Carbon Dioxide Removal (CDR) vs. Other Carbon Credits

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How carbon dioxide removal (CDR) projects are different from other carbon offsets and why your organization might want to buy carbon removal credits.

In October 2021, the science based target initiative (SBTi) published the Net-Zero Standard to help companies across the world set net-zero targets. In their guidance, the SBTi warns that deep and urgent decarbonization must take place in order to limit global warming to 1.5 degrees Celsius by 2040, including the need to counterbalance emissions that are impossible to eliminate with permanent carbon removal activities, which produce the type of carbon credit that we’ll cover in this blog post. The framework provided by the SBTi makes it clear that carbon removal activities are crucial for achieving net-zero. Under the guidance, carbon removal credits can account for up to 10% of harder to abate carbon emissions that cannot be eliminated, and starting in 2030 the SBTi will only recognize carbon credits generated from carbon removal activities as valid offsets. So, what are carbon removal credits, how are they different from other types of carbon credits utilized to offset carbon emissions, and why can they be used where other carbon credits can’t be under SBTi?

Note: you can set decarbonization targets, including net-zero targets, without following SBTi’s protocols, and in those cases, removal credits would not be required for your strategy, however you may still seek out removal credits as part of a holistic decarbonization strategy to meet your goals, SBTi or otherwise.

What Is Carbon Dioxide Removal (CDR)?

Carbon dioxide removal (CDR), commonly also referred to as carbon removal, is a process that involves extracting carbon dioxide (CO₂) from the atmosphere and harmlessly sequestering (storing) it in geological, terrestrial, or ocean reservoirs—also known as natural carbon sinks—or by using the CO₂ for another purpose. After the CO₂ is removed from the atmosphere, it may be turned into rock, utilized for enhanced oil recovery, or utilized to make carbonated beverages—to name a few ways the CO₂ may be repurposed.

Carbon Removal examples

There are a number of carbon removal techniques being developed and tested, including kelp sinking, a nature-based solution that involves growing kelp and then sinking it to the bottom of the ocean, as well as direct air capture (DAC), a technology-based solution that extracts CO₂ molecules from the air using chemicals. Growing up to two feet per day, kelp is a carbon sequestering powerhouse. Nature-based projects involving blue carbon ecosystems are especially good at soaking up CO₂, then safely storing that CO₂ so it doesn’t reenter the Earth’s atmosphere. Solutions like kelp sinking are considered permanent (more on permanence later) since the chance of CO₂ escaping back into the atmosphere is basically non-existent. DAC pulls CO₂ out of the air by using selectively binding chemicals. Once the CO₂ is extracted from the air, it can be injected into an underground storage site or used in products like cement or carbon fiber. There are a variety of technologies being pursued with differing levels of effectiveness, scalability, and permanence, and it’s going to take a combination approach to meet net-zero goals globally.

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Carbon Removal Credits vs. Other Carbon Credits

While other carbon offset projects help to reduce CO₂ emissions now and in the future (for example, with clean energy innovations), carbon removal offsets extract preexisting CO₂ from the atmosphere. The key difference between CDR projects and other carbon offset projects is that CDR involves actually removing CO₂ from the atmosphere, whereas other carbon offset projects compensate for emissions that have already been released, or are planned to be released, into the atmosphere. CDR can be thought of as a cure to the problem since it focuses on reversing the damage we’ve already done to the atmosphere, while other carbon offsets can be thought of as treating the symptoms, or compensating for damage that has already been done or will be done. CDR also differs from carbon capture and storage (CCS) methods; CDR involves extracting CO₂ that already exists in the atmosphere, causing a net drop of CO₂ in the atmosphere, while CCS projects prevent CO₂ (from factories, manufacturing plants, etc.) from entering the atmosphere to begin with, causing the net CO₂ in the atmosphere to remain unchanged. While all types of carbon credits are important tools in helping to achieve a net-zero future, the technical differences between carbon removal credits and other carbon credits are important to note.

Scalability and Permanence of Carbon Removal Techniques

In April 2021, the United States (US) government committed to reaching net-zero by 2050, and while strategies to reduce emissions are already underway, more will have to be implemented to meet these net-zero targets. According to the World Resources Institute (WRI), the US government needs to remove 2 gigatons (GT) of carbon from the atmosphere to reach net-zero by 2050. Pure CDR projects made up just 3% of projects issuing credits between 2021 and 2022, and carbon credits issued in 2020 equaled just 0.4% of total global emissions. In other words, while CDR technologies are rapidly being developed and explored, there is a scalability problem that needs to be solved if we are going to be able to collectively meet net-zero goals.

Barriers to Scaling

The cost to start a new CDR project is high. Programs like Frontier are helping to cover some of these costs, but that’s not a realistic solution across the board. On the buyer’s side, carbon removal credits can cost anywhere from $25/tonne on the low side to $1,000+/tonne on the high side, which can add up to a significantly higher cost than other carbon credits in the voluntary carbon market. So the efficiency of these projects is something that is going to have to improve, in order to bring down the price point for both project developers and the companies buying carbon removal credits, and to increase the scalability and thus the availability of carbon removal credits as we get closer to 2030 and beyond.

Scalability Solutions

New technologies are being developed and tested to make CDR more efficient, scalable and cost-effective, but this all takes time and money. In addition to help from programs like Frontier, organizations that can afford to pay the premium can help fund the creation of new projects by becoming early adopters of carbon removal credits—especially organizations that have already set SBTi targets, since they will need to transition 100% to carbon removal credits by 2030 anyway, for their harder to abate emissions, according to the SBTi net-zero guidelines. Also, organizations with SBTi targets set would benefit in having a long term supply of carbon removal credits locked in well ahead of the upcoming change in 2030.

What Is Permanence?

Permanence refers to the durability of a CDR or other carbon offset project and is a key indicator of the project’s quality. The more CO₂ that seeps back into the atmosphere over time means a project has less permanence and is therefore not as impactful as other projects with more permeance—or a better ability to retain captured CO₂. Removals projects that can store carbon for at least 100 years are deemed “permanent.” In addition to solving scalability problems, the permanence of different carbon sequestration techniques will be a factor in whether or not net-zero goals can be met by 2050.

Does Your Business Need Carbon Removal Credits?

If your organization has set SBTi targets, you will need to make the transition to carbon removal credits by 2030. By starting the process now, you can secure your organization’s ability to meet its sustainability goals while leading the way for everyone else.

Even if your organization hasn’t set SBTi targets, the interest from consumers and investors in sustainability, in addition to new, upcoming, and potential compliance requirements, will only continue to grow. Carbon removal and other carbon credits are a tool for decarbonization that can pair with other carbon reduction efforts. It’s important to reduce what you can and source high quality carbon credits when offsetting emissions. By taking control of your company’s sustainability journey today, you can greatly improve the ROI of your sustainability efforts.

Conclusion

If you’re interested in learning more about acquiring carbon removal credits for your business, reach out today. Our team of experts can guide you through the entire process, no matter where you are. Contact us today to get started.