Building a Net Zero Strategy With Carbon Removals
In today’s world, the impacts of climate change are becoming ever more evident, prompting businesses and individuals alike to take meaningful action. The call to reduce carbon emissions and achieve net zero targets is gaining momentum. However, the path to sustainability demands more than just reducing emissions; we must also focus on removing CO2 from the atmosphere.
In this comprehensive guide on building a net zero strategy with carbon removals, we will explore the vital aspects of net zero, including reducing carbon emissions and carbon removal strategies.
What is Net Zero?
Net Zero is a state in which the amount of greenhouse gas emissions that are emitted into the atmosphere are also removed from the atmosphere. The process in which a company or business can achieve net zero emission targets can be achieved by reducing the emissions they are producing (e.g., through switching to cleaner sources of energy) and implementing methods of carbon removal to remove emissions that they cannot reduce.
Over time, the concept of Net Zero has become increasingly important as countries and governments are striving to reduce their carbon emissions to be in line with the Paris Agreement. The Paris Agreement is an international treaty agreement on climate change that aims to hold “the increase in global average temperature to well below 2 C above pre-industrial levels.”
However, just reducing our carbon emissions is not enough to reach these goals and achieve net zero emissions. As such, the rise of carbon removal solutions is becoming an increasingly discussed topic.
What is Carbon Removal?
Carbon removal is the process of removing CO₂ from the atmosphere and storing it away. Currently, there are two main approaches to carbon dioxide removal (CDR): nature-based and engineered solutions (sometimes called permanent solutions) CDR solutions.
Nature-based solutions include increasing the amount of carbon that is stored in nature sinks such as forests, wetlands, or soil through a variety of methods. However, many of these methods have a higher reversal and integrity risk, meaning that if the carbon is stored now for 20, 30, or 100 years, the carbon will then be re-released back into the atmosphere through events such as wildfires.
Permanent carbon removals are solutions that remove carbon from the atmosphere and store it in more long-term storage, such as in the ocean (and eventually into sediment) or mineralisation in underground rock formations or in concrete. There are four main types of permanent carbon removal solutions to consider: direct air capture (and subsequent storage), biomass CDR, ocean CDR, and enhanced weathering.
Why is Permanent CO₂ Removal Important?
By removing carbon from the atmosphere, we can help to slow the rate of climate change. While most companies struggle to reach net zero purely by reducing their carbon emissions, they can attain this goal by offsetting their emissions through the purchase of removals.
Over the past century, we as humans have been releasing an unprecedented amount of CO2 into the atmosphere. While we are currently making efforts and will increasingly make efforts in the future to reduce CO2 emissions, that alone may not be enough to undo the damage that has already been done. Permanent carbon removal solutions offer a way to address the accumulated carbon in the atmosphere and help companies reach their net-zero targets.
What Are The Steps?
1. Adopt a Science-based Approach
Define a science-based climate claim backed by a globally recognised initiative
A science-based claim is a statement that is backed by the latest scientific evidence on climate change. The Intergovernmental Panel on Climate Change (IPCC) has stated that to limit warming to 1.5 C, global carbon emissions need to be reduced by 45% by 2030 and reduced to net zero by 2050.
Several initiatives provide guidance to support science-based approaches and make science-based claims to help organisations demonstrate their commitment to addressing climate change. Initiatives such as the Science Based Targets initiative (SBTi), Climate Action 100+, and Climate Pledge, can help companies reach their goals by providing guidance on net zero emission pathways and strategies.
By defining a science-based climate claim backed by one of these globally recognised initiatives, organisations can also help to drive the transition to build a more sustainable future and a cleaner energy economy.
2. Set Ambitious Reduction Objectives
Set up an ambitious and transparent decarbonisation plan prioritising internal emission reduction
After a company has adopted a science-based approach, the next step is to set up a decarbonisation plan prioritising internal emission reduction. By setting ambitious and transparent reduction targets, organisations commit themselves to going beyond the status quo and making meaningful changes.
Setting reduction objectives involves conducting a thorough audit to identify emission sources and areas for improvement within company operations, supply chain, and infrastructure. This involves assessing scope 1, 2, and 3 emission categories. By adopting cleaner technologies, reducing energy consumption, and encouraging sustainable practices within the organisation, organisations can quickly work towards reducing their carbon footprint.
Transparency plays a pivotal role in the success of an organisation’s decarbonisation plan. By openly communicating their targets, strategies, and progress, they can build trust with both internal stakeholders and the public.
