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Recap & Outlook: Reflecting on 2023 Milestones and Charting the Course for 2024 in Carbon Removal

Reflections on 2023: Milestones, Partnerships, and Challenges

In the early days of 2024, I'm excited to reflect on Carbonfuture's transformative journey in the extraordinary past year, marked by significant milestones, strategic partnerships, and groundbreaking advancements in Carbon Dioxide Removal (CDR). As we embrace the opportunities and challenges that lie ahead, let's take a moment to explore the insights that have fueled our progress and will continue to shape our path in the evolving landscape of 2024.

In 2023, Carbonfuture achieved significant milestones, expanding our reach, and reinforcing our commitment to scaling carbon removal. We’ve signed new deals with esteemed CDR buyers such as Microsoft, Swiss Re, Swiss Life, and AXA, collaborated with key Standards like, VCS, and CSI, and formed strategic partnerships with the World Economic Forum First Movers Coalition, Ceezer, Greenly, and Swiss Climate to strengthen our global impact. We enhanced our core product offering, Carbonfuture MRV+, to include due diligence and supplier support services - an expansion that focuses on delivering increased value and comprehensive support to both CDR suppliers and buyers. The success of our 'CDR Basel’ event in April highlighted our ability to convene global leaders and advance the discourse on carbon removal. Carbonfuture closed out 2023 as the world’s leading provider of durable carbon removal, delivering a total of 60,000 tonnes of CDR to date. Furthermore, we have contracted a strong pipeline of more than 1.3 megatonnes of CDR supply, with an extensive network of suppliers across 5 continents.

2023 proved to be a major year for carbon dioxide removal: The volume of CDR purchases grew more than seven times from 2022, thanks to significant purchases from leading companies like Microsoft, Airbus, and Swiss Re. Despite fewer new actors on the buy side, existing buyers strategically leveraged top-tier supply, prioritizing durability, measurability, cost competitiveness, and low failure risk. In line with McKinsey & Company's findings, over 75% of buyers prioritize high-quality CDR, showcasing the dedication of climate-committed companies. Significant shifts include the increasing prominence of equity and participation in global CDR projects, signaling a growing understanding of the interconnected nature of carbon removal initiatives and the need for global solutions. Our partnership with Microsoft and the Exomad Green Concepción project located in Bolivia is a perfect example of that. It's not only one of the largest biochar carbon removal deals to date - it's also providing significant environmental and community benefits. This is an example of partnerships we need to reach net zero, driving climate action at scale with high-quality, durable carbon removal.

The past year has been huge for CDR policy, too. Scaling CDR to climate-relevant levels can only happen with conducive government policy, allowing for long-term planning by investors, buyers, and suppliers. In 2023, we have seen the US government award over $1.2b to the first two DAC Hubs and we have seen Europe make significant progress on the Carbon Removal Certification Framework, arguably the most important CDR legislation in the world right now. Furthermore, Carbonfuture joined the Board of the Negative Emissions Platform, supported the launch of DVNE (Deutscher Verband für negative Emissionen e.V.), and contributed to many policy discussions in the U.S. and Europe.

Despite our achievements and positive shifts in the CDR market, we cannot overlook the harsh realities of the external environment. Ongoing conflicts in various parts of the world have brought untold suffering. Furthermore, the State of Climate Action 2023 report paints a sobering picture, showing that global progress across sectors isn’t happening at the pace and scale necessary to limit warming to 1.5°C.

Yet, in these challenging times, I remain optimistic because I recognize that we have the power to choose our path forward.

In discussions about climate change, we often refer to planetary tipping points - critical thresholds that, when crossed, trigger significant, accelerating, and sometimes irreversible changes in the climate system. Conversely, there are positive tipping points, too, where a small intervention can yield a substantial positive effect.

We must pinpoint such tipping points for the CDR industry, and in doing so, identify the big questions we should be tackling this year: What actions can we take in 2024 to drive change and accelerate industry growth?

Outlook: Positive Tipping Points in CDR

Central tipping points in the carbon removal industry will be reached, when:

Demand signals are strong enough to initiate a functioning, high-quality market.

Esteemed climate pioneers play a crucial role in amplifying the message and guiding new entrants in recognizing the urgency within the expanding CDR industry.

The voluntary carbon market (VCM) serves as a crucial channel directing private funding to climate projects that might otherwise struggle for support. These credits not only boost investments in innovative climate technologies but also open doors to broader markets. They enable the flow of capital to regions in the Global South, where some projects find ideal conditions to create both climate and wider social impact.

The World Economic Forum’s recent white paper is clear: There’s a case for every company to invest in durable CDR today. The best way to do that is through long-term offtake agreements that ensure steady financial support for CDR suppliers. The sooner the demand for durable CDR solutions is established, the faster the industry can scale.

A tech-neutral European approach to CDR has met ambitious carbon removal targets.

Ambitious and inclusive policy efforts will be key to scaling the carbon removal market to its necessary scale. The most recent IPCC report is clear: it is now nearly impossible to prevent 1.5˚C of global warming without the removal of gigatonnes of carbon from the Earth’s atmosphere. However, this requires investing in a portfolio of solutions that are method-agnostic and adhere to strong quality criteria.

Looking ahead, a lot of focus will be on driving forward the CRCF in Europe and keeping it tech open. This, alongside ambitious targets for CDR for all 27 EU member states, could prove crucial tipping points for carbon removal in Europe. In the US, all eyes will be on the successful execution of the Department of Energy’s public procurement pilot, which could contribute to a broader shift towards public procurement, serving as a role model for governments taking leadership on growing the CDR market.

Clear complementary roles and responsibilities are defined between standard-setting bodies and MRV providers.

Carbon removal, a new frontier in the carbon credit market, offers a unique opportunity to establish transparent and well-governed systems right from the start. To prevent certification delays, it's crucial to have clearly defined roles, especially considering that a few carbon removal certification schemes need to handle hundreds of thousands of projects with the assistance of numerous Verification Bodies (VVBs) and MRV providers globally. The ideal setup involves interconnected registries and standardized Carbon Dioxide Removal (CDR) quantification methods, setting higher standards for quality carbon removal through transparent and robust MRV practices.

Governments, companies, and investors galvanize behind the cause.

The path to a flourishing gigatonne carbon removal market at scale depends on stakeholders advocating for transparency and accountability. Unfortunately, many companies have pursued CDR strategies only for the outcomes not to meet expectations or lack long-term durability. Data integrity issues and deficient accounting practices among some actors in the VCM have led to accusations of greenwashing, impeding progress not only for the companies involved but also for the wider adoption of other CDR technologies.

CDR embodies a distinct value: a shared responsibility for the well-being of our planet and future generations. It calls for collective action, transcending individual interests, as an ethical imperative to address climate change challenges.

Carbonfuture's Trust Infrastructure actively contributes to the advancement of transparency and trust, crucial for scaling carbon removal, inspiring collective action, and ensuring environmental integrity.

A high-quality supply of carbon removals meets the demand needs of the emerging CDR market.

The current scale of CDR stands at 2 Gt of CO2 per year, with less than 0.01% qualifying as durable. To meet the growing demand and reach the necessary 10 Gt by 2050, innovative technologies must be developed for effective carbon removal. Creating an enabling environment and ensuring the efficacy of implemented measures are crucial for scaling these technologies. However, challenges persist, and not all removals meet high-quality standards. A recent study found that over 75% of buyers prioritize credit quality based on permanence, additionality, and MRV parameters, and companies committed to climate mitigation are willing to pay a premium for high-durability CDR. The carbon removal supply market must meet these quality demands.

The journey to scale durable carbon removal to gigatonne levels is a collective effort. Our shared goal is clear: cut emissions and scale carbon removal. At Carbonfuture, we are excited to work together with you to make even bigger progress on our collective climate goals in 2024! Let’s continue to prioritize collaboration across the ecosystem and “tip these positive tipping points” into the breakthrough climate impact they can become.

The Future of Carbon Removal: What Lies Ahead for Carbon Markets

Join us for our webinar on February 20th to gain insights into key trends that will shape the CDR market over the coming years. Our panel of experts will take a deep dive into what you need to know about the technologies and policies that will drive innovation in carbon markets, as well as key trends to watch out for and the dates you need to have circled on your calendar in 2024. Register to save your spot today

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