True Permanence

We have a carbon storage problem. All credible emissions reduction pathways with a good chance of keeping warming under 1.5°C, in line with the Paris Agreement, require large volumes of permanent, geological storage of carbon. But the technologies required have not been deployed at a scale large enough to drive needed cost reductions, and few policies explicitly support the growth of this sector. A new, net-zero compliant carbon offset product based on permanent storage would harness the private sector’s willingness to pay to go “net-zero”, and offer a new stream of financing to get carbon removal projects off the ground.

 

Actor(s)

The number of organisations making net zero emissions commitments is snowballing. New carbon capture and storage technology pathways (remineralisation, direct air capture, etc.) and companies are proliferating, but they struggle to finance projects without long-term certainty that someone will pay them to store carbon. The missing element is a set of actors with an innovative business model and product, linking those who demand affordable decarbonisation with those who can provide that service. Ultimately, enduring policy support for carbon storage will be needed, but early action in the voluntary carbon market is the SIP to drive the system to the point where governments will be compelled to act.

 

Trigger (intervention)

Create a net-zero compliant carbon offset product for organisations with net zero targets, backed by a portfolio of both geological and nature-based carbon removal projects. Harnessing funds from the voluntary carbon market - which is set to multiply in response to todays net zero zeitgeist - to fund projects that are not otherwise being underwritten otherwise will be catalytic. By aggregating demand for negative emissions among smaller entities, larger carbon storage projects can be certified and financed on the basis of secured offtake agreements. Just as Power Purchase Agreements (PPAs) supercharged renewable energy deployment, standardised Carbon Storage Agreements between negative emission providers and organisations who want verifiable proof that they have neutralised their unmitigable emissions could tip the scales and inspire a first wave of carbon storage projects.

 

Criticality

Conditions are ripe for a paradigm shift in how we manage our carbon stocks. There has never been more enthusiasm among companies and non-state actors to drive climate action, and the coronavirus pandemic doesnt seem to have meaningfully sapped this energy. Oil & gas giants, once staunch opponents of climate action, are suddenly committing to go net-zero (see Total, BP and Shell), including by decarbonising the carbon embedded in their products. Age old enemies of the environmental movement may no longer pose a roadblock, and could ironically become critical allies.

 

Feedback Dynamics

The more people understand that achieving net zero requires high-quality offsets backed by geological storage of CO2, the more demand for such projects. The more CCS projects that are built, the faster costs fall through learning-by-doing and cost-of-capital reduction due to lowered perception of risk. The cheaper projects get, the more carbon storage can be delivered to offsetting entities.

 

Timescale and scaleability

Carbon storage needs to scale up from 36 million tons of CO2 per year (MtCO2/yr) today to several billion tons/yr over the next 30 years. This will require robust policy support (e.g. governments paying or requiring carbon-intensive industries to pay for sequestration) and a massive mobilisation of human and financial capital. But before those pieces come together, the voluntary carbon markets can act as a catalytic force to finance the first wave of projects. In 50 years, we will look back at Carbon Storage Agreements for carbon storage much as we look back on Power Purchase Agreements as the force that drove solar and wind power from niche, expensive applications to omnipresent providers of clean energy.

 

Resistance

 

Author

Stuart Hillen

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