According to the Intergovernmental Panel on Climate Change (IPCC), global society must remove billions of tons of greenhouse gas (GHG) emissions annually by 2050 to achieve a net zero economy. In response to this climate imperative, organizations that provide guidance on achieving corporate net zero goals, including the Science Based Targets initiative (SBTi), are mandating the eventual use of carbon removals. These standards require organizations to reduce emissions across their value chains as much as possible (>90%), then match removals to any remaining (i.e. residual) emissions in their net zero target year.
In this article, we will explore the current carbon removals landscape, providing background on third party guidance, carbon removal project types, market developments, and considerations for investment.
Definitions and Project Types
Carbon removals represent one metric ton of carbon dioxide equivalent (MT CO2e) that is removed from the atmosphere and durably stored within a carbon sink or reservoir.
A few criteria are critical for identifying credible carbon removals. One such criteria is permanence (also called durability). Permanence refers to the length of time over which sequestered carbon will be stored in natural or geologic sinks. The durability of removal projects can vary quite dramatically – some store carbon for fewer than 100 years, while others can potentially store carbon over a thousand years if monitored effectively. As of now, there is no single threshold or standard that dictates how long carbon must be stored to qualify as a ‘removal’, although logic tells us that the longer GHG can be stored, the more beneficial to mitigating climate change.
Another key criterion for removals related to the concept of durability is risk of reversal, which refers to the possibility of stored carbon being released back into the atmosphere. High-quality removal credits should have measures in place to protect and/or insure against reversals. Credible removal projects also demonstrate net negativity. In simple terms, this means that a project does not generate more carbon (e.g., from energy use, transportation, etc.) than it removes via the project activity itself.
A number of different types of projects can effectively remove carbon from the atmosphere. These include:
- Biological projects (also referred to as “nature-based” projects) that sequester and store carbon in natural ecosystems
- Engineered projects that use new technologies to remove carbon from the atmosphere, and
- Hybrid projects that are a combination of the two.
Biological projects, including reforestation, improved forest management, and soil carbon sequestration, often store carbon over short, decadal timescales and are subject to a relatively substantial risk of reversal. However, credits from these projects are available in the market today and facilitate large-scale carbon sequestration, ecological conservation and protection of existing natural landscapes. On the other end of the spectrum, engineered projects like direct air capture (DAC) can store carbon underground for potentially thousands of years with minimal reversal risk, but credits from these projects are extremely scarce and often prohibitively expensive in today’s market.
Standards and Market Pioneers
The global removals market is still relatively small, but has seen significant growth over the last few years. While only 3% of all carbon credit projects exclusively issued removals in 2023, total demand for carbon removals continues to increase year-over-year. Meanwhile, standard-setters and infrastructure providers are attempting to support this new demand by providing third-party assurance and standardization to the market. Major carbon crediting programs, namely Verra, Climate Action Reserve, Gold Standard, and ACR, are publishing new methodologies and guidance on various types of removals. We’re also seeing the emergence of standards and registries dedicated entirely to removals, such as Puro.earth and Isometric.
However, uncertainty remains over how net zero standards that structure market demand will define “eligible” removals. Corporate buyers still await guidance from the Science-based Target Initiative on which types of removals will be able to neutralize residual emissions at the net zero target year. Regardless, the SBTi has recommended that companies start buying a wide variety of carbon removals today in order to help the market scale for future demand.
Despite the uncertainty around quality criteria for net zero removals, several of the world’s largest tech companies are taking action to support the development of emerging carbon removal technologies. Microsoft, for example, has committed to becoming carbon negative by 2030 – meaning it will remove more carbon than it emits – and has pledged to remove every metric ton of carbon it has emitted since its founding in 1975. To support market growth, Microsoft is taking an open-source approach to its pioneering CDR purchases by publishing its learnings and criteria for high-quality carbon removals.
Governments are also looking to grow demand for removals by incentivizing procurement and adding credibility to the market. In the United States, the Department of Energy (DOE) launched a Carbon Dioxide Removal Purchase Pilot Prize, which will award $30 million to suppliers of high-durability CDR. The DOE also plans to publish a leaderboard for corporate carbon removals purchases through its Voluntary CDR Purchase Challenge. Meanwhile, the European Union Parliament has agreed to a preliminary Carbon Removals Certification Framework, which will define criteria for high-quality removals and aims to grow the supply of EU-based removals projects.
Corporate Strategies for Carbon Removal Procurement 
With a growing CDR market and pressure to demonstrate climate leadership, companies are beginning to consider how to incorporate removals into their broader decarbonization strategies. These companies are navigating complicated questions around when to start purchasing carbon removals, which types of removals to buy, and how to choose between numerous contracting options that offer varying benefits.
The Oxford Principles for Net Zero Aligned Offsetting lay out one credible pathway for developing a net zero-aligned climate strategy that gradually incorporates carbon removals. According to Oxford, organizations should purchase a blend of emission reduction/ avoidance credits and removals with a higher risk of reversal (i.e. removals to the biosphere) today. Then, at 2030 and beyond, companies should start steadily increasing the proportion of removals with low risk of reversal (i.e. removals to the geosphere, such as DAC). By 2050, organizations should be exclusively sourcing removals with low reversal risk to counterbalance any residual emissions.
Once organizations have decided how to incorporate removals into their decarbonization journey, they must develop procurement plans to support their short- and long-term strategies. There are a variety of procurement structures that organizations can consider when evaluating opportunities to work with carbon removals projects, including spot purchasing, long-term offtake, forward offtake commitments, or prepayment. Each option has its own benefits and risks; spot purchasing and long-term offtake agreements offer less delivery risk, while forward offtake and prepayments provide a powerful mechanism for supporting nascent projects that require upfront capital to scale.
Across the board, there is no single “one size fits all” approach for supporting carbon removal. Each organization should carefully consider its own risk tolerance and investment goals when developing a removals strategy. At 3Degrees, we recognize the value in all types of removals approaches, and therefore encourage our clients to support a wide variety of project types at different stages of maturity. To this end, we will be announcing a new carbon removal offering on May 27 that will allow companies to integrate meaningful and verifiable contributions to carbon removal. Stay tuned for more details.
The Path Ahead
Every organization has a unique role to play in supporting the carbon removals market, and not every organization can play every role (nor should they). Buyers should consider a number of factors when developing their strategy, including how specific projects fit into their broader organizational priorities (e.g., those that fall in their geographic footprint) and sustainability goals (e.g., those that generate co-benefits that align with their mission). Ultimately, buyers should work towards finding a sweet spot where their removal goals intersect with their values, risk appetite, and areas of influence to determine how to meaningfully support the market.
Want to learn more about carbon removals? Download the full white paper. Ready to discuss how your company can engage in the removals market? Get in touch with our team today.