potential revenue on the carbon market?

To keep temperature rises below 2˚C, we need to remove about 7 billion tonnes per year by 2040; this number rises to around 17 billion by 2050. Using DAC to remove 17 billion tonnes of carbon in 2050 at a cost of $200 per tonne would require roughly $3.5 trillion p.a. — the current GDP of Germany. And that’s just the raw cost for one year - not including infrastructure and maintenance costs!

This problem might seem completely insurmountable. However, it’s useful to remember renewable energy seemed completely insurmountable only 30 years ago. But innovation and persistence reduced costs and made processes more efficient. Wind and solar are currently the cheapest (by levelised cost of energy) and are soon to be the most widespread sources of electricity globally. Such advancement bodes well for the nascent carbon removal industry.

Just because the economics don’t work now does not mean they never will. And, for the moment, carbon removal techniques such as forestry, regenerative farming and open-ocean biomass are considerably cheaper than DAC.

2 — The Market Problem

To incentivise innovation in the carbon removal industry, the prices of carbon credits need to rise. To get prices to rise, carbon markets need to become fairer and more efficient. There are two glaring problems with carbon markets right now that need to be addressed.

The first is that the variation in credit quality isn’t accounted for in credit prices. Credits are not made equal!

1. Carbon credits don’t all do the same thing. Avoidance credits are granted to projects that actively prevent carbon from being emitted in projects that would otherwise have emissions. The credits have no net change on the atmospheric carbon level. On the other hand, removal credits are awarded for carbon pulled out of the atmosphere. These credits actively see carbon pulled from the atmosphere.

2. Some credits are far more permanent than others. There are a number of CCS projects that store carbon deep underground with the permanence of tens of thousands of years. On the other hand, techniques such as forestry have the permanence of as little to 10 years. Wildfires can easily tear through tree plantations, releasing all the atmospheric carbon sequestered in the trees and soil (see the method problem for more detail).

3. Some carbon credits have a huge degree of measurement uncertainty. A 1-tonne carbon credit could actually be a 0.5 tonne (or even a 2 tonne) carbon credit. For example, the amount of carbon removed in algae and kelp farms can be notoriously hard to measure.

4. The carbon footprint of a carbon credit can vary enormously. Carbon credits created from DAC require a significant amount of energy. According to research published in Nature Communications, the energy required to power DAC machines in 2100 under a 2˚C pathway, will be equal to the current annual energy demand of the USA, the EU, China and Japan, combined. Compare that to credits created from planting which has next to no carbon footprint. Markets must ensure these credits are priced in a way that fully recognises these stark differences.

5. One must consider the additionality of a carbon removal project. Additionality is the degree to which the project wouldn’t have happened had there not been a buyer of the carbon credit. If the carbon offset was going to happen regardless, and the off-setter is just trying to earn extra cash, then the credit should be priced accordingly. A carbon credit awarded for avoiding deforestation is far more additional for a forest actually at risk of deforestation than one relatively safe from deforestation.

Carbon markets will eventually be able to internalise these factors into a standardised pricing system (as financial markets do), but we are not at that point yet.

The second problem with carbon markets is that there is little regulation. This not only means there are no standardised metrics for the quality of the credits, but it also means fraud is rife. Many carbon off-setters have been accused of double selling their offsets through multiple credits.

In California’s forestry carbon offset program, 30 million tonnes of carbon was over-credited by off-setters, representing a fraud of $410 million. For context, this was nearly 30% of California’s entire offset program. Regulation needs to be brought in for there to be confidence and trust in carbon markets.

3 — The Method Problem

As we know, most firms and organisations have opted to offset emissions through planting (or pledging to plant) enormous forests to capture atmospheric carbon. However, due to its scale, forestry is often implemented through monocultural planting — that is planting one tree species for thousands of acres rather than mixed-species (natural) planting.

