As the hangover of the past year slowly fades away, the smell of fire wakes us up from a restless sleep. Did we leave the oven on last night? We sort of did, but for the last 300 or so years. Since the industrial revolution, humans have emitted more than 2,000 gigatons of carbon dioxide into the atmosphere, leading to a one-degree celsius increase in temperature – the effects of which are well reported. Indifference and procrastination over climate issues have led humanity to a point where emissions avoidance and reduction practices are simply not enough, we must also reverse climate change by removing carbon dioxide from the atmosphere. It’s important to understand that there are tipping points in the climate system, which, if triggered, can lead to irreversible ecological damage.
We currently emit about 51 gigatons of carbon dioxide per year – this number needs to be roughly halved by 2030 and reach net-zero by mid-century if we are to have a realistic chance of limiting global warming to 1.5 °C (the most ambitious target set by the Paris Agreement) . Reaching these targets will require rapid and far-reaching transitions in every system (land, energy, industry, transport, buildings, cities and urban planning) at a scale and extent which is unprecedented and requires political will and our own willingness to undergo socio-cultural transformations. Yet, just transitioning these structures and processes would still not be enough.
A helpful way to sort out what needs to be done to reach the net-zero emissions targets:
- Avoiding emissions, ie. building a solar plant instead of a coal plant
- Reducing emissions, ie. replacing a coal plant with a solar plant
- Removing emissions, ie. removing carbon out of the air and oceans with technological solutions or ecosystem management
“Startups can be the changemakers. The overall interest in climate targets has enabled founders to take their ideas and put them into practice,” Harri Lammi, director of environmental projects at the Tiina and Antti Herlin Foundation analyses the role of startups in stabilising our climate. (More about TAH Foundation here)
Lammi, who has decades of experience in global climate action speaks optimistically about the impact Nordic startups, in particular, can have, “compared to China we are slow and conservative in adopting the use of new products, but what they are solving is more conservative. In the Nordics, we can hopefully focus our thinking more into tomorrow’s problems and not yesterday’s problems,” adds Lammi, recalling from his experience working in Asia.
All roads lead to negative emissions technologies
The Intergovernmental Panel on Climate Change (IPCC) estimates that we must remove about 10 gigatons of carbon dioxide per year until mid-century to limit global warming to 1.5 °C. The IPCC has charted several mitigation pathways compatible with 1.5; all pathways depend on innovative carbon dioxide removal, also known as negative emissions technologies . The batman symbol is in the sky, but who will answer the calling?
First, let’s examine the carbon cycle of our mother earth. Through photosynthesis, the planet has been removing carbon dioxide from the atmosphere for thousands of years, way before it was on-trend. A carbon sink is the term for any reservoir, natural or otherwise, which absorbs more carbon from the atmosphere than it releases. Globally, the two most important carbon sinks are vegetation and the ocean. Thus afforestation/reforestation, land use and protecting oceans is also critical.
Lammi observes that “it is important to make sure there are only positive impacts on land use, to avoid harm to ecosystems, which have valuable roles as carbon sinks and also biodiversity value.”
Negative emissions technologies remove carbon directly from the atmosphere and lock it in – or sequester it – in carbon sinks, ie. plants, soils, geological formations, and the ocean. Reliable sequestration is critical in order to avoid releasing carbon dioxide back into the atmosphere.
Examples of negative emissions technologies:
Startups are on the quest to create solutions
A startup tapping into the carbon cycle of trees and other biomass is Carbo Culture. “We set out to find the most elegant solution for CO2 drawdown,” reveals Henrietta Moon, co-founder and CEO of Carbo Culture.
In nature, when biomasses such as wood or crop waste decompose, 99% of the carbon is re-released into the atmosphere. “We short-circuit this cycle by converting the biomass into a stable material called biocarbon,” shares Moon.
By converting the biomass into biocarbon, the carbon is sequestered into a stable form that won’t break down and stays unchanged for over 1000 years. The biocarbon can then be used for soil remediation, water treatment and environmental processes. (more about Carbo Culture here and here )
How Carbo Culture is hacking the carbon cycle
Net-zero commitments and consumer engagement have also led to increased interest from investors. Climate tech investment has grown at five times the venture capital market over the last 7 years. However, funding negative emissions technologies can be challenging for investors with standard fund setups.
Early movers like Pale Blue Dot, the first climate-tech focused fund in Europe, are well-positioned to make impact and financial return. According to Heidi Lindvall of Pale Blue Dot, “it is important for us to research and fund negative emissions technologies and these will play an important part in reversing climate change.” (more about Pale Blue Dot here)
Moon emphasises that there are plenty of opportunities for startups looking to make an impact, “the scale of the problem is so humongous that there is space for a lot of actors! We need mitigation, carbon removal and adaptation to climate change, all, in vast quantities, today!”
Because the fight against climate change is such a multidimensional challenge – diversity is a distinct advantage for founding teams. We need “universities to work closer to the startup ecosystem as well as more capital and different types of funding models so that we can back a wide range of solutions,” affirms Lindvall.
Challenges of scale
Negative emissions technologies are often costly and present unique risks. In addition to lowering costs, startups face the challenge of “creating systems of storing or re-using amounts of carbon safely without releasing them back to the atmosphere,” remarks Lammi.
The volume of deployment which is needed is vast, making cost a huge hurdle for budding startups. Lack of government action in purchasing carbon removal credits means startups currently rely on voluntary carbon markets for scale.
Let’s keep in mind that there is also an inherent climate risk in not investing in these technologies today – “if the companies are not at scale in a few decades, the technologies will not be able to scale when we need them to,” observes Moon.
The budding carbon market
It’s obvious that there is a demand for carbon removal and new technologies, at least from a climate perspective. However, the infancy of the industry and a lack of governmental action are holding back the acceleration of the market. Net-zero commitments across the board, along with rising consumer engagement, means it is just a matter of time until the floodgates open.
There is value in being an early mover, especially in an industry that may rival the size of oil and gas by 2050 . In fact, the carbon dioxide removal industry might have to be in the $1 trillion range if we are to reach the 1.5c target.
Carbon pricing is needed. “Permanent pricing mechanisms for NETs could be helpful to kickstart an ecosystem of industry around this,” according to Lammi. “In my view in the long term, there should be at least two separate mechanisms and carbon prices: the carbon price of emissions, such as in the current EU emission trading, and the price of carbon for recaptured and permanently stored carbon, as NETs.”
The introduction of carbon removal credits offers an essential pathway to net-zero by neutralising emissions. “Most carbon offsets represent emissions avoidance. Even if emissions are avoided or reduced in one place, it does not neutralise other emissions. So the net result is adding emissions to the atmosphere,” asserts Moon.
As the diagram shows… not all offsets are created equal!
While the government kicks their heels, carbon removal startups are mainly relying on the voluntary carbon markets for their first customers. Corporates like Shopify, Stripe and Swiss Re, are paying premium prices for carbon removal offsets in an attempt to kickstart the market. Yet, carbon removal credits represent only 3% of total offsets, with the remaining 97% being traditional carbon offsets, like green energy, efficiency and emission reduction.
How to monetize the captured carbon is a big barrier for the carbon market and an area which is also ripe for innovation. Note: carbon removal and storage is not the same as carbon removal and utilisation. In the former, CO2 is locked away for decades or centuries. In the latter, the CO2 is often re-emitted, ie. in sodas, fuels, etc.
Carbon utilization is the broad term used to describe the many different ways that carbon can be used to produce economically valuable products or services, like cement. This process presents an opportunity for a circular economy around carbon. As long as no carbon is re-emitted back into the atmosphere during this recycling, a once costly process is now a lucrative business opportunity and worthwhile global warming solution.
- UNFCCC – Paris Agreement
- IPCC Special Report
- NAP – Negative Emissions Technologies and Reliable Sequestration
- Thunderbird – Global Climate Restoration Report
Written by Verneri Välimaa
LinkedIn , Twitter: @VerneriValimaa