What Are Carbon Dioxide Removal Marketplaces And How Many Are There?

Carbon Dioxide Removal Marketplaces - Can They Remove Corporate Emissions? - Carbon Herald
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There has never been a more pressing need for companies to reduce the amount of emissions they incur daily. Global greenhouse gases have been rising steadily for decades, with record levels reached in 2019 – an urgent call for carbon dioxide removal. 

There was a decline of 6.4%, or 2.3 billion tons in 2020 compared to 2019 emissions levels due to the coronavirus restrictions, however, the amount is still small given the scope of the pandemic. 

According to statistics, from 1900 until 2019, the man-made cumulative carbon dioxide emissions released in the atmosphere totaled more than 1,560 gigatons. The US alone is historically responsible for emitting more than 400 gigatons or a quarter of all CO2 emissions globally. 

Scientific research is united around the notion that vast quantities of carbon dioxide must be removed from the atmosphere and locked away for hundreds, possibly thousands of years, if the world stands a chance of keeping global warming within the 1.5 degrees limit set by the Paris Agreement. 

So far, the world keeps emitting between 30 and 50 gigatons of CO2 every year. According to a recent report issued by the Coalition for Negative Emissions (CNE), and consultancy firm McKinsey, we need to remove 1 gigaton of emissions by 2025 to limit global warming up to 1.5 degrees. 

How Carbon Removal Marketplaces Have Emerged?

With news and scientific research confirming that countries need to shrink their carbon footprint and eliminate the causes of greenhouse gas (GHG) pollution like fossil fuel burning, the idea is getting more and more acceptance. That is despite attempts of opposition from the fossil fuels industry and the lack of political will to change the status quo. 

Together with the need to not just curb the release of further emissions but also remove vast amounts of CO2 from the atmosphere already there, comes the necessity for net zero incentives and processes to be the catalysts driving this transition.

Corporations are one of the major economic players that need to re-shape and find a way to cancel out their emissions in order to meet carbon neutral or net zero environmental claims. In fact, we all need to remove our emissions, in addition to taking away the accumulated ones in the atmosphere to achieve sustainable living. 

What Is A Carbon Removal Marketplace And How It Works?

One of the instruments created to provide a solution for those in need of emissions reduction is called a carbon removal marketplace. This represents a marketplace where corporations (the client interested in removing CO2) and providers of the carbon removal (suppliers) meet to make the transaction. 

For corporations wondering what process removes carbon dioxide from the atmosphere, carbon removal marketplaces provide a variety of suppliers and information on the methods they use.

Corporations are usually interested in removing their own emissions and to do that they buy carbon dioxide removal certificates (CDRCs). The certificates represent a ton of CO2 removed from the atmosphere by a variety of CO2 removal methods. Those certificates are usually provided by the marketplace itself and quantify the emissions being eliminated by the suppliers of carbon dioxide removal. 

The price per CDRC is set by each supplier and usually varies depending on the carbon removal method being chosen by the client. The opportunity for suppliers to sell carbon removal on such marketplaces acts as a revenue stream for them to keep adding more similar projects and initiatives. 

The marketplace itself also charges a transaction fee to keep going but normally all the revenues from the certificates being bought go to supporting the suppliers. Usually, the carbon removals are quantified and verified by an independent third party before being listed in the marketplace to ensure their viability. 

Advantages Of Carbon Removal Marketplaces 

Big corporations are facing huge pressure to act on reducing their larger carbon footprint. Therefore, a huge demand for carbon removal services is present in the market. Corporations are pouring money into natural and engineered solutions in order to fulfill their pledges. Often, they announced net zero ambitions before mapping a detailed plan on how to reduce CO2 emissions. 

So far, the economy was lacking financial incentives for CO2 removal services to take off. There was literally no economic stimulus for reducing CO2 emissions in the atmosphere which is one of the challenges regarding developing solutions for CO2 negative emissions. 

The regulatory carbon markets like the European Trading System is a system that ensures some major emitters pay for releasing GHGs into the atmosphere. It gives allowances for companies to release emissions and sets a cap for them that determines the penalty for exceeding the maximum emissions allowed. In this way, the EU puts a cap on the amount of emissions emitted by the bloc. 

Carbon Offsets Vs Carbon Removal

However, the EU ETS enforces carbon offsets rather than carbon removal. Carbon offsets represent compensation for emissions being released by investing in a project that displaces CO2 pollution activities somewhere else. An example is a company emitting a ton of CO2 that wants to make up for that by investing in a solar project that would save a ton of CO2 by generating electricity that would otherwise be produced by a fossil fuels plant. 

By purchasing carbon offsets, the companies neutralize their emissions but the current levels of GHGs they emit are maintained. Carbon removal differs from carbon offsets in that the current levels of emissions are reduced to zero. Carbon removal certificates ensure that every ton of CO2 is pulled away from the atmosphere and sequestered, thus lowering its absolute levels. 

Carbon offsets avoid emissions, but they have no effect on the current levels in the atmosphere. Therefore, carbon removal goes one step further than offsets by removing CO2 from the air which makes it ultimately a necessity to achieve true net zero emissions. 