Monocultural planting is merely a band-aid solution and provides a great example of the method problem: Effective and sound carbon removal methods are too often substituted with cheaper and less effective methods when implemented at scale. These methods are not quality scalable, meaning that the quality of carbon capture deteriorates with scale.

A recent article in the top science journal ‘Nature’ found that most monocultural forests release all captured CO2 back into the atmosphere within 20 years of planting. By comparison, multicultural planted forests are far less likely to release captured carbon back into the atmosphere, also capturing 20% more carbon through their foliage and fungi. The relative shortness of monocultural forests’ lifespan comes down to two reasons:

1. Most monocultural afforestation occurs in developing economies where businesses use carbon credit revenue to build large timber and rubber plantations, with the purpose of harvesting the trees within a decade of planting.

2. Monocultural forests are extremely fragile ecosystems, with considerable risks. Extreme weather events (like bushfires) are both more likely and far more devastating in monocultural forests. Moreover, just one new plant disease variant is capable of wiping out an entire monocultural forest. We don't want to over-expose our climate change solution to disease-prone forests in the same way the Irish food supply was over-exposed to disease-prone potatoes in the 1800s.

This has been one of the main criticisms of the ‘Bonn Challenge’, a global effort to reforest 350 million hectares of deforested land by 2030, as more than half of all areas committed to afforestation will be monoculturally planted.

All this means companies often do not get their money’s worth from the carbon credits they purchase. Nor do consumers get their money’s worth at checkouts when rounding up to the nearest dollar to plant a tree in Brazil.

Forestry has another significant problem: small capacity. Although we have deforested vast swathes of land in the past, a lot of this land has been for agricultural use. The world’s population is growing rapidly, meaning we need space for food production. This places a natural cap on the amount of land able to be used for carbon removal, unless we are able to make significant strides with adoption of techniques and technologies used to radically decrease land needed for food production. Nevertheless, it is valuable to explore less land-intensive decarbonisation solution.

4 — The Greenwashing Problem

Greenwashing is the act of overstating the environmentally friendly nature of a firm or organisation’s practices.

In the new green economy, companies are incentivised to show they are taking sustainability seriously, driven largely by investors and customers. In many cases, corporations may struggle to back up their commitments to sustainability given the tension between ‘bottom line’ profitability, and the cost of implementing sustainability solutions. In some cases, this may lead to an overstatement of initiatives (one form of greenwashing). In other cases, companies may genuinely want to implement sustainability programs effectively, but don’t have the market clarity, resources to decarbonise, or understanding of the quality of offsets. Fears of greenwashing accusations could, in these cases, lead to inaction.

In ideal circumstances, companies would actively decarbonise, rather than simply pursue offsets for ongoing emissions. We expect that challenges with decarbonisation will lead to a greater focus on offsets in the near term.

To pursue decarbonisation at a larger scale, it will be critical for emitters to have the technology and tools to both measure and monitor their output, as well as the economic incentives to enact these programs in the first place.

Carbon removal that works

I hear you thinking: “clearly carbon removal is not that great!”.

Yes, carbon removal does have its problems. But the fact of the matter is, that there is no solution to climate change that doesn't involve carbon removal. We must make it work!

And while carbon removal has its problems, they are solvable. The startup space is pioneering new technologies and methods that greatly shorten the list of problems.

Open-ocean biomass and regenerative agriculture are standing out as two big spaces where solutions can be made.

Open-Ocean Biomass

Carbon removal through kelp farming has the potential to be one of the lowest cost and largest-scale carbon removal solutions available to the market. The approach is unique in the way that it scales and accelerates a naturally occurring process, rather than looking to create a new ‘system’ of capture.

Kelp naturally accumulates biomass through photosynthesis and then sinks, sequestering its embodied carbon under the extreme pressure of the deep ocean. It is a fantastic vessel as its dry mass is approximately 30% carbon (only slightly below trees at 50%), growing quickly and abundantly in most marine geographies. When grown correctly, kelp can sink below the 100m depth level needed to ensure removal of up to 1000 years. Permanence!

