Using carbon removal to deliver climate impact

How should we use carbon dioxide removal? For compensation? For tackling historical emissions? For corporate social responsibility? Are there other uses out there? While much research into carbon dioxide removal (CDR) has been dedicated to supply-side issues, how CDR gets used and where demand for CDR lies are underexplored topics.

So-called “use cases” for CDR refer to the purpose for and the way in which stakeholders engage with carbon removal activities, ultimately linking to how CDR is paid for. In this policy brief, we argue that diversifying the accepted uses for CDR activities would expand the demand pools available to scale CDR while improving overall environmental integrity. Finding new “use cases”, and thus new markets for CDR, creates more opportunities to direct funds towards CDR scale-up. We examine key use cases and explore the cross-cutting question of how certification can be leveraged to deliver more diverse uses of CDR.

This policy brief examines four current and emerging use cases in turn. We consider their significance (their ability to provide a market to drive CDR scale-up), barriers to adoption, as well as explore the governance needed to ensure they are used sustainably and deliver real climate impact.

Use case 1: Voluntary compensation

Compensation is the primary use case for CDR today, bringing much-needed funding to CDR, primarily via the voluntary carbon market. However, CDR-based compensation practices are still not widely used, limiting the market size. Guidance frameworks could address this shortfall by clarifying the near-term role of compensation (rather than framing it as a long-term tool to be used only at the point of net zero), and by promoting the use of CDR over avoided emissions and reduction units. Policymakers should establish a regulated corporate standard to limit greenwashing practices while enabling a wider use of CDR. Compensation practices should be guided by four key principles:

1. Companies or organisations wanting to compensate their emissions (and make a related claim) should only use CDR units.
2. Only permanent CDR should be used to compensate for fossil emissions (like-for-like principle).
3. Only ex-post, publicly retired CDR units should be used.
4. At the point of net zero, CDR should only be used to balance hard-to-abate emissions, but in the nearer-term, CDR may be used more flexibly, provided that corporates have adopted a clear decarbonisation pathway and are fully transparent on the percentage of the emissions reduced vs. those compensated.

Use case 2: Voluntary contribution

Corporates can adopt a “contribution” approach to CDR, directing money towards CDR without making a compensation claim for their emissions. Doing so could reduce the risk of mitigation deterrence associated with tonne-for-tonne claims. Businesses engaging in contribution could approach contributing to CDR as a corporate social responsibility or marketing exercise, or even a financial investment in the CDR sector. However, common guidance is needed to build corporate understanding and steer contributions towards high-impact initiatives.

Use case 3: Compliance frameworks

In the absence of clear economic incentives to invest in CDR, voluntary approaches alone are insufficient to drive CDR scale-up. Compliance markets – mandatory use cases for organisations – would ensure that organisations at different levels engage with, and finance, CDR in a more consistent way. Compliance systems could also set out specific rules on how companies and organisations engage with CDR. Such systems would establish enduring demand and higher predictability for CDR to enable the continued growth of the sector.

Use case 4: Government support

Use cases – A “use case” refers to the motivation for a stakeholder to engage with carbon removal activities, recognising the circumstances and end goals of these engagements are diverse. Use cases vary in terms of the identity of any user (e.g. a company, a government), the purpose of the use (e.g. demonstrating compliance with a regulation, making a public claim), how it is paid for (e.g. by purchasing a certified unit, investing in project development, donating to non-profit organisations working on CDR) and how the climate benefit is accounted for (e.g. retired to substantiate a claim, counted towards a given country’s NDC, or both where allowed).