Over the past year, innovative carbon removal solutions have received some high profile media coverage and started to enter the climate conversation in a much more prominent way. This post highlights some of the most encouraging developments around carbon removal technologies and businesses in 2016, and provides some context for what it will take to build on these accomplishments to ensure that novel carbon removal technologies can transform into prosperous businesses that make a meaningful contribution to fighting climate change.
CO2 removal technologies increasingly viewed as a tool for decarbonizing heavy industry
2016 saw a surge of interest in the idea of using CO2 as a resource to make products (e.g. consumer goods, buildings, fuels, etc.). A prime example is the XPRIZE Foundation’s $20M Carbon Prize, which announced their semi-finalists earlier this year. Some of the startups in this space, such as Opus 12, are working on transforming CO2 into fuels and chemicals; others like Carbon Cure and Solidia are using CO2 to make stronger, more sustainable cements. Groups like the Global CO2 Initiative have projected that the market for CO2 utilization will be worth billions of dollars in the near future, and investors, including Evok Innovations, have begun to fund early-stage companies in this space.
The conventional carbon capture and storage field also saw progress in 2016. A handful of large-scale CO2 capture projects came online this year around the world and more projects are expected in 2017. Two of those projects, at an ethanol refinery in Decatur, IL and a municipal solid waste incinerator in Oslo, will help demonstrate the concept of bioenergy with carbon capture and storage (known as “BECCS” for short), which climate scientists see as a prime candidate for delivering large-scale carbon removal in the future.
Direct air capture (DAC), another potential industrial carbon removal technology, also started to gain commercial traction in 2016. One DAC company in Canada, Carbon Engineering, signed an agreement to produce synthetic hydrocarbon fuels using CO2 captured from air. Also, the Swiss DAC company Climeworks announced three EU Horizon 2020 Power-to-X projects using their DAC technology.
There’s a big catch with this progress around CO2 capture and use: most of the commercial activity described thus far will result in emissions reductions, but NOT net-negative emissions. Emission reductions are important and early commercial activity that encourages technology development, creates initial markets, and helps navigate regulatory and financial barriers relevant to carbon removal is critical. However, going forward, these companies will need to work with industry, government, and civil society to build markets that enable carbon-removing versions of their technologies to flourish.
Finance and business model innovations helped fuel growth in land-based carbon removal approaches
2016 saw big advances in funding for promising technologies that can enable carbon removal in the land sector. For example, ARPA-E announced a $35M investment in grants to a range of technologies that could improve carbon sequestration in agricultural crops. More broadly, the AgTech field as a whole continued to see billions in venture capital funding, including for technologies such as microsatellites and connected sensors that can measure and verify carbon sequestration in natural and working lands.
Entrepreneurs have also made good progress on developing innovative financial instruments and business models that can help carbon removal projects reach scale. Companies like Blue Forest Conservation and Encourage Capital have partnered with philanthropies and government agencies to offer innovative bonds that deliver social and financial returns on enhanced forest management projects. Other companies, like All Power Labs, have begun exploring hybrid energy/agricultural business models to unlock markets for products like biochar all around the world.
Measuring and verifying the carbon sequestration from specific land-based carbon removal projects still remains an enormous challenge. Without simple solutions and protocols for tracking CO2 sequestration associated with soil and biomass carbon projects, it will remain challenging for land managers to monetize the carbon sequestration benefits of these projects.
Established industry began exploring carbon removal business opportunities
Overall, one of the most encouraging signs in 2016 was a major uptick in corporate interest in carbon removal. Venues such as the annual VERGE and SxSW Eco conferences provided new platforms for business leaders to discuss early opportunities for deploying carbon removal solutions. Bill McDonough, an architect of the Cradle-to-Cradle certification, has launched a campaign to get businesses to think about CO2 as a resource and an asset for their supply chains. Interface also launched their major “climate take back” initiative to reverse climate change by using CO2 from the sky in their supply chain. Patagonia Provisions even launched a beer made with a perennial variety (and potentially carbon-sequestering) of wheat. This uptick in private sector support will be a key demand driver for carbon removal solutions in the near future.
A lot of fundamental questions still need to be answered for carbon removal to secure a meaningful place in the corporate world. What types of goals should companies have around carbon removal? How do they measure and track progress towards these goals? How do they differentiate carbon removal efforts from traditional GHG offsetting programs and how do they communicate their progress towards these goals in a clear and constructive way? Corporate leaders will need to get to work answering these questions and more in 2017.
Want to learn more about where our team sees the carbon removal field headed next year? Check back in on the blog in early January 2017 for our thoughts!