july 2021 the insurance rationale for carbon removal solutions

01 Executivesummary02 Thecaseforcarbon

removal08 Theremovalindustry

landscape22 Theroleofinsurance39 Conclusion

July2021

The insurance rationale for carbon removal solutions

Swiss Re Institute Theinsurancerationaleforcarbonremovalsolutions 1

Executivesummary

Carbonremovalisthecaptureandpermanentstorageofcarbondioxide(CO2)fromtheatmosphere.Tolimitglobalwarmingto2015ParisAccordlevels,theworld’snetemissionsofgreenhousegasesneedtodroptozeroby2050.Thereafter,therewillstillbeworktodotosustainnet-negativeemissionsthroughthesecondhalfofthecentury.Zeroemissionsisfarfromreality.Evenwithactionstotransitiontoalow-carboneconomy,globalemissionsarestillrising,anditmaytakemanydecadestofullydecarbonisesomesectors.Thereforebalancingresidualandreversinghistoricalemissionswillrequirebillionsoftonnesofnegativeemissionsuptoandafter2050.

Inthiscontext,scalingthedeploymentofcarbonremovaltechnologiesandactivitieswillbecentraltokeepingglobalwarmingatsafelevelsoverthelongterm.“Net-zeroemissions”hasbecomecommonparlanceinthepublicandprivatesectors,anacknowledgmentoftheneedto:1)double-downonemissionreductionefforts;and2)buildacarbonremovalindustrycapableofdeliveringnegativeemissionsatthespeed(withinthreedecades)andscale(10–20billiontonnesperyear)thatclimatesciencesayswillberequiredtoenablesustainablelivingforfuturegenerations.

Themainbarriertodeploymentofcarbonremovalislackofbusinesscase.Intheabsenceofcarbonpricinginmanypartsoftheworld,societydisposesofcarbonintotheatmosphereatwill.Asufficientlyhighfeeonemissionswouldinternaliseexpectednegativeexternalities,andfosterlow-carbondecisionmakinginproductionandconsumption.Intheabsenceofafeeandpolicymandates,thereislittleincentivetocut,letalonecollectandstoreemissions.Thatsaid,recentyearshaveseentheemergenceoffirstcommercialprovidersofcarbonremovalservicesandalsomarketplaceinitiativestocommoditisecarbonremovaloutcomes.

Carbonintheatmospherecanbecapturedandstoredthroughdifferentmeans.Theleastcost-intensiveinvolvessequesteringcarboninforests,wetlands,oceansandsoil.Whenexecutedproperly,theseso-callednature-basedsolutionsaddressmultiplesustainabilitygoals,includingadaptationtoclimatechangeandpreservingtheintegrityofecosystemsandbiodiversity.Buttherecanbeopportunitycosts,suchasafforestationprojectscompetingwithagricultureforlandresources.Moreover,nature-basedsolutionsaresusceptibletoreversalthroughcatastropheeventslikefiresandfloods,and/orman-madethreats(eg,deforestation).

Therearealsotechnologicalsolutionsforremoval.Carboncanbefilteredfromtheatmosphereandusedascommercialgoodsinlong-livedproductslikeconcrete.CO2canalsobecontainedandmineralisedinundergroundrocklayers,forinstanceindepletedoilandgasreservoirs.Theimplementationcostsofthesesolutionsarehigherthanfornature-basedapproaches,andexistingsolutionsareunder-deployedandnewonesunder-developed.Importantly,however,theriskofreversalislower.

There/insuranceindustrycanassistwithscaling-upofthecarbonremovalindustryinthreeways.First,re/insurerscanimprovethebankabilityofcarbonremovalprojectsbyprovidingcompensationforlossesinthecaseofadverseevents.Standardengineeringpolicies(eg,contractorsallriskpolicies)cancovertheconstruction,operationanddeconstructionrisksofcarbonremovalfacilities(forairfilters,CO2pipelines,orinjectionrigsamongothers).Andstandardpropertyinsurance,includingforlossesresultingfromnaturaldisasters,cancovertechnologyinfrastructureandnaturalassetslikeforests.Morechallengingarepotentiallong-termliabilityexposuresarisingfromtheriskofcarbonstoragereversal.

