Marginal Carbon, a platform covering topics and analyses of the carbon removal market, published a unique free dataset of collected emission, revenues and profits data for leading 250 companies (Scope 1-2 data for 209 of them).
The dataset is for 2020-2022 and contains companies from different industries. It tries to answer the question of who can afford to pay for carbon removals. The data was also used in Carbon Gap’s analysis: “Who Can Pay for Carbon Removal?”, which is now updated.
Relevant: Key Takeaways From COP28 UAE
This analysis itself is an update from a report published in November 2022 called Bridging the Ambition Gap: A framework for scaling corporate funds for carbon removal and wider climate action.
The sophisticated data analysis shows the scope 1,2, and 3 greenhouse gases, revenues and profits of the top companies to calculate the profits per ton of CO2 emitted and thus determine how much companies can afford to pay for carbon dioxide removals and what are their capabilities in supporting the space.
The results show that low-emission/ high-profit companies can afford to take full responsibility for their greenhouse gases, implementing a credible internal carbon fee. For example, a bank earning $2 million of profits in total with a profit of $100,000 per ton of CO2e emitted, can affort to spend $200 on a carbon fee which represents just 0.1% of the profits.
Even though companies are expected to direct most of their internal carbon fees towards reducing the total emissions, those with high profits and a low emission intensity have fewer opportunities to use the money to cut their emissions as the majority are hard to abate. They might need carbon removals as the last resort to offset their carbon footprint so that money could be spent on promising CDR technologies.
The analysis also shows that high-emissions/ low-profit companies, might contribute the most to CDR in absolute terms. A fossil fuel energy company for example, with $2 million in profits would have $200 profit per ton of CO2 emitted due to its higher emissions profile. That would make the internal carbon fee just $2 per ton of CO2 emitted. Even if it represents a small fee, multiplied by the total emissions would still make a higher absolute contribution.
That means, the financial sector could purchase nearly as many carbon removal tons as their total emissions, while other sectors like utilities might only buy CDR which would compensate for a fraction of a percent of their current emissions. However, the absolute amount of money contributed from the utility is going to be higher.
For a significant number of top companies, a fee of $100-200 per ton across all emissions would represent less than 1% of their profits. Some methods for setting the internal carbon fee could be including the social cost of carbon, the long-term expenses of permanent removals, or the marginal abatement cost. Based on the analysis of these approaches, a fee of $100-200 per ton could be seen as a reasonable benchmark.
Another key conclusion from the report is that all sectors can afford to remove their final 10% emissions with permanent carbon removals. The SBTi net zero standard – a framework for corporate net-zero target setting in line with climate science, companies should aim to reduce emissions by 90% and restrict CDR to the remaining 10%.
At current profit levels, companies from all sectors can afford carbon removal for the final 10% at a price of $100 per ton, which ranges from 0.01% to 20% of their profits.