In background conversations, several industry insiders I’ve spoken with acknowledge that the number of carbon removal companies is simply unsustainable, and that a sizable share will flame out at some point.
The sector has taken off, in part, because a growing body of studies has found that a huge amount of carbon removal will be needed to keep rising temperatures in check. By some estimates, nations may have to remove 10 billion tons of carbon dioxide a year by midcentury to keep the planet from blowing past 2 °C of warming, or to pull it back into safer terrain.
On top of that, companies are looking for ways to meet their net-zero commitments. For now, some businesses are willing to pay the really high current costs for carbon removal, in part to help the sector scale up. These include Microsoft and companies participating in the $1 billion Frontier program.
At the moment, I’m told, corporate demand is outstripping the availability of reliable forms of carbon removal. There are only a handful of direct-air-capture plants, which take years to construct, and companies are still testing out or scaling up other approaches, like burying biochar and pumping bio-oil deep underground.
Costs are sure to come down, but it’s always going to be relatively expensive to do this well, and there are only so many corporate customers that will be willing to pay the true cost, observers say. So as carbon removal capacity catches up with that corporate demand, the fate of the industry will increasingly depend on how much more help governments are willing to provide—and on how thoughtfully they craft any accompanying rules.
Countries may support the emerging industry through carbon trading markets, direct purchases, mandates on polluters, fuel standards, or other measures.
It seems safe to assume that nations will continue to dangle more carrots or wield bigger sticks to help the sector along. Notably, the European Commission is developing a framework for certifying carbon dioxide removal, which could allow countries to eventually use various approaches to work toward the EU goal of climate neutrality by 2050. But it’s far from clear that such government support will grow as much and as quickly as investors hope or as entrepreneurs need.
Indeed, some observers argue it’s a “fantasy” that nations will ever fund high-quality carbon removal—on the scale of billions of tons a year—just because climate scientists said they should (see: our decades of inaction on climate change). To put it in perspective, the DCVC report notes that removing 100 billion tons at $100 a ton would add up to $10 trillion—“more than a tenth of global GDP.”
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