Second,asinstitutionalinvestorsre/insurerscanprovidefinancingforremovalprojectsandinfrastructure.Carbonremovalisalong-terminvestmentopportunitythroughwhichre/insurerscanbalancetheirlong-termliabilities,andrunanet-zeroemissionsassetportfoliostrategy.Andthird,re/insurerscanbeearlybuyersofcarbonremovalcertificatestobalancetheirownoperationalfootprintinpursuitofnet-zeroemissions.Thatfootprintissmallrelativetoothersectors,makingfirst-moverremovalprojectsmoreaffordable.Byenteringlong-termofftakeagreementsandguaranteeingfuturerevenues,re/insurerscanbestrongpartnersforthecarbonremovalindustry,whilealsogainingaccesstoitsnewriskpoolsandassetclasses.

Fornet-zero,emissionsneedtobereducedandresidualsremoved.

Withoutcarbonpricingorpolicymandates,carbonremovalhaslackedabusinesscase.Nevertheless,theindustryisnowgainingafoothold.

Nature-basedsolutionsmakeuseofscarcelandresources,butcomewithmanyco-benefits.

Technicalsolutionsforcarbonremovalcarryhighercosts,buttheriskofstoragereversalislower.

Re/insurerscansupportthecarbonremovalindustrydevelopmentsbytakingonsomeoftheassociatedrisks,…

…bymakinglong-terminvestmentsinremovalprojectsandinfrastructure,andbybuyingcarbonremovalservices

Carbonremovalisrequiredtoachievenet-zeroemissionsby2050andnet-negativeemissionslongthereafter.

2 Swiss Re Institute Theinsurancerationaleforcarbonremovalsolutions

Thecaseforcarbonremoval

Awarmingworld

Risingtemperaturesarecausingclimatechangeeffectsofincreasingvisibility,frequencyandseverity.Theincreaseinglobaltemperaturesisduetoanthropogenic(man-made)greenhousegas(GHG)emissions.AccordingtotheIntergovernmentalPanelonClimateChange(IPCC),humanactivityhascausedapproximately1.0°Cofglobalwarmingfrompre-industriallevels.1Sincethebeginningoftheindustrialrevolution,humanshavereleased2200billiontonnesofcarbondioxide(CO2)intotheatmosphere,2halfofitduringthelastthreedecadesalone.3Currently,theworldemitsaround40billiontonnesofCO2annually.Unabated,thisemissionratewouldseethe+1.5°CwarminglimitoftheParistargetreachedin10years,andthe+2°Climitin30years.4Bytheendofthecentury,temperatureswouldrisebybetween3.7°Cand4.8°C.5Evenifallemissionsarehaltedimmediately,GHGswillremainintheatmosphereformanycenturies,exacerbatingtheimpactsofclimatechange.6

Climatechangeisasystemicthreat,withfar-reachingconsequencesfortheworldandlifeasweknowit.Increasingtemperaturesaremeltingtheplanet’sicereservoirsandwarmingtheoceans.Togethertheseareleadingtorisingsealevels,andanincreaseinthefrequencyandseverityofextremeweathereventssuchasdroughts,hurricanesortorrentialrains.Beyondlastingimplicationsonnaturalecosystems–withclimatechangeseenasoneofthemostimportantdriversforfuturebiodiversitylossandecosystemdegradation–thesephysicalchangeswilllikelycauseincreasedmortalityanddamagetohumanhealth,foodandwaterscarcity,diseasespreadandmoredamagetoanddevaluationofpropertyassets.7Fromabroadeconomicperspective,arecentSwissReInstitutereportestimatesthatunabatedfromtoday,thephysicaleffectsofwarmingtemperaturescouldresultinan18%losstoglobalgrossdomesticproductbymid-century,relativetoaworldofnoclimatechange.8

