09/01/2024
As the impacts of climate change continue to increase, concerns over climate risks are compelling companies and organizations to invest in carbon offsetting. Voluntary initiatives serve as a strategic approach employed by corporations to enhance their environmental performance and foster innovation for climate solutions.
Barriers to the development of voluntary carbon offsetting
Almost a fifth of global emissions are now covered by some kind of carbon market, and the cumulative value of all of those was an estimated US$ 850 billion (€ 768.1 billion) in 2021. But we still need to do more if we are to reach net zero emissions by 2050. More companies than ever are aware of the severity of the challenge we face, and they are searching for ways to be part of the global solution to the climate crisis.
To address climate risks, a carbon offset broadly refers to a reduction in GHG emissions - or an increase in carbon storage (through land restoration or the planting of trees) - that is used to compensate for emissions that occur elsewhere. Although, voluntary carbon offsetting has picked up steam in recent years, these offsets are definitely not perfect. For instance, there is no internationally defined standard for what constitutes a valid offset, meaning schemes can be marketed to businesses with little oversight. Companies with good intentions have to navigate an oversupply of low-quality offsets that do little to actually remove carbon dioxide from the atmosphere in a permanent way. Companies can easily offset today’s emissions against new forest growth that may not begin to store significant amounts of carbon for another 70 years and which might not grow successfully at all.
Nor do "avoided emissions credits" solve the problem. Avoided emissions credits let one party emit the amount someone else claims they would have emitted but didn’t. These offsets are hard to verify, and they risk creating complacency from participating companies without contributing to the critical challenge of rapid emissions reduction. If we are to achieve our net zero goals as a society, carbon capture has to be part of the solution.
The Intergovernmental Panel on Climate Change (IPCC) has said that to limit global warming to 1.5 degrees Celsius, between five and 15 billion tons of CO2 will have to be removed from the air and stored permanently every year. So, how do we bring more certainty to world of offsets while at the same time scaling up the amount of carbon removed in the first place?
Need to ramp up carbon removal technology
The answer could lie in an emerging ecosystem of so-called carbon removal credits (CRCs). CRCs follow strict quality criteria involving permanence, additionally and verifiability. However, there are obstacles to overcome before carbon removal credits are truly mainstream.
Many carbon removal initiatives are still in the early stages, permanent storage facilities are just being developed, and the carbon markets are only starting to understand the differences in credit quality. And, the price per ton removed is high, for now. We believe that despite these challenges, carbon removal credits should sit at the center of companies’ emissions policies.
Organizations are beginning to build the infrastructure we need to ramp up carbon removal technology. Remove is one example of a newly launched European accelerator for early-stage carbon removal startups designed to support the emerging carbon removal ecosystem. And some of the biggest and most influential private and public companies see the benefits of an innovation-led approach. Stripe, Alphabet, Shopify, Meta, and McKinsey founded the Frontier fund, which is an "advance market commitment" to select and invest in the most promising climate technologies and teams.
Albeit at a smaller scale, Ledgy has decided to invest its climate budget along similar principles. After a rigorous evaluation process, Ledgy has decided to buy carbon removal credits from SeaO2 as a first investment. Why? It's simple: 24% of all global carbon emissions are bound up in our seas and oceans. Additionally, the concentration of carbon in the ocean is more than 150 times higher than in the air, making oceanic carbon capture technology a potent weapon in the fight against climate change.
SeaO2’s carbon capture technology could offer a new route to oceanic carbon capture at scale. SeaO2’s first prototype, which has the capacity to extract one ton of carbon dioxide per year, launches in the North Sea this month. The prototype is just a stepping stone: the next "pilot plant" - which will be able to extract 250 tons of carbon per year - is on track to launch by the end of 2023.
In recent decades, disruptive startups have turned many industries upside down by reinventing established ways of working. We are confident in the potential of oceanic carbon capture and carbon removal credits, more generally, in helping the push towards net zero. Companies thinking about funding and financing new climate innovations should look at CMCs and the startups building carbon removal technology as part of a balanced and effective emissions reduction strategy. The world needs more startups thinking differently about commercializing technologies, and in turn, they need forward-thinking early customers.
Phạm Đình (Source: Euronews)
(Source: The article was published on the Environment Magazine by English No. IV/2023)
