MANDATORY CDR OBLIGATIONS

A government can require specified companies to ensure that a set quantity of carbon dioxide is removed from the atmosphere and stored by a compliance deadline. It decides which firms are responsible, how much each owes and how they may fulfil the duty. Depending on the legislation, companies can operate their own removal projects, contract specialist developers, purchase verified removal units or use an approved joint arrangement. Every route must demonstrate the required net removals. Where units are issued, they must be retired, meaning marked as used in a registry so they cannot be sold or claimed again. The obligation creates customers for CDR without government buying the removals itself. It can cover one industry or several, with a purchase-only mandate as one design option.

The central choices are which companies are responsible, how much they owe and how the requirement increases. Emissions can provide a basis for allocating responsibility, while expected compliance costs and companies’ financial capacity should inform the pace of introduction. Lawmakers should specify whether own projects, affiliated suppliers and pooled arrangements qualify, and who remains liable if a developer or joint arrangement fails. All routes need credible net-removal, storage, verification and reversal rules. Advance contracts can help suppliers finance delivery, but only completed, verified removals should normally discharge a current obligation. Penalties and narrowly defined shortage relief should make compliance credible without encouraging weak credits. Separate emissions-reduction duties and clear accounting rules should prevent double use and substitution for feasible emissions cuts.

A rising legal duty gives suppliers identifiable customers and a reason to plan capacity before net-zero deadlines. Companies expecting recurring obligations may prefer multi-year contracts that secure supply, providing developers with stronger revenue commitments. Shared purchasing arrangements can help smaller obligated buyers obtain expertise and negotiate contracts. Companies with suitable land, biogenic CO₂ or residues may also invest in their own removal projects where legislation permits that route. Competition for this demand can support repeated delivery and learning across qualifying methods. The financing benefit depends on actual contract terms; an annual duty alone does not guarantee long-term offtake.

Demand can exceed credible supply, causing high prices, concentration, waivers or low-quality eligibility. Companies may treat removals as a substitute for cutting emissions, pass costs to customers or lose business to uncovered competitors. Short annual deadlines can favour existing credits over contracts that finance new supply. Weak retirement, ownership or cross-border rules allow duplicate claims, including when companies claim removals from their own projects. Political pressure may freeze or repeal the schedule. Failed suppliers or joint arrangements can leave companies short of the removals they owe, while unclear reversal rules can leave stored carbon losses without an accountable party.

Evaluation should compare company obligations with verified removals delivered through each permitted route and the corresponding retirement records. Prices, contract length, supplier concentration, waivers, penalties and the performance of joint arrangements should show whether the duty is creating reliable demand. Gross emissions and removals should be reported separately to show whether compliance accompanies emissions cuts. Reversals, invalidations, duplicate claims and cost pass-through should inform later schedules, eligibility and consumer protections.

Engagement should combine supply, cost and contracting evidence from covered companies, removal suppliers and lenders with accounting evidence from registries, auditors and climate authorities. Smaller firms and organisations arranging joint purchases should help test whether compliance routes are practical. Competition and consumer bodies should assess market power and affordability, while workers, communities and civil society should scrutinise safeguards and where supported removals occur.

Governments can agree common obligations through international sector bodies, with participating states enforcing company compliance. Supranational institutions can impose duties across member states. National governments and regional or state legislatures can establish obligations where their climate and business-regulation powers allow. Regulators calculate required removals, check delivery and retirement records, and enforce penalties. Companies choose among the compliance routes the legislation permits. Ordinary municipal purchasing powers do not themselves authorise a duty on other businesses.