Acallbyclimatescience

TheglobaltargetoftheParisAgreementof2015istolimitglobalwarmingtowellbelow2°C,andpreferablyto1.5°C.Thisisthecapthatscientistssaycanstillpreventtheworstimpactsofclimatechange.TheIPCCsaysthatlimitingglobalwarmingto1.5°CwillrequireGHGemissioncutsof50%by2030,andnet-zeroemissionsby2050.9Fornet-zero,anyresidualemissionswouldhavetobebalancedbythesameamountofnegativeemissions,inotherwords,permanentremovalandstorageofcarbonfromtheatmosphere.ThisprocessisknownasCarbonDioxideRemoval(CDR),orcarbonremoval.TheIPCCfurtherpredictsthatglobalemissionlevelswouldberequiredtostaynet-negative(negativeemissions>residualgrossemissions)throughoutthesecondhalfofthecurrentcentury.Bytheyear2100,dependingonhowfastwestartreducingemissions,thecarbonremovalindustrywillhavetodelivercumulativelyupto1000billiontonnesofnegativeemissions.Forcontextofscale,thatisalmosthalfofallthatalreadyhasbeenemittedsincepre-industrialtimes.10Figure1showsfouremissionscenariosmodelledbytheIPCCthatwouldallowlimitingglobalwarmingto1.5°C.Three

1 Global Warming of 1.5°C,IPCC,2018.2 Ibid.3 More than half of all CO2 emissions since 1751 emitted in the last 30 years, Institute for European

Environmental Policy, 29 April 2020.4 J.Rockström,etal.,“Theworld’sbiggestgamble”,Earth’s Future,vol4,2016.5 See“ContributionofWorkingGroupsI,IIandIIItotheFifthAssessmentReportoftheIntergovernmental

PanelonClimateChange”,inClimate Change 2014: Synthesis Report,IPCC,2014.6 CO2emissionsstayintheatmospherefordecadestocenturies.Itisestimatedthatevenafter1000

years,15–40%oftheanthropogenicCO2emissionsremainintheatmosphere.OtherGHGhaveshorterresidencetimesintheatmosphere(eg,methane12years;NOx~100years)butexhibitastrongergreenhouseeffect(eg,methane25timesstrongerradiativeforcingthanCO2;NOx~300timesstronger).SeeDie Treibhausgase,GermanEnvironmentAgency,2020.

7 E.S.Brondizio,J.Settele,S.Díaz,andH.T.Ngo(editors),Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services,IPBES,2019.

8 The economics of climate change: no action not an option,SwissReInstitute,April20219 IPCC,2018,op.cit.10 1750–2017:2200billiontonnesCO2.SeeIbid.

Carbonemissionshavecausedglobaltemperaturestoriseby1.0°Calready.

Theeffectsofclimatechangearefarreachingandwillimpactnature,humans,andtheglobaleconomy.

Limitingglobalwarmingto1.5°Crequiresemissioncutsof50%by2030,net-zeroemissionsby2050,andnet-negativeemissionsthereafter.

scenariosassumemoreorlessstringentemissioncutsstartingimmediately.Anotherassumesaninitialhigh-emissionslifestyle(essentiallycurrentbusiness-as-usual)thatwould,inturn,requireevenlargeramountsofnegativeemissionslater.

Source:SwissRe,basedonGlobal Warming of 1.5°C,IPCC,2018(overlapofthescenariosP1-4).

Thescenarioillustratesthreeimportantfindings.First,itwillrequiredeepemissioncutstofollowthe1.5°Cnet-emissionpathway,andthelongerwewait,thesteeperthereductionpathwillneedtobe.Second,evenwithbesteffortstoreduceemissions,therewillberesidualcarbonrelease,meaningthatemissionswillnotreachabsolutezerothiscentury.

