Decarbonization: the role of high-quality carbon removal and the urgency to get started now

The growing importance of carbon removal 

According to a recent report released by Boston Consulting Group (BCG), Carbon Dioxide Removal (CDR) is on the cusp of becoming a pivotal component in worldwide decarbonization endeavors. The period from 2030 to 2040 is expected to witness a significant uptick in demand for carbon removal offsets, accompanied by a corresponding decrease in prices, making carbon removal technology and solutions increasingly accessible. This evolution is set to assume a vital role in the short-term reduction of global net emissions while contributing to long-term aspirations to erase historic emissions. 

Titled "The Time for Carbon Removal Has Arrived", the report emphasizes the urgency for corporations to get started now with a robust, science-based net zero strategy utilizing carbon removal solutions — particularly those capable of effectively capturing and sequestering emissions over extended periods of time. Notably, the report highlights the prominence of various durable CDR techniques, including direct air capture and storage (DAC+S), biomass with carbon removal and storage (BiCRS), enhanced weathering/carbon dioxide mineralization, and ocean alkalinity enhancement. These carbon removal technologies are poised to play a transformative role in the landscape of global carbon reduction initiatives and the broader, global net zero strategy. 

In this article, we’ll distill some of the key messages from BCG’s published report, expanding on high-quality, durable CDR as a tipping point with substantial demand potential. The report contains findings from an independent study conducted by BCG to assess market opportunity across both voluntary and non-voluntary markets for a select set of CDR methods in the 2030-2040 timeframe. It leverages interviews and a survey of 100+ buyers of CDR (current and potential), as well as BCG IP and analysis.

The critical role of carbon dioxide removal

The global scientific community, including the IPCC, recognizes that emissions reductions alone will not be enough to meet either the 1.5°C or 2°C targets. We need carbon removal solutions that capture and sequester emissions from the atmosphere before storing the CO₂ in geological, terrestrial, and ocean reservoirs or in products. The required quantity of CDR will be determined by how quickly the world can reduce its greenhouse gas emissions, with current estimates for the need ranging from 5-16 Gt CO₂e per year by mid-century (source).

Without CDR, we can’t reach the “net” in “net zero strategy” because carbon removal is the only way to tackle emissions where mitigation or reduction measures are insufficient/not readily available. Carbon removal plays a critical role in the near, medium, and long term, as detailed below:

• Near term: to reduce greenhouse gas emissions in hard-to-abate sectors, where reduction measures will require more time to implement.

• Mid-term: to counterbalance residual emissions and help us reach Net Zero.

• Long-term: to achieve net-negative emissions.

CO₂ has been collecting in the atmosphere for the last 70 years, from ~300 parts per million (ppm) to ~420 ppm compared with pre-industrial times. CDR will help to reduce this gap. 

The need for high-quality carbon dioxide removal

In their report, BCG revealed that voluntary buyers indicate a willingness to pay up to -4x more ($160-280/t-CO₂) for high-quality CDR. But what does this mean exactly? The defining characteristics of high-quality carbon dioxide removal are cited as permanence of removal as well as measurement, reporting, and verification protocols (MRV). By permanence, this refers to carbon removal technology and solutions that can remove and store CO₂ for significant periods of time — for example, direct air capture and storage (DAC+S), which uses geological storage to safely remove CO₂ from the atmosphere for over 10,000 years. In terms of MRV, it’s about the increasing quality standards of carbon markets and public pressure on companies to pursue verifiable impact. Consumers want carbon removal that’s fully measurable, additional, and durable. In fact, 77% of buyers in BCG’s study indicated that they first optimize for quality over quantity, with 78% citing permanence and 77% citing MRV in the top 5 indicators of high-quality carbon removal. This is essential progress to ensure that corporations deliver on their net zero strategies with durable carbon removal that has a demonstrable payoff.

The urgency to scale carbon removal solutions now 

Climate mitigation investments, including CDR, will need to at least triple by 2030 to limit warming below 2°C. That’s because the carbon removal solutions available to us will either need time to capture their share of CO₂ — for example, nature-based solutions such as afforestation will need at least a decade to maximize their capacity. Or, in the case of carbon removal technology solutions, operations are still in the pilot stages and need further backing to scale up. Early investment is, therefore, essential to grow the supply of durable carbon removal.

Additionally, until now, the uptake of CDR has primarily been driven by the voluntary engagement of a limited number of corporations. As of 2022, the market remained relatively modest, accounting for just ~600 kt CO₂. But in 2023, there’s been a notable uptick in demand with large purchases from major players like Microsoft, J.P. Morgan, and NextGen, in addition to advanced market commitments from buyer groups such as Frontier Climate. By 2030, the demand for CDR will far outstrip supply — in fact, BCG estimates that quality CDR demand will grow to -80-900 MtCO₂ p.a., with demand in 2040 exceeding the 2030 announced project supply of -33 MtCO₂. This brings an added layer of urgency because corporations must essentially act now to secure supply for the future. But it’s also an opportunity for investors to get in early as voluntary demand for CDR grows and winning suppliers are determined. As such, companies are looking to allocate approximately 34% of their carbon credit portfolios to durable carbon removals by 2030, with this figure rising to around 48% by 2040, aligning with scientific recommendations. 

As the title of BCG’s report suggests, "The Time for Carbon Removal Has Arrived", and there are opportunities for companies to get on board which can’t be missed. To establish a robust supply of high-quality carbon removal offsets and services, it’s essential for all key players to take action. This includes governments, purchasers, providers, those responsible for policy and standards, and investors.

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