In this sense, carbon removal marketplaces are the system that creates a financial incentive for actually reducing the amount of CO2 in the atmosphere. They make CO2 removals verified, comparable and tradable and allows businesses to cut their carbon footprint to zero. They also facilitate projects with verified CO2-negative emissions to expand as they provide a financial incentive by selling their CO2 removal certificates.

B2B Carbon Dioxide Removal Marketplaces

Business to Business carbon removal marketplaces empowers corporate buyers of carbon removals to bring their CO2 emissions down to zero. According to a report by the UK’s non-for profit Energy and Climate Intelligence Unit (ECIU), at least one fifth (21%) of the world’s 2,000 largest public companies have committed to becoming net zero. 

Those companies combined represent sales of nearly $14 trillion. Another estimate shows that half the world’s assets under management are signing up to meet climate change goals. They pledge to eliminate their emissions by 2050 – a trend that is deemed to bring major shifts in the investment world as we know it today. 

Therefore, carbon removal marketplaces are set to enjoy an influx of demand for carbon removal credits. The world’s first carbon dioxide removal market, specifically for B2B, was created in 2018. It is called Puro.earth and aims to serve the unprecedented interest in CO2 removal. 

Puro.earth is a Finish startup that guarantees carbon removal from the atmosphere for at least 50 years. Nasdaq has also recently acquired a large stake in the company to support the transformation of the economy. 

Its goal is to create a huge voluntary carbon market for CO2 removal credits to fund whole industries that lock away more carbon than they emit. According to the CEO of the company, carbon removals are the best strategy for corporations to reduce their emissions to zero or remove the concentrations of CO2 in the atmosphere to achieve carbon negative emissions. 

How The Process Works?

The Puro.earth process works as businesses can buy up to 1000 carbon dioxide removal certificates (CORCs) at set prices from its website. Buyers can also negotiate pre-purchase agreements directly with suppliers. 

Currently, the marketplace offers two carbon-removal methods- biochar and wooden building elements from 14 available carbon removal suppliers. 

Biochar prevents the CO2 from organic matter from leaking into the atmosphere and also enriches soil, which improves food security in developing countries and crop production.

The other method – locking CO2 in wooden building materials is deemed to sequester the carbon emissions absorbed by the trees for at least 50 years or as long as the building lives. 

This method is controversial as even though the projects grow sustainable forests for wood products and those forests take away CO2 from the atmosphere, they create partial carbon debt as the unused biomass from the tree – in the soil, for example, releases back the CO2 it has absorbed. 

Furthermore, one could argue if cutting trees is the best climate change mitigation policy. Even though older forests reach an equilibrium in the amount of CO2 they sequester, even 800 old forests still take up carbon. 

Apart from those methods, the company also plans to add other carbon removal options like direct air capture. It claims it has other upcoming science-based methods with the potential to remove up to 15 gigatons of CO2 per year by 2050.

How Carbon Removals Are Verified?

To make sure the carbon removals are truly eliminating CO2 as they claim, Puro.earth goes through a rigorous supplier verification process. 

The suppliers are required to present evidence for their carbon removal method: Lifecycle Assessment (LCA) or Environmental Product Declaration (EPD) which proves the product has absorbed more CO2 than it has emitted.

The evidence then gets audited by Puro’s independent assessors, who visit the production facility, validate the accuracy of data and issue an audit statement. 

After the product is verified, it gets CO2 Removal Certificates (CORCs) for every metric ton of CO2 removed and stored. The certificates are sold on the marketplace to corporations willing to become climate positive. All costs from the verification process are covered by Puro.earth.

B2C Carbon Removal Marketplaces

Other carbon removal marketplaces offer both corporate clients and individuals the opportunity to reduce their emissions. Nori, Compensate, and Carbon Engineering’s direct air capture carbon dioxide removal via BeZero are examples of such markets. 

Nori is an innovative Seattle startup launched in 2017, using blockchain technology to operate its marketplace with its own cryptocurrency tokens that allow corporations, governments, and individuals to purchase carbon removal. 

The company issues the so-called Nori Carbon Removal Tons (NRTs) for $15 per ton of CO2 sequestered – one of the lowest prices on the CO2 removal market. Each transaction of NRTs is recorded using blockchain technology. The carbon removal is guaranteed for at least 10 years. If carbon gets released before the 10 year period, Nori is obligated to compensate the buyer.

The carbon removal method Nori has chosen is carbon capture in soil – a scalable natural carbon sink method that locks away CO2 fast. The company also uses a carbon quantification tool – Soil Metrics, to estimate the amount of CO2 being stored in the soil. The data is then used to model a carbon baseline for the estimation of the number of NRTs, so suppliers are paid fairly.

Conclusion

Carbon marketplaces are not a new phenomenon, however, companies so far have been able to just offset their emissions by buying carbon credits. Until recently, the economy lacked financial incentives for actual carbon removal credits to take over the space. 

Carbon removal marketplaces are addressing this issue by allowing corporations to actually get rid of their emissions completely and add them to zero. They are considered the most effective way currently developed for companies, willing to participate in the scaling of carbon removal projects and technologies while also taking responsibility for their part in causing climate change.

As long as those carbon removal marketplaces sustain rigorous processes on assessing, quantifying, and verifying the carbon removals, they could well be a viable solution for large corporations to take care of their current and historic emissions.

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