Frequently Asked Questions

Carbon Dioxide Removal (CDR) involves extracting CO2 that has been previously emitted into the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) defines CDR as human activities that capture and store atmospheric CO2 durably in geological, land, or ocean reservoirs, or in products. This includes enhancements to natural removal processes but excludes natural uptake not directly caused by human actions. “Durably” means storing CO2 for decades to millennia, though there is no agreed minimum duration yet. There are several scientifically validated CDR methods, each using different techniques to capture and store CO2. These methods vary in terms of readiness, potential, and durability. They also have potential co-benefits and sustainability risks that could affect their effectiveness as climate mitigation tools.

Net Zero commitments support the Paris Agreement’s goal to keep the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and aim to limit it to 1.5 degrees Celsius. Achieving this requires immediate action to reduce or stop carbon dioxide emissions and a strategy to address both residual and historical emissions. Net Zero is not possible without both emission reductions and the removal of previously emitted carbon dioxide from the atmosphere. In the short term, Carbon Removal helps reduce net carbon dioxide emissions. In the long term, it offsets residual emissions, aiding in reaching Net Zero. If Carbon Removal exceeds emissions, this strategy can achieve net-negative emissions.

To keep global temperatures below 2 degrees Celsius above pre-industrial levels, the most sustainable scenarios require removing 170 gigatons of carbon dioxide (GtCO2e) from 2020 until net zero is achieved. This assumes that emissions reduction commitments are fully realised. Currently, the estimated capacity for Carbon Removal is 1.3 MtCO2e. Each organisation will have different emissions compensation needs based on its carbon intensity and the effectiveness of its emissions reduction efforts. Guidance suggests that this compensation should be less than 10% of total emissions. It is crucial to emphasise that Carbon Removal should not replace emissions reduction.

The policy and regulatory environment varies by jurisdiction. Most major developed markets have carbon policies and many implement pricing mechanisms like a carbon tax or emissions compliance market, targeting carbon-intensive industries. Carbon Removal is included to a limited extent in some compliance markets. Some jurisdictions require organisations to establish net zero targets and emissions reduction plans, which implicitly need a Carbon Removal strategy. In most places, net zero commitments are voluntary, but there is increasing pressure for carbon and sustainability reporting, especially for organisations listed on major exchanges and those seeking strong ESG investment profiles. Progress is being made in some areas to develop carbon management policies that include Carbon Removal, with clear definitions, certification requirements, and acceptable use cases. At least one jurisdiction has enacted laws against false claims, creating rules to prevent ‘greenwashing’ in the use of offsetting.

Most of the 2 gigatons of carbon removal today comes from nature-based solutions, which store carbon through natural processes. While valuable, these methods have limited durability. Novel or engineered carbon removal uses advanced techniques to store carbon for hundreds or thousands of years. Although scientifically validated, these methods are still emerging, resulting in limited scale of supply and high costs. According to the like-for-like principle, long-lived emissions from the long carbon cycle can only be neutralised by long-duration or permanent carbon removal.

Outside of compliance markets, traditional carbon removal is managed through the voluntary carbon market. Carbon credits are issued by projects that sequester or reduce carbon according to an accredited methodology or protocol. These credits are registered, sold in the voluntary carbon market, and retired when used to offset emissions. Novel carbon removal follows a similar process, but the methodologies are still new, with limited field experience. Due to a shortage of delivered novel carbon removal, much of the current volume is bought through pre-purchase agreements. While there are recognised principles and best practices, there is little standardisation, making procurement risky. Like traditional carbon removal, sourcing and procurement can be done directly with a supplier, through a platform, or via a procurement partner, depending on expertise and risk tolerance. Market intelligence and risk management services are available to support this process.

Methodologies or protocols are developed for scientifically proven carbon removal methods to issue carbon credits. Major carbon standards have established these methodologies, including new standards for advanced durable engineered carbon removal. However, these standards currently lack significant field experience. Certification of carbon removal can only happen at delivery, and most novel carbon removal is being procured through pre-purchase agreements and capacity scale-up investments. Thus, comprehensive risk assessment across the project lifecycle is crucial. As with traditional carbon removal, no single standard exists today.

A carbon credit is an asset issued by an accredited carbon standard for 1 tonne of CO2 equivalent (t/CO2e) of Carbon Removal or reduction, achieved using an accredited methodology or protocol. Carbon credits can be used in carbon management strategies to compensate or offset residual emissions. The Oxford Principles for Net Zero provide best practice guidance. Carbon finance based on carbon credits has been essential in developing and scaling clean energy. It is expected that carbon finance through the Voluntary Carbon Market will similarly help scale the capacity for novel engineered Carbon Removal.

There are currently 15 recognised novel Carbon Removal method groups and many suppliers offering credits, pre-purchase agreements, or hybrid investment/supply arrangements. Like traditional Carbon Removal, this market is challenging for buyers to navigate due to the lack of a standardised process, tools, and data for procurement. Buyers can either develop in-house expertise or collaborate with qualified experts. Assessing project delivery risk is crucial, especially for pilot and demonstration projects in the early stages of scaling up novel Carbon Removal methods.

All organisations with net zero commitments must develop a Carbon Removal strategy to meet public pledges and maintain their social licence. Novel durable engineered Carbon Removal is still in early development, and the development cycle of each method determines its scalability. Engaging with various methods helps buyers gain experience relevant to their needs. A portfolio approach allows buyers to optimise impact, risk, and cost. Engaging with different methods and making early test purchases can secure supply options and improve supply chain resilience for Carbon Removal in case of shortages.

Managing project and delivery risk until carbon is delivered and carbon credits are issued is crucial. This requires expert knowledge of the method, thorough due diligence, and ongoing monitoring. Often, project reporting is insufficient and lacks independence and rigor. Therefore, various market service providers now offer services such as standard ratings, bespoke independent assessments, and specialist monitoring to support effective risk management.

While there is scientific agreement that organisations with net zero commitments should start procuring carbon removal well before their net zero target date, and principles for responsible use have been established, guidance on acceptable use within an SBTI plan is still limited. Previously, SBTI guidance focused only on emissions reductions, leaving organisations to decide independently how and when to address residual emissions. This was interpreted as advising against carbon removal procurement before completing emissions reductions, which is counterintuitive given the time needed to scale up supply and could lead to supply issues. The revised Oxford Principles for Net Zero provide basic principles for organisations to follow. Further guidance is expected in 2025 from the EU Commission on certification and use rules, and from public and private procurement programmes. Without detailed guidance, organisations need to develop a carbon removal strategy based on reasonable policy assumptions and manage this risk effectively.