It has been estimated that the total size of the carbon dioxide removal (CDR) market in 2022 amounted to USD 226,418,403 in CDR purchases. What developments can we look forward to in 2023 that will spur the growth of the market further? Here are Climeworks’ top 3 expectations for the coming months, plus one highlight of the year that we already know for certain: the return of Climeworks’ Direct Air Capture Summit.
The monitoring, reporting and verification (MRV) of CDR is indispensable in order to create a market defined by high-quality standards. Clear definitions and industry standards of what a ton of CDR actually is (a ton of CDR must equate a ton of emission) as well as clear rules on key criteria such as durability, additionality and measurability are needed before the industry massively scales. We want to make sure we incentivize the scaling of high-quality CDR and build a market that serves global climate goals, not one that primarily profits from them.
Following the release of our methodology for CDR produced via direct air capture and storage (DAC+S), we were proud to announce this January that we delivered the DAC industry’s first third-party verified CDR Services to our first corporate customers.
We expect the focus on MRV to sharpen in 2023 and beyond. As deployment of DAC continues to roll out on a global scale, it places increased responsibility on different drivers of change: policymakers, specifically, will play a crucial role in pushing the market to adopt strong industry standards. How policymakers define standards and protocols inevitably defines the market and if it successfully drives climate action.
When we talk gigatons, we want to be sure we are talking high-quality gigatons that bring effective climate impact. Some of the initiatives that will shape the CDR industry’s MRV efforts in 2023 include:
With the release of the DOE’s funding opportunity announcement (FOA) for the regional DAC hubs program late last year, the U.S. is solidifying its position as a leading proponent for future large-scale DAC deployment. It released the first USD 1.2 billion out of a total of USD 3.5 billion available in a first round to solicit DAC projects in the U.S. After DAC project developers submit their applications in mid-March, the selected recipients are expected to be notified during the summer. Together with the Inflation Reduction Act signed into law in mid-August 2022 that increased the 45Q tax credit for DAC projects, we expect a flurry of exciting project announcements and activities across the U.S. this year.
While the federal funds created excitement among DAC developers, valid questions have been raised about how community engagement will factor into the development of the future DAC hubs. The DOE requires applicants to the DAC hubs program to include Community Benefits Plans in their dossiers, and we expect the conversation around environmental justice, community engagement, and wider considerations of fairness to stretch far beyond the U.S. As highlighted by Ugbaad Kosar, Carbon180’s director of environmental justice, “carbon removal is at an impressionable stage of maturity as more players come to the table and now is the time to shape it in a way that can be a tool for climate justice”.
The U.S. and Europe are typical hotspots for CDR companies but we are slowly beginning to see the start of a global CDR industry. One indication for this is that more and more people are making career changes across the world to work in the climate space. Whether they leave big tech companies, oil and gas, the beauty or travel industry (as documented recently in Bloomberg Green’s “Zero” podcast), the switch to a climate career path is made by many. With such inspiring examples on hand, we can expect to — and want to — hear more of these stories in the next months.
In parallel, we are witnessing rapid growth in the number and diversity of CDR companies. There is good reason to look forward to 2023 as new actors will enter the field. Despite the pull of the U.S. for DAC, it is likely that CDR projects will increasingly emerge outside the U.S. and Europe. For example, DAC company Octavia Carbon and Cella Mineral Storage (who was part of Frontier’s second round of CDR purchases) are already advancing their technologies in Kenya, and Capture6 is trialing its technology in New Zealand.
We need all reliable and effective CDR solutions available to permanently remove CO₂ at gigaton levels by 2050 and fulfill the potential of CDR in the fight against global warming. This cooperative spirit is inherent to Climeworks, and we believe it will be a core common ground across the industry, as we race with a common purpose: contributing to solving the biggest challenge of our time. We look forward to all the actors that will join the ecosystem in 2023 and to see CDR transforming into a global, mainstream effort.
While only time will tell how 2023 will effectively shape the CDR industry, we already know that Climeworks’ Direct Air Capture Summit returns in June 2023. Join us for the fourth edition of the summit to discover, learn and discuss what it takes to advance high-quality CDR solutions. Our summit is one of many platforms with which we want to help demystify CDR — a goal that we strive towards with passion and humility on our journey to inspire 1 billion people to remove CO₂ from the air.
We are looking forward to sharing more details about our program and speakers in due time, but already welcome your questions or notice of interest via [email protected]
Let us know what your predictions for 2023 and expectations for this year’s Direct Air Capture Summit are in the comments below!