Some critics of carbon removals have noted that offsetting emissions using carbon removals could be considered a “license to pollute”, stating that companies could look to buy carbon removal to reach their net zero targets instead of reducing emissions first and then offsetting the emissions that cannot be further reduced. However, it’s important to highlight that the general view is that companies should prioritise emission reduction, given that the cost of carbon removal is more expensive than that of emission reduction. Therefore, there exists a natural incentive to initially focus on maximising emission reduction efforts before using carbon removals to offset the inherent emissions that cannot be further reduced.
How Can Carbonx Assist? Steps 3 through 8
At Carbonx, we specialise in guiding buyers through the process of purchasing high-quality removal solutions, from understanding the market to purchasing carbon removals and continuous monitoring after agreements have been made.
Many nature-based solutions are able to be implemented now but have a higher risk of carbon being re-released back into the atmosphere over decades. On the other hand, engineered solutions (e.g., permanent solutions such as direct air capture or storage in the ocean through enhanced weathering) generally take a longer time to remove the carbon from the atmosphere due to slower technological development and removal type, but the carbon will be locked away on geological timeframes (e.g., thousands to millions of years) and thus provide a permanent solution. Due to these reasons, many buyers are now looking to invest in more engineered CDR solutions.
3. Reference Carbon Credit Quality Drivers
Identify and understand what are the quality drivers of carbon removal credits (CRCs)
Selecting a high-quality (HQ) carbon removal credit is important to ensure that the company is making a difference when purchasing carbon removal. However, with an ever-evolving market, it can become difficult to understand what you, as a buyer, should be looking for when choosing your carbon removal credits. As a buyer, you also want to select HQ carbon removal credits to avoid potential reputation risks from making climate claims that cannot be supported by the carbon removal credits.
There are key criteria that should first be considered when selecting HQ carbon removal credits:
- Net-negative and permanent: The process must be removing carbon from the atmosphere and storing it in a way where it will not be released back into the atmosphere for a very long time (500+ years)
- Additionality: The carbon that is being removed from the atmosphere must be an addition to what would have naturally occurred.
- Verifiable: A third party (such as Puro, Isometric, or Gold Standard, for example) must be able to verify that the carbon is being removed from the atmosphere and the storage is permanent.
- Sustainable: The process must also be removed in a way that is sustainable and doesn’t cause more harm to the environment than the benefits of carbon removal.
There are also other criteria that should be considered, such as the cost-effectiveness and the delivery risks of various removal methods.
4. Perform CDR Quality Assessment and undertake due diligence
To select high-quality CRCs, perform CDR quality assessments and undertake due diligence
With many new carbon removal solutions appearing in the market, undertaking due diligence and quality assurance are essential processes for ensuring the quality of carbon removal credits.
To determine which projects an organisation should invest in, buyers should undertake robust due diligence. A thorough review of the carbon removal projects should include answering key questions such as:
- Verification methodology: How does the project’s technology remove carbon from the atmosphere? What type of MRV protocols do they have in place? Are they being verified by a third party?
- Permanence: How permanent is the carbon removal solution? Are there any risks of the carbon being re-released back into the atmosphere?
- Additionality: Will this project remove carbon from the atmosphere that would not have otherwise been removed?
- Safety & Legality: Has the project identified legal risks and regimes relevant to the deployment of their technology?
- Strategy & Team: How substantive is the business strategy of the supplier? What is the technical and commercial experience of the project staff and project partners?
- Financial: What will the project’s primary sources of cost reduction be? What is the capital structure of the project?
- Scalability: Are there scaling limitations? (land use, energy use, etc)
For example, at Carbonx our evaluation methodology is built on three core pillars to quantify the impact of carbon removal: integrity, delivery performance, and catalytic impact.
5. Define the Ideal Carbon Removal Credit (CRC) Portfolio
Define which criteria to base your CRC portfolio on (Geography, Co-benefits, strategic fit etc.)
With due diligence and quality assurance undertaken, buyers will find a variety of high-quality carbon removal projects to choose from. When defining a carbon removal credit portfolio, buyers will have the options for different projects they choose to engage with and may choose projects based on a variety of criteria such as geography, co-benefits, and strategic fit.
- Geography: with carbon removal projects occurring around the world, buyers may decide to purchase removals from suppliers that are located in a specific geographical area. For example, if an organisation has a large amount of carbon emissions or an employee base in the United States, it may choose to fund CDR projects from the United States.
- Co-benefits: different carbon removal solutions may or may not have co-benefits. For example, many enhanced weathering solutions will also regenerate degraded soils, which in turn helps agriculture.