Third,thechallengeishuge.In2050,societymusthavethecapacitytoremoveupto10billiontonnesofCO2fromtheatmosphereeveryyear:that’saquarterofwhatisemittedeachyeartoday.Itwilltaketimetobuildthatcapacity,andworkneedstostarttoday,parallelto(notinsteadof)stringentemissionreductionefforts.Laterthiscentury,itwilltakeupto20billiontonnesofnegativeemissionseachyeartostayontrackwiththe1.5°Cglobalwarmingtarget.Asananalogy,20billiontonnescorrespondstotoday’semissionsgeneratedbyhumanconsumptionofalloilandgasproductsinoneyear:ifittakesatrillion-dollarindustrytoprovideforalltheoilandgasthatcauses20billiontonnesofemissionstoday,11itwilltakethenexttrillion-dollarindustrytoremovethatsameamountfromtheatmospherein2050+.12

Certainhard-to-abateindustriesaremoredifficultandmoreexpensivetodecarbonise.Table1outlineshoweachsectorcontributestoGHGemissions.Itshowscurrentabsoluteandrelativeemissionsalongsidesector-specificreductionmeasuresandkeymitigationchallenges.Thesehelpexplainandreaffirmwhynegativeemissionsareanecessityiftheworldistolimittemperatureriseto1.5°C.13

11 Thetop20globaloilandgascompaniestogetherhadcumulativerevenuesofUSD3.4trillionin2020.SeeGlobal 500,Fortune,accessedon8February2021.

12 Ananalogysharedinotherpublications.Forexample,An investor guide to negative emission technologies and the importance of land use,VividEconomics,2020;Global Climate Restoration for People, Prosperity and Planet,ArizonaStateUniversity,2020;“OccidentaltoStripCarbonFromtheAirandUseIttoPumpCrude”,Bloomberg Businessweek,accessed13January2021.

13 Forfurtherreading,see“Specialfeature:Movingtoalow-carbonfuture,”SONAR,SwissRe,2020.

Figure 1 Net-emissionpathwaystolimitglobalwarmingto1.5°C

20202010 2030 2040 2050 2060 2070 2080 2090 2100

Global CO2 emissionsbillion tonnes per year

Net-zero

Residual emissions that cannot be reduced yet

Negative emissions requiredto balance the residual emissions

Massive emission reductions

Business as usual emissions

Net-emission pathways

to limit warming to 1.5°C

Emissions from oil & gas today...

EvenwithbesteffortstoreduceGHGemissions,therewillberesidualcarbonreleaseintotheatmosphere.

SomuchsothattohitParisAgreementtargets,carbonremovalwillneedtoreachadouble-digitbilliontonnescale.

Notallemissionscanbereadilyreduced.Hencetheneedfornegativeemissions.

The case for carbon removal

Table 1 Emissions,reductionmeasuresandmitigationchallenges,bysector1415

Sector Absolute (relative) emissions inbilliontonnesCO2eqperyear

Key reduction measures15 (excludinggeneral,cross-sectorialpolicymeasureslikecarbonpricing,carbon-intensitymandates,etc)

Key sector specific mitigation challenges16 (excludinggeneral,morebroadlyapplicablechallengeslikelackofregulation,consumerpreferences,economical/structuralimpediments,etc)

Energy 17GtCO2(34.6%)

– makeglobalelectricityproductionwhollyrenewable– reappraiseenergyinfrastructure:addelectricitystoragecapacity;buildrobustandfasttransmission/distributionlines,andsmart,localgrids.

– fuelswitch(green/blueH2andsynthetic-/bio-methane)andfuelefficiencyforback-upplants

– fossilfuelsubsidiesofUSD333billionperyear(USD5.3trillionperyearifthevalueofcombustion-relatedexternalitiesisincluded),creatinganegativecarbonpriceatproductionandconsumptionside17

– lackofseasonalstorageoptions/capacity– newrenewableenergyinfrastructurecompetesforotherland-usepurposes,andmaycompromisehabitatandbiodiversityprotection.– energysecurity:increaseddemandforelectricityoutweighsadditionofnewrenewablecapacity,andoldfossilpowerplantsremainoperational

– longinvestmentcyclesinenergyinfrastructure,causingalock-inofemissions– lackofde-riskingforrenewableenergyinvestmentsindevelopingcountries(reducingthecostofcapitalthatweighsheavyonrenewableassets)18

