How can removing carbon add value to your organization?

Business leaders can flip the script on carbon by capturing it and turning it into a source of commercial and long-term value.

Extreme weather has given no respite to a world struggling with the COVID-19 pandemic. From massive fires in California to record flooding in China, hurricanes in the Atlantic, and typhoons in Southeast Asia, climate keeps up a drumbeat of disruption. Perhaps it’s no surprise equal majorities of people globally now view climate change and infectious disease as major threats. Yet even as lockdowns related to COVID-19 resulted in a dip in emissions, atmospheric CO₂ concentrations are rising and we haven’t narrowed the projected overshoot of the emissions levels needed to limit global warming to 1.5 degrees Celsius.

A growing group of innovators aims to help address this gap with carbon removal technologies and approaches that flip the script, capturing carbon to turn it into a source of commercial and long-term value. For CEOs who want to shift sustainability in their organizations from a reporting-led function to a more value-led focus, yielding new business opportunities, carbon removal could be an important new lever.

The existing global market for products using carbon as an input is valued at US$6t, according to the think tank Carbon180. Carbon-negative building materials, plastics, textiles, and carpet tiles—which capture more CO₂ than is emitted producing them—are entering this market. Companies have a growing opportunity to incorporate carbon removal into their product strategies, supply chains and operations.

Nature-based carbon removal, such as regenerative agriculture, reforestation and afforestation, seek to harness and restore nature’s ability to remove CO₂ from the atmosphere. The carbon sequestered in the soil or trees provides the basis for verified carbon removal credits. Revenue from the credits supports agricultural producers, while carbon removal projects provide additional environmental benefits (e.g., protecting local watersheds) and long-term social value (e.g., protecting traditional cultures and livelihoods). By supporting carbon removal projects, companies can help forge a sustainable legacy in many vulnerable communities they serve and operate in.

Financing carbontech’s growth

Scaling while reducing costs is a key challenge, but a number of large corporations are partnering with carbon removal companies to accelerate development, and carbontech innovators have raised over US$2b in venture financing according to the Circular Carbon Network. One indicator of carbontech scale-up is the US$100m financing round received by the Swiss direct air capture company Climeworks at the end of 2020.

It is likely that financing of carbon removal will be supported by the implementation of national climate plans and green recovery programs. According to the United Nations Environment Programme’s Emissions Gap Report 2020, 126 countries representing 51% of global greenhouse gas emissions have adopted or announced net-zero goals. The share of covered emissions will rise to 63% if the United States joins this group as expected under the US$2t Biden-Harris climate plan, which includes negative emissions technologies in its proposed investments. Similarly, carbon removal will likely benefit from the €1t to be spent on decarbonization under the European Union’s Green Deal.

Creating value from carbon

Carbon removal is driving a broader question in sustainability thinking: is carbon neutrality an adequate ambition? For heavy emitters, carbon removal provides another tool to accelerate the transition to carbon neutrality. But, for many global companies, the ability to capture and revalue carbon opens a path to going a step further, becoming carbon negative, removing more CO₂ from the atmosphere than they are responsible for. Microsoft, Ikea and AstraZeneca are among the companies that have committed to using carbon removal to achieve the ambition of carbon negativity.