- Strategic Fit: depending on the company, they may choose to align with solutions that are a strategic fit for the company. For example, if a company has a large quantity of scope 1 and 2 emissions, they may be interested in purchasing direct air capture CRCs. Or if a company is involved in the food supply business, it may be more interested in buying CRCs from enhanced weathering suppliers that are helping farmers as well.
Additionally, there are other considerations that play a role such as the cost of the project and ultimately selecting a CRC portfolio comes down to what the buyer is most interested in engaging in.
6. Decide How to Source Carbon Removal Projects
Decide if you want to dedicate an internal team or rely on a third party to source new projects continuously
Deciding on how to source carbon removal solutions is a crucial step for any organisation committed to achieving its net zero goals. The carbon removal marketplace is rapidly growing and companies that are looking to purchase CDRs will need to consider how they are going to source carbon removals. Depending on a variety of factors, organisations may decide to dedicate an internal team to sourcing projects or working with an external company (such as CarbonX).
Dedicating an internal team to sourcing CDR solutions provides several benefits. Firstly, having a team in-house allows for more direct control and oversight of the entire process. The team can focus solely on the organisation’s unique needs and priorities, thus tailoring a portfolio that aligns with the company’s specific net zero goals.
On the other hand, working with a third party to source carbon removal projects offers distinct advantages as well. Engaging with specialised organisations that focus specifically on carbon removals can save significant time and resources. These experts have a broad network of verifiable and reliable carbon removal projects. They also possess in-depth knowledge of the evolving carbon market and regulatory landscape, which can be invaluable in navigating complex carbon removal systems and ensuring compliance with environmental standards.
CarbonX has a team of dedicated individuals who have the expertise to identify and vet potential carbon removal suppliers. By undertaking robust due diligence and working closely with both our suppliers and buyers, CarbonX can take the pressure off organisations to undertake the steps to secure carbon removals. Additionally, we work closely with our clients and can offer tailored portfolio options to match our client’s net zero goals.
As the carbon removal marketplace continues to grow, we have also recently released a new data initiative to give better market data transparency and to encourage a better overall understanding of the carbon removal market.
Ultimately, the decision to choose between an internal team and a third party to source carbon removal projects comes down to a variety of factors such as the organisation’s size, budget, and long-term sustainability objectives.
7. Execute and Invest in Robust Monitoring
Once projects are selected and contracts executed, invest in a robust monitoring process to avoid non-delivery risks
When purchasing carbon removals, buyers are typically signing agreements that projects will remove carbon in the future. As such, an important part of building a net zero strategy with carbon removals is to invest in robust monitoring to ensure the efficiency and reliability of the carbon removal solution. A robust monitoring system allows stakeholders to keep track of the progress that a carbon removal project is making.
With high-quality carbon removal solutions, the suppliers should be undertaking MRV processes to track and understand their progress in removing carbon. They should be collecting data from various sources, analysing the data, and ensuring that the project is on track and being verified by a third party. This monitoring process enables projects and buyers to have a clear understanding of whether the expected carbon removal results are being achieved as planned and if the supplier is meeting milestones on time.
Investing in robust monitoring allows for any potential non-delivery risks to be mitigated effectively. Non-delivery risks can occur for a variety of reasons including technical challenges, unforeseen environmental impacts, or project implementation delays. With timely monitoring, any deviations from the projected outcomes can be identified as soon as possible and allow stakeholders to take corrective actions promptly and prevent the loss of invested resources and efforts.
8. [Continuous] – Remain Compliant
To remain compliant define an internal team or 3rd party to monitor future regulations and standards
Although the concept of carbon removal has been around for a while, the carbon removal industry and market are very new and evolving rapidly. With new standards and regulations continuously coming into play, staying up to date with what is going on in the space is critical to staying compliant.
Both suppliers and buyers must be keeping compliance with rules and regulations. For buyers, this means ensuring the carbon removal suppliers that you are buying from are maintaining their compliance. This means having a clear understanding of the requirements and ensuring that these requirements are met. One way to do this is to define a team either within your organisation or a third-party (such as Carbonx) to stay up to date and monitor future regulations and standards and provide ongoing progress reports from the suppliers.
Carbon removal is an essential part of the fight against climate change. By removing carbon from the atmosphere, we can reduce the amount of carbon in the atmosphere and help to slow the rate of climate change. While most companies are unable to achieve their net zero goals by purely reducing their carbon emissions, by purchasing carbon removals they will be able to do so.
Carbonx is here to help you navigate the complex world of carbon removals. We have a dedicated team of professionals who can guide buyers through the process of buying permanent carbon removals to help you meet your net zero goals.