Carbon naturally cycles between the atmosphere and oceans; with an annual flux of around 100 billion tonnes of CO2. It is estimated the deep sea has a carbon capacity of around 37 trillion tonnes of CO2, yet only 0.001% of that is utilised annually by naturally occurring oceanic carbon sinks. Therefore, there is plenty of room to capture and remove carbon with ocean-based techniques. Large capacity!

Unlike other solutions that require land where best use can be contested, open-ocean farming can occur in a much larger area with low competition and environmental impacts. Quality scalable and low carbon footprint!

Recent developments in kelp sequestration have led to estimates that the method can remove carbon at a substantially lower cost than DAC, the most obvious competitor on a permanence basis. The key to growth here will be engineering and technological advancements to drive economies of scale and lower the cost of production. Economical!

Open-ocean biomass largely solves the economic and method problems and goes a long way in solving the market problem. However, the measurement uncertainty in kelp carbon removal is the big hurdle preventing kelp carbon farming from expanding.

Regenerative Agriculture

Likewise, regenerative farming offers a great solution by creating carbon credits through optimising the functioning of solar, water, soil, and carbon cycles on agricultural land.

Landowners alter practices and ongoing operations for a cut of the carbon credits raised such that natural vegetation can regenerate and increase carbon capture potential. Such changes include the suspension of land clearing, the introduction of responsible grazing practices, measurement of biomass growth, and prevention of methane emissions. Avoidance and removal!

Carbon credits provide farmers with alternative income, which allows land managers to make more sustainable decisions and further improve the sustainability of their farming. As such, provided credit prices are sustainably high enough, regenerative farming should beget more regenerative farming. Quality scalable!

Government-backed programs in areas with a strong rule of law and consistently applied standards help ensure the unit economics of regenerative farming work. Wyuna Regen, an Australian regenerative farming startup, is looking to leverage the opportunities provided by The Australian Carbon Credit Unit (ACCU) program to transform large swathes of northern NSW and southern QLD into regenerative farming hubs. The graph above shows how economical Wyuna Regen’s carbon removal techniques are — supporting the Australian countryside in becoming both a food bowl and a carbon sink! Economical!

Successful implementation of conservation efforts in farming through carbon credits solves the economic and method problems whilst decarbonising an irreplaceable industry. Again the big problem is the measurement uncertainty surrounding the venture. In fact, innovation in the carbon measurement space will be crucial to the increased development of carbon capture techniques.

Where are we left?

There is no solution to the climate change issue that doesn't involve carbon removal. Without it, we will not only miss our emissions targets, but we will also miss them by decades, causing potentially irreversible and self-perpetuating damage to our planet. Though the carbon capture space is an extremely nascent and mismanaged field, it is also an irrefutable necessity. We have to make it work.

While the carbon removal space has some big problems, they are solvable, and we are seeing those solutions emerge right now. Over the coming decades, the cost of carbon removal will decrease, carbon markets will become more heavily regulated and standardised, and higher carbon credit prices will support more expensive removal technologies.

But the realisation of these goals in time to save our planet will be extremely difficult and will require a concerted effort from many different stakeholders. Most importantly, governments need to subsidise carbon removal technologies, build and regulate robust carbon markets and must consider more radical policies like cap and trade markets or carbon taxing.

Trust Albert

Carbon removal isn't a silver bullet, but it's a very important piece of the current climate puzzle. Without it, we are fighting blind. With it, we stand a fighting chance.

Shortly before his death, Albert Einstein told us:

“The world will not be destroyed by those who do evil, but by those who watch without doing anything.”

When he made those comments, the knowledge and pain of climate change were not on his mind. That evil hadn’t quite presented itself yet. Yet he perfectly encapsulated the 21st-century climate crisis.

Trust Albert. We need to do something — and carbon removal is a big part of that something.

Declaration of possible conflict of interest: GreenPoint invests in sustainability strategies including regenerative agriculture and open ocean biomass recapture

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