In the last couple of days a range of key reports haven been published on the state of the voluntary carbon market and CDR (carbon dioxide removal). In addition, the work by the EU is continuing in standardizing the monitoring and certification of CDR methods through the CRCF regulations, while the U.S. Government is pushing the development of policies to achieve an overall 50-52% reduction of net GHG emissions below 2005 levels by 2030.
So let’s go inside the tape where I tried to summarise the main takeaways in a nutshell from key publications.
Policies & Guidelines.
The CRCF by the European Commission is aiming to launch by 2026 with the creation of a public registry by 2028. It will regulate projects located in Europe, providing guidelines for private and public certification schemes.
The release of the ICVCM’s Core Carbon Principles and the introduction of VCMI’s Claims Code bolstered buyer confidence in the market’s quality and integrity. However, implementation delays and the absence of clear guidance on using carbon offsets for corporate net-zero goals were frequently mentioned by respondents as key reasons why buyers remained hesitant through much of late 2023.
Current global CDR efforts.
Over 2.0 Gt of CO2 per year is being removed, but only 0.0013 Gt of this comes from novel CDR methods. The leading methods among the novel CDR methods is Biochar Carbon Removal (BCR) with 0.79 megatons.
Requirements.
To achieve the Paris Agreement’s temperature goals by 2025 it requires between 7.0 Gt and 9.0 Gt of Carbon removal annually with the current governmental commitments being insufficient.
Voluntary carbon market.
In 2023 the sale of conventional CDR credits fell from 20.4 Mio to 13.3. mio, a reduction of nearly over 35%. In comparison, the sale of novel CDR credits has increased by over 700% in the last year, growing from 0.6 mio to 4.6 mio credits.
Costs.
Conventional CDR credits have averaged between $6 to $16 per credit in 2023, a slight drop since 2022.
The range of the novel CDR credits is far larger due to the technical innovation that go into the different removal methods. The prices range from $110 to $1,200, significantly higher than emission reduction or avoidance credits, which makes scaling novel methods financially challenging.
MRV (Monitoring, reporting, verification).
All reports emphasize the crucial role of MRV in scaling CDR efforts and to meet the customer requirements of data driven projects and full transparency for increased trustworthiness. There are a small range of companies offering dMRV technologies which, with their data-driven technology, will have an edge over their competitors on the long run.
CDR technology Innovation.
Currently the driving force in CDR innovation and developing new CDR technologies is based in the novel CDR sector. Looking at the market segment they are currently holding, there is a major deficit in financial funding which makes scaling novel methods challenging.
For a deep dive I recommend the reading of the following reports and webinars, which formed the basis of the above takeaways. The level of coverage presented in the different papers is impressive, with dense knowledge packed into well-structured reports, respect to all the contributing authors on their work!
Ecosystem Marketplace: State of the Voluntary Carbon Market 2024
University of Oxford’s Smith School of Enterprise: The state of carbon dioxide removal, 2nd edition 20024
Carbonfuture: 2024 buyers guide to carbon removal policy
So let’s de-fossilize, reduce and remove. Make your mark on the world.
#cdr; #dmrv; #Smith School of Enterprise and the Environment – University of Oxford; #carbonfuture; #ecosystem Marketplace