Carbon Gap – the climate not-for-profit focused on eliminating carbon dioxide emissions, published a report aiming to bridge the critical gap between companies’ “ability to pay” for external climate solutions like carbon removal and their willingness to do so.
Authors of the report are Robert Höglund – Climate Advisor at Marginal Carbon AB and Eli Mitchell-Larson – co-founder, Chief Science & Advocacy Office at Carbon Gap. The analysis is titled “Bridging the Ambition gap: a framework for scaling corporate funds for carbon removal and wider climate action.”
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A key finding from the report is that the largest emitters in the world are actually not the ones that are able to contribute the most to fund carbon dioxide removal. In fact, the vast majority of global profits are generated by a small cohort of companies with a relatively low carbon footprint. The analysis calculates that 85% of profits come from companies with less than 15% of total emissions, with profits per ton emitted in the $10k-100k range.
According to the report, those companies with the highest profit per ton of CO2 emitted, are actually spending an “astonishingly low” part of their revenues and profits on purchasing carbon credits.
The sample looks into buyers like Microsoft, Google and Disney, which are spending less than 0.02% of revenue and 0.1% of profits on purchasing credits. The numbers suggest “there is a lot of headroom for more voluntary (or government-mandated) spending on climate projects,” the report states.
Carbon Gap also hosted an online event on Wednesday, November 16th officially launching the report. To a question asked to Robert Höglund about what the recommended percentage share from profits is that companies in this category should set aside towards carbon removal, he answered:
“There are different ways this can be seen from. A benchmark could be 1% which is traditionally what companies have been spending on charity. A credible price per ton is arguably +100 dollar per ton, which could be the long-term removal cost.”
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Those corporations also have the opportunity, and arguably the obligation, to eliminate the emissions that can be avoided or reduce emissions, while also taking responsibility by funding high-cost, higher-durability carbon removal or other climate solutions.
Even though their contribution to the climate crisis is relatively small, funds generated by this cohort of companies can generate large amounts of money that would be catalytic toward scaling higher durability carbon removal and other climate solutions.
Bridging the Ambition Gap analysis answers critical questions for the industry and raises the bar for emitters that want to take meaningful climate action. It also brings up more questions for discussions that are sitting in front of the industry to tackle and could be addressed if all participants and mediators come together to join forces.