Agriculture,forestryandotherlanduse

11.8GtCO2(24%)

– decreasenumberofmethane-producinglivestock:changetoplant-richdiets,anddiversifyproteinconsumptionawayfrommeat

– reducewaste/lossofcropandfood– optimisefertiliseruse(precisionfarming,nitrificationinhibitors,biochar)– conserveexistingandrestorecarbonpools(soils,forests)throughimprovedlandmanagement,agriculturalpracticesandfireprevention

– populationgrowth(foodsecurity)– subsidiesforunsustainablefarmingpractices,withlessthan5%ofUSD600billioninglobalagriculturesubsidiesgoingtoconservationefforts19

– increasingshareofmeatinaveragediet– higherlanduseperyield– technical,economic,educational,culturalimpedimentstonew(lessintensive)agriculturalorforestrypractices– lackofvaluationofpositiveexternalitiesfromclimate/biodiversityfriendlyagricultureandforestry(improvedlocalair,soil,andwaterquality)– unmitigateddeforestation,includingdrivenbylandgrab/speculation20

– increasedfrequencyandseverityofnaturalhazards(wildfire,droughts,storms)– counter-productivesubsidiesthatdonotreducetheglobalwarmingfootprintofagriculture,northenegativeimpactsonbiodiversity21

– foodwasteduetoinefficientharvesting,transportandstoragecapacities

Industry 10.3GtCO2(21%)

– increaseenergyandmaterialsefficiencyinmanufacturingandconstruction– improveproductdesigntolowerembodiedcarbonandincreasecircularity(facilitatedismantling,sorting,re-using,re-cycling,productlongevity)

– substituterawmaterialswithlowcarbonalternatives(eg,masstimber,carbon-fixingconcrete)

– electrifyproductionprocesses– switchtorenewableheat/processfuelsandreactants(blue/greenhydrogen)– carboncapture(utilisation)andstoragetodecarboniseheavyindustry,inparticularcementandchemicalsworks

– comparedtoconsumer-facingindustries,hard-to-abatematerialproducersectors(cement,mining,textiles,chemicals,steel,aluminium)havethehigheremissionintensity(CO2/product)butsmallermargins(income/product),makingaffordabilityofemissionreductionmeasureschallenging22

– longinvestmentcyclesforheavymachinery/processingplants– performanceandconcernsaboutcost/willingnesstopaybyclients/consumers– intransparencyofsupplychains

Transport 6.9GtCO2(14%)

– electrifylight-dutyroadtransport,mostlythroughbatteryelectricvehicles– modalshifts(increasepublictransport,moreefficientmodesforlogistics)– fuelswitch(biofuels,hydrogen/ammonia,syntheticfuels)inheavy-dutyroadtransport,shippingandaviation

– improvefuelefficiency– substituteandoptimisetravel(remotecollaboration,longer/lesstrips,etc.)

– increaseddemandformobility– increaseinglobaltrade– airplanes,trainsandshipswithincreasedlongevityseetotallife-cycleadjustedusagecostdecline,anargumenttokeepoperatinginefficienttransportmeans/infrastructure

– lackofinfrastructurepreventsadoptionatscale(eg,fewsuperchargingstationsforelectricvehicles)– transportinfrastructureinvestmentsarelongtermandtiedowncapital.

Buildings(operationsonly)

3.1GtCO2(6.4%)

– improvebuildings’energyefficiencytechnology(appliances,heatingetc)– advancebuildingautomationandcontrolsystems/meters(smartbuilding)– buildingconstruction:replacefossil-fuelledbuildingtechnologywithlow-carbonalternatives(rooftopsolar,heatpumps,biofuels,districtheating/cooling)

– slowrenovation/renewalcycleforbuildings(andenergyintensiveappliances)– concernsoverhigherinvestmentoutweighsbenefitsfromlowerrunningcost23

– lackofaccesstofinancing

Source:SwissReInstitute

14 TableisbuiltontheFifthAssessmentReportbytheIPCC(2014)andamendedbasedonauthors’judgementandfurtherliteratureasindicatedseparately:Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,IPCC,2014.Forfurtherreference,othersourcesusedwereClimateEngineering:Risks,Challenges,Opportunities?GermanResearchFoundation,January2019;andCO2-neutralbis2035:EckpunkteeinesdeutschenBeitragszurEinhaltungder1,5-°C-Grenze,WuppertalInstitute,2020.

