(Bloomberg) —
Europe wants to become the global leader in removing planet-warming carbon dioxide from the air. But before it can, it will need to create robust standards and smart market mechanisms.
The challenge of carbon removal is overwhelming.
First, there’s the hurdle of scale. The European Union aims to capture and store as much as 5 million metric tons of CO₂ annually by 2030 using negative-emissions technologies and a further 40 million tons through nature-based approaches (beyond the 270 million tons captured by land and forest sinks today). And that’s just a tiny fraction of the billions of tons of CO₂ that humans dump in the atmosphere every year.
But it’s important to start somewhere. A study published last year in Nature Communications found that a failure to grow the carbon removal market this decade could mean as much as 190 billion euros ($217 billion) in extra annual spending to catch up in later years.
Then comes the problem of choice between different ways of removing carbon.
Nature-based solutions include growing forests, combining agriculture and forestry, restoring peatlands and changing farming practices to trap more carbon. These methods are mature, economical and ready to be scaled up, and they can also provide other benefits such as increasing biodiversity. But trees and land are only temporary carbon stores: Soil can degrade and forests can catch fire.
Technology-based options meanwhile can involve the use of machines to selectively filter CO₂ from the air, burning wood in power plants and burying the carbon produced underground, or using crushed minerals to improve soil health while trapping the warming gas. These options are still nascent and expensive — but once the CO₂ is buried deep underground, it can stay there for millennia.
The diversity of routes available and varying lengths for which they keep carbon out of the air is a nightmare for creating robust standards. That’s especially so because right now there are no good protocols for carbon removals through farming or forests, the most common method, says Danny Cullenward, policy director at nonprofit CarbonPlan.
That’s something the EU wants to address. “We need to do something urgently,” the bloc’s climate chief Frans Timmermans said at a conference last week. “The accounting has to be credible.”
If the EU goes too fast at scaling, however, Cullenward worries that it may end up using an existing methodology which could lead to the kinds of problem that the voluntary carbon market currently faces, where weak standards mean broken climate promises. “You’ll get a race to the bottom,” he said.
Even if a good protocol could be designed, Cullenward worries that there’s a risk of overpaying. Companies in Europe currently pay almost 100 euros a ton to emit carbon. Many of the high-integrity nature-based offsets, however, are likely to be quite a lot cheaper, perhaps less than 50 euros a ton.
Cullenward suggests there might be a way to balance scale and price. The EU could replicate what payment company Stripe Inc. is doing. Customers can choose to add a tiny sum to transactions using Stripe’s technology which add up to millions of dollars each year. Stripe uses that money to back new carbon removal startups by paying them to take CO₂ from the air.
Some of these startups offer the removal at $200 a ton while others may charge as much as $2,000 a ton. If Stripe were only concerned with how many tons of CO₂ it can remove, the company offering the cheapest rates would get all its funds. But because Stripe’s main goal is supporting as many types of carbon removal technologies as possible, it puts its money behind many startups.
According to Cullenward, applying Stripe’s model to the EU’s carbon removal program could look something like this: the EU auctions a set number of credits on the ETS to raise money for a “carbon removal pot.” It then uses that money to find the highest-quality projects that ensure CO₂ is verifiably removed and stored for as long as possible. It may apply other criteria, such as ensuring the money is spent on different types of solutions and in as many different member nations as possible.
If the EU procures removed carbon from a mixture of cheap nature-based solutions and expensive technology-based options, it may even end up buying more CO₂ than the credits it auctioned on the ETS. Most importantly though, it will have actually removed CO₂ from the air and avoided meaningless offsets.
A version of the idea already has backing from Ville Niinistö, a Finnish member of the European parliament, who is responsible for guiding the carbon removal legislation’s passage. In fact, he thinks the EU can be more ambitious. Niinistö wants the bloc’s additional nature-based carbon removal target to be 220 million tons by the end of the decade (on top of what’s already in natural sinks that exist today), and argues for using 5% of revenue generated by the ETS to support land management.
Akshat Rathi writes the Net Zero newsletter, which examines the world’s race to cut emissions through the lens of business, science, and technology. You can email him with feedback.
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