Introduction

In this episode of What Goes Up Must Come Down, Simon is joined by Marian Krüger, founder of Remove, a nonprofit supporting carbon removal startups worldwide. Together, they explore the motivations behind why companies buy carbon removal credits and how compliance will shape the sector’s future.

TL;DR

• Companies are increasingly buying carbon removal credits as part of their sustainability goals and long-term strategies.
• The carbon removal market is still maturing, with demand not yet meeting expectations, but the gap is shrinking.
• Compliance frameworks like the EU ETS are seen as key drivers for future market stability, but introducing them too soon could limit innovation.
• Companies are exploring both portfolio-based strategies and single-project investments, each with its own risks and benefits.
• Innovation and compliance must work together to ensure emerging technologies can scale without being stifled by price-driven markets.

Writing the book “Race to Zero”

Marian Krüger and co-author Benedict Probst from the Max Planck Institute wrote Race to Zero to fill a gap in the carbon removal space. “We realised there wasn’t an accessible resource for professionals who need to understand carbon removal without delving into highly technical content,” says Marian.

The book is designed to make carbon removal more understandable for corporate sustainability professionals tasked with integrating it into their strategies. “We wanted to provide a clear starting point for managers to learn about carbon removal technologies and their role in a net-zero strategy,” he adds.

Why and how companies buy CDR

Companies buy carbon removal credits for various reasons. Some are driven by CSR goals or to enhance their brand. Others, particularly larger corporations, see it as a long-term investment in technologies that will shape their future operations.

“We’re seeing a shift towards more strategic purchases,” Marian explains. “It’s not just about ticking boxes. Companies are aligning their carbon removal investments with their core business or securing future technologies.”

However, despite growing interest, Marian acknowledges that demand has not yet reached expectations. “The gap between supply and demand is shrinking, but we’re not there yet. The market is still maturing,” Marian notes.

The growing role of compliance in carbon removal

As the carbon removal sector matures, many are looking to compliance systems like the EU Emissions Trading System (ETS) to drive demand. However, there are risks if these frameworks arrive too soon.

“If compliance comes too quickly, we risk focusing on the cheapest solutions and excluding technologies that need more time to scale,” Marian cautions. “We must avoid stifling emerging solutions.”

While compliance could bring stability, Marian stresses the need for balance. “If it becomes too rigid, it could squeeze out technologies like biochar, DAC, and enhanced rock weathering, which need time to mature.”

He believes that a more flexible approach to compliance would allow innovation to flourish. “Compliance is essential, but it must work hand in hand with innovation,” he says.

Navigating carbon removal portfolios

Companies are building carbon removal portfolios, spreading their investments across different technologies. But, as Marian points out, there are challenges with this approach.

“Diversification helps spread risk, but it can also mean that no single technology gets enough funding to scale quickly,” he says. Companies like Airbus have opted to buy into single projects to help specific technologies get off the ground. But this approach has its own risks.

While diversifying portfolios makes carbon removal more affordable, companies must ensure they’re not spreading their investments too thin. The key, especially for smaller companies, is finding the right balance of technologies to support, while navigating a market that’s still in its infancy.

Conclusion

As the carbon removal market evolves, businesses must adapt. While compliance frameworks will likely help stabilise the sector, it’s crucial to ensure they don’t stifle innovation.

For companies looking to invest in carbon removal, it’s crucial to balance short-term cost considerations with long-term innovation. By strategically supporting a range of carbon removal technologies, businesses can help scale effective solutions that will be key to meeting global climate goals.

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