15 SeealsoSONAR2020,SwissRe,op.cit.

Table 1 Emissions,reductionmeasuresandmitigationchallenges,bysector1415

Sector Absolute (relative) emissions inbilliontonnesCO2eqperyear

Key reduction measures15 (excludinggeneral,cross-sectorialpolicymeasureslikecarbonpricing,carbon-intensitymandates,etc)

Key sector specific mitigation challenges16 (excludinggeneral,morebroadlyapplicablechallengeslikelackofregulation,consumerpreferences,economical/structuralimpediments,etc)

Energy 17GtCO2(34.6%)

– makeglobalelectricityproductionwhollyrenewable– reappraiseenergyinfrastructure:addelectricitystoragecapacity;buildrobustandfasttransmission/distributionlines,andsmart,localgrids.

– fuelswitch(green/blueH2andsynthetic-/bio-methane)andfuelefficiencyforback-upplants

– fossilfuelsubsidiesofUSD333billionperyear(USD5.3trillionperyearifthevalueofcombustion-relatedexternalitiesisincluded),creatinganegativecarbonpriceatproductionandconsumptionside17

– lackofseasonalstorageoptions/capacity– newrenewableenergyinfrastructurecompetesforotherland-usepurposes,andmaycompromisehabitatandbiodiversityprotection.– energysecurity:increaseddemandforelectricityoutweighsadditionofnewrenewablecapacity,andoldfossilpowerplantsremainoperational

– longinvestmentcyclesinenergyinfrastructure,causingalock-inofemissions– lackofde-riskingforrenewableenergyinvestmentsindevelopingcountries(reducingthecostofcapitalthatweighsheavyonrenewableassets)18

Agriculture,forestryandotherlanduse

11.8GtCO2(24%)

– decreasenumberofmethane-producinglivestock:changetoplant-richdiets,anddiversifyproteinconsumptionawayfrommeat

– reducewaste/lossofcropandfood– optimisefertiliseruse(precisionfarming,nitrificationinhibitors,biochar)– conserveexistingandrestorecarbonpools(soils,forests)throughimprovedlandmanagement,agriculturalpracticesandfireprevention

– populationgrowth(foodsecurity)– subsidiesforunsustainablefarmingpractices,withlessthan5%ofUSD600billioninglobalagriculturesubsidiesgoingtoconservationefforts19

– increasingshareofmeatinaveragediet– higherlanduseperyield– technical,economic,educational,culturalimpedimentstonew(lessintensive)agriculturalorforestrypractices– lackofvaluationofpositiveexternalitiesfromclimate/biodiversityfriendlyagricultureandforestry(improvedlocalair,soil,andwaterquality)– unmitigateddeforestation,includingdrivenbylandgrab/speculation20

– increasedfrequencyandseverityofnaturalhazards(wildfire,droughts,storms)– counter-productivesubsidiesthatdonotreducetheglobalwarmingfootprintofagriculture,northenegativeimpactsonbiodiversity21

– foodwasteduetoinefficientharvesting,transportandstoragecapacities

Industry 10.3GtCO2(21%)

– increaseenergyandmaterialsefficiencyinmanufacturingandconstruction– improveproductdesigntolowerembodiedcarbonandincreasecircularity(facilitatedismantling,sorting,re-using,re-cycling,productlongevity)

– substituterawmaterialswithlowcarbonalternatives(eg,masstimber,carbon-fixingconcrete)

– electrifyproductionprocesses– switchtorenewableheat/processfuelsandreactants(blue/greenhydrogen)– carboncapture(utilisation)andstoragetodecarboniseheavyindustry,inparticularcementandchemicalsworks

– comparedtoconsumer-facingindