This week, McKinsey released a report titled ‘Carbon removals: How to scale a new gigaton industry’.
According to the Intergovernmental Panel on Climate Change (IPCC), the world will not be able to achieve net zero by 2050 without the help of carbon dioxide removal (CDR).
And while there are many different CDR approaches that are to be deployed alongside emissions reduction efforts, most of them are still very far away from reaching the necessary gigaton scale to help achieve meaningful amounts of carbon removals.
Hence, the market has yet to grow, and the new report published by McKinsey explores exactly what potential it holds.
One of the key conclusions of the ‘Carbon removals: How to scale a new gigaton industry’ report is the potential for its value to reach $80 billion dollars by 2030, growing to a whopping $1.2 trillion by 2050.
Of course, reaching this value will require massive investments, ranging anywhere between $6 and $16 trillion by mid-century.
And then, naturally, the question of who will benefit from this market arises. Intiaitally, it will predominantly be the suppliers, taking anywhere between 70% and 80% of the market value.
But over time, McKinsey sees that number shifting and allowing more room for traders to cash in as the market matures.
The report examines 10 different CDR solutions, four of which are nature-based and the remaining six are technology-based approaches.
The former currently cost less and are already more widely used, with examples being reforestation and afforestation projects, blue carbon management, and wetland restoration.
The technological approaches, on the other hand, are at present still very expensive.
However, the report says, the situation for both is likely to change in the years ahead, as CDR technology becomes more affordable, and nature-based solutions, on the contrary, become pricier due to limited land resources.