To quote an analogy developed by Professor John Sterman at MIT, we are adding too much water to a bathtub that is already nearly full. The tub is in danger of overflowing if we don’t find a way to remove at least as much water as we add. According to estimates, even if firms and governments met their current targets, we still need to remove 7–9 billion tonnes of carbon dioxide per year from the atmosphere to achieve net-zero emissions by 2050. In other words, exploring options for carbon dioxide removal (CDR), be they nature-based or technology-based, seems essential.
Nature-based solutions such as afforestation and biochar leverage natural processes to capture and store atmospheric carbon. Technology-based solutions, which include bioenergy with carbon capture and storage (BECCS) and direct air capture, rely on human-made engineering approaches.
The limits of nature-based solutions
Nature has an in-built CDR method: photosynthesis. It’s estimated that the world’s forests have absorbed over 100 billion tonnes of carbon dioxide over the past 30 years. One CDR approach is to accelerate this process through forest restoration or biochar-based carbon removal to increase the amount of carbon that nature absorbs.
Nature-based CDR also offers other benefits like biodiversity conservation, flood protection and economic opportunities for local communities. But there are challenges. Growing new forests is expensive. Trees take 20-30 years to mature, have a finite life span and can be damaged by wildfires and disease. Mismanaged reforestation projects can even harm biodiversity or negatively impact indigenous people.
Even if the above issues could be solved, land is a constraint: there is just not enough available space to scale nature-based CDR to a point where it can fully compensate for global emissions. It is estimated that nature-based solutions can help achieve one-third of the emissions reduction the IPCC considers necessary by 2030, but would have limited room to scale further beyond 2030.
Can technology-based solutions save the world?
In principle, technology-based CDR approaches hold significant potential, and even offer unique advantages over nature-based solutions. They are typically less land intensive and offer more permanent ways to store the captured carbon. However, most of these approaches are nascent and face the dual challenge of high cost and limited scalability.
The debates around CDR, particularly technology-based CDR, are well illustrated in my case study on Climeworks, a leading venture in direct air capture technology. The key idea behind their solution involves utilising banks of large fans powered by green energy to draw in atmospheric air, from which carbon is removed and buried deep underground.
The approach seems to hold promise. In addition to a more efficient use of land and more permanent carbon storage than nature-based solutions, it offers accurate and reliable carbon removal data to help clients monitor their emission reduction, helping counter any accusation of greenwashing. It’s no surprise that Microsoft, BCG and J.P. Morgan are among the firm’s customers.
Considering its ambition to remove a staggering one gigaton of carbon dioxide per year by 2050, Climeworks’ current scale is tiny. A key challenge is that Climeworks’ offering is still over 100 times more expensive than other carbon offset solutions. Even as the company tries to bring down costs, increase capacity and grow demand, not everybody is convinced by their ambitions.
Creating demand for carbon removal
The current array of carbon offset offerings differ significantly in their cost and quality. Carbon markets are still largely voluntary, lack standardisation and involve potential customers with limited understanding of quality. This is bad news for Climeworks, as a significant market segment is critical to the scalability of its business model.
However, Climeworks sees an opportunity in the broader carbon offset space coming under increasing scrutiny as its clients grow in sophistication. Criticisms levelled at cheaper offset solutions range from double counting of claimed emission reductions to limited evidence of the difference they make (i.e. their “additionality”) to the overall carbon in the air, in the first place.
The climate tech company is devoting significant resources to educating clients on why its services are worth the price. Yet, given its huge premium, growing its market requires policies that make it mandatory to pay for one’s emissions (e.g. carbon taxes) and channel funds into high-quality CDR. Engaging in non-market strategy to educate policymakers and influence regulation is therefore a critical part of the venture’s strategy.
CDR as a part of a portfolio of solutions
There is growing scientific consensus that mitigating climate change needs a combination of aggressive emissions reduction with responsible carbon removal. The hype around CDR should not distract us from reducing emissions.
Despite their focus on CDR, Climeworks’ leaders acknowledge that no single solution can serve as a silver bullet for climate mitigation. Rather than positioning its technology as something that can save the world on its own, they emphasise the need for a portfolio approach because “it takes more than one seed to plant a garden.”
One critical priority is to scale renewable energy sources like solar or wind power more quickly. Another priority ought to be improving energy efficiency. The good news is that pursuing both approaches can uncover “win-win opportunities” for companies, where a reduction in emissions goes hand in hand with falling energy costs.
But we need to do more if we want to achieve net zero. We must accelerate efforts to find climate solutions in sectors where there is still a significant “green premium” in adopting climate-friendly approaches. Examples of such hard-to-abate sectors include aviation, shipping, construction, cement and steel. Then there is agriculture, where significant emissions also come from methane and nitrous oxide. It’s not just up to scientists but also entrepreneurs to develop scalable climate solutions.
There are also growing calls to do more on the consumption side to reduce our reliance on highly-emitting products and services – from animal meat to frequent flights – in the first place. Proponents of this movement are insisting that we need to stop using growth as a metric of progress.
In the end, CDR is necessary to the extent that even our best efforts on other fronts cannot achieve net zero quickly enough to avert the worst harms of climate change.
Collective responsibility
While it is easy to demand firms and policymakers fix the issue, climate mitigation needs us all to engage in every aspect of our lives.
As individuals, we need to educate ourselves on the science behind global warming. The knowledge can help us reduce our personal footprint and put pressure on the companies we buy from or work for to play their part.
As citizens, we should pressure governments to develop policies and frameworks that can guide the energy transition, ensure transparency and incentivise those organisations pursuing positive change, while ensuring climate justice to make sure the vulnerable are not penalised.
As managers and entrepreneurs, we can develop innovative business models so that firms can operate more efficiently, help accelerate the transition to renewable energy, pursue circularity and actively explore greener approaches.
As activists, scientists and academics, we must promote an “urgent optimism” grounded in evidence and actionable knowledge. Now, more than ever, we can’t let climate deniers or doom-mongers distort the climate discourse and prevent change.
It is only by adopting a portfolio of approaches and working together, that we can hope to fight the global climate challenge and secure a sustainable future for everyone.
“INSEAD, a contraction of “Institut Européen d’Administration des Affaires” is a non-profit graduate-only business school that maintains campuses in Europe, Asia, the Middle East, and North America.”
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