“Regulation Is The Bedrock Upon Which The Carbon Removal Industry Stands – It’s What Makes Our Business Feasible” – Chris Sherwood, Secretary-General Of Negative Emissions Platform

“CDR Is A Sector Running Towards Regulation, Embracing It, Because Only That Will Make The Business Possible” - Chris Sherwood, Secretary General Of Negative Emissions Platform - Carbon Herald
Image: Negative Emissions Platform

Yesterday the Negative Emissions Platform (NEP) announced the launch of the CDR Capital Flow Chapter – a series of curated meetings where members like Climeworks, Carbonfuture and Carbon Removal Partners will be engaging with governments and investors to plot a course for achieving the common goal of scaling the industry.

With policy and standardization high on the agenda for carbon removal, we sat down with NEP’s secretary-general Chris Sherwood to talk about the platform’s work, how it supports members and where legislation for CDR is headed in Europe and around the world.

This interview has been edited for clarity and brevity.

Can you tell us more about the Negative Emissions Platform and the types of member companies it has?

We have 37 members and we’ve been on a very clear upward trend since we were founded three years ago. We expect the membership to grow to 50 by the end of 2023.

Membership growth is accelerating and covers a wide range of carbon dioxide removal methods. The largest communities in NEP today are direct air capture, BECCS and biochar.

We are very keen to broaden the range of methods that we cover, and we already have some very interesting, less well known, and perhaps less well developed, carbon dioxide removal methods in the family.

We really would like to continue expanding so that we cover as many of these as possible. And the reason for that is because our mission is to make sure that if, and when one or more of these carbon dioxide removal methods fail, it is for the right reason, and not because of a regulatory “accident” or because policymakers didn’t know a CDR technology or method existed.

Do you have members that are working on ocean carbon removal, enhanced rock weathering and mineralization?

Yes, the marine side is one that we would like to develop much more. We have Brilliant Planet, which takes algae from off the coast and farms and sequesters it onshore for many centuries. But we’d like to develop that community more. We’re talking to a number of companies in that space that we believe will join shortly.

Mineralization is a chemical process, which is a storage method but it can also be a removal method, depending on how you’ve configured your CDR activity. Mineralization can be what happens underground, like what our members Carbfix and 44.01 are doing. They take carbon dioxide, which has been removed from the atmosphere by someone else, and mineralize it into rock underground. But of course, it can also be like enhanced rock weathering, the process of removing the carbon dioxide from the atmosphere as well.

How can the platform help companies operating across the world? How can they benefit from being members of Negative Emissions Platform?

Very good question. The Negative Emissions Platform was initially set up about three years ago, specifically with a focus on advocacy in the EU institutions. And the reason for that was that the EU institutions have proven over the last few decades, that they are capable of producing high quality regulation, which is not just effective in terms of creating a large single market inside the European Union, but is also often very influential outside the EU.

By investing an effort in the EU institutions, you are actually getting a bigger bang for your buck than you might even get (for example) in Washington. Although the U.S. is a larger market, it’s less capable of exporting its regulatory model to the rest of the world. Or has been for the last few decades.

Key Takeaways From Climeworks & Shopify Webinar - The Business Case For CDR -carbon Herald
Source: Climeworks

The logic of setting up an association to focus on the European Union is clearly a logic of efficiency in terms of advocacy efforts. But having said that, the EU institutions are not alone in terms of the policy that has been made around the world. Of course, there’s a need for us to expand what we do towards national governments, whether they are European or not. And also beyond government, towards multistakeholder institutions such as the Science Based Targets Initiative, the UNFCCC, where policy is being made and the market is being structured in a non-governmental setting.

The U.S. approach seems to be focused on building supply for carbon removal, whereas the EU is more focused on the market itself. How would you compare the two from the NEP’s perspective?

I think that what carbon removal requires to be successful is three things: supply and demand and a well-functioning, well regulated market. The U.S. has moved first on supply, the European Union has moved first on the well-regulated market. Both need to do what the other is doing plus focus on building the demand. At the moment, that is the biggest gap that we face globally.

The demand is going to be there in the next few years, as companies become more sensitive to the need to compensate for their emissions and reduce their emissions. But that growth will hit a glass ceiling and ultimately, companies and governments will need to purchase carbon removals if we’re to achieve the Paris targets.

That demand will ultimately come from compliance markets, whether those are government compliance with international rules or corporate compliance with government rules. Ultimately, that is where we need to end up and right now, neither the U.S. nor the EU has really tackled that question of demand.

Do you feel there is a risk of markets becoming too fragmented? We are seeing corporate buyers act on their own when it comes to purchasing carbon removal credits.

I don’t think of fragmentation as a problem today. I think different companies will have an interest in different forms of CDR credits. Some companies will want CDR credits that deliver a certain amount of carbon removal at a steady rate over a certain number of years. Maybe they want that for five years, and maybe after 15 or 30 years. Others will want to buy carbon removal credits where the carbon is removed today.

Some will want to buy carbon removal credits attached to a particular geography or a particular legal jurisdiction because of their corporate structure [and/or] their shareholders. What you will find is that companies will naturally have a variety of different types of demand. That will be one of the factors which makes the portfolio approach of CDR valuable and necessary.

Image: Igor Starodubtsev/Shutterstock

I think that fragmentation in the sense of variety in the supply and the demand is not a problem. I think that’s inevitable and necessary and a good thing. But in terms of the structures of the market, of course, today there’s a proliferation of marketplaces where you can buy and sell credits. That’s a great way for smaller buyers to enter the market and learn without necessarily having the depth of relationship that a large player like an Amazon or Microsoft can have with a CDR provider. I think the marketplaces will become increasingly important.

It’s an open question whether ultimately, we get consolidation in that market around 2050, or thereafter. That’s anyone’s guess. You would hope that as the world moves towards a more coherent, coordinated global approach to carbon removals, that the structures of the market become more coherent and consistent globally.

Switching to your work with policymakers, what are the ways you’re interacting with them?

Policymakers are a reflection of the societies that they serve and represent. The reality is that the societies in which we live know very little about carbon dioxide removals. So our primary job today is to provide as much information as possible to policymakers, so they can make policy based on evidence, not just on feelings.

That challenge goes beyond our work with policymakers but actually goes to our work with civil society organizations, environmental NGOs, which are in some cases, very skeptical of carbon dioxide removals.

Relevant: Open Letter Calls On EU To Include Carbon Removal In Net-Zero Industry Act

We have an important mission, which is to make sure that all of our stakeholders, whether they’re policymakers or not, are getting access to the best and latest information. This is something which we as an industry need to take extremely seriously and to focus heavily on in the coming years. It’s developing a level of transparency and scientific backing for what we do, which gives us the highest possible level of credibility.

In terms of the policymaker outreach, we’ve done quite a lot in the context of the European Union’s legislative work on the carbon removal certification mechanism, on the Net Zero Industry Act, on the Green claims directive, on the upcoming changes to the to the EU climate law, and specifically the 2040 targets. This includes giving examples of CDR methods that policymakers haven’t heard of, giving data about CDR as it exists today. And really making sure that policymakers understand that the language in policy texts needs to be kept very precise, and also very open to the possibility of as many valid CO2 removal methods as possible.

How would you describe the progress there?

I think there is progress. Certainly, the European Commission is thinking very clearly and very deeply about this and is undergoing a policy development process, which is well planned and deliberate. They’ve got some good experts in house, they leverage the Joint Research Center, which is an arm of the commission, to do some interesting and important research work on CDR. The European Parliament is also learning quite nicely but is going to be reelected next year. So we will face the challenge of having a parliament half composed of new members who will need to be informed and educated just as their predecessors were.

Are you in touch with individual governments about carbon removal? Are some of them coming up with support mechanisms, or are they relying more on a broader EU approach?

Some governments are more advanced than others and they tend to drive the EU agenda. I think it’s important that governments think about carbon dioxide removals from a local perspective, because different countries have different geology, they’ve got different lengths of coastline, different depths of water off their coast, different land use, plus human factors like population, skills, etc.

All of these factors will lead countries to prefer to invest in a particular method of carbon removal more than another, just as companies will have variety in terms of their interest in certain methods of carbon removal. Every country in the European Union needs to be thinking about which method of carbon removal is the one that’s going to be most useful for it.

Obviously the larger countries with larger government machines like France and Germany are able to invest in thinking ahead. The various small countries are counting on the European Union to drive the agenda for them. They will be better served by taking a more deliberate and strategic national approach, which identifies which CDR methods are the ones for them.

We have been working on national policy, but in a very limited manner, because our resources are very limited. We are currently funded by membership fees and we need to get new philanthropic funding in order to expand our operations beyond the core business of advocacy in the EU institutions and into the business of advocacy at the national level and also outside of government.

Do you think there is enough support for these fledgling carbon removal companies from public sources?

Well, there is certainly support from public sources for these companies. There’s European funding of the Innovation Fund, Horizon research grants etc. And doubtless some national funding as well. But what we ultimately need to see is, of course, a completely different scale of industry. And that will not be possible unless governments create these compliance markets that we’ve been talking about. That happens through regulatory support.

We talked earlier about supply and demand and the regulatory framework. We think the EU regulatory framework as a huge necessary condition for the sector, unlike the tech sector which ran away from regulation for 20 years. This is a sector which is running towards regulation, and embracing it, because it’s only regulation which will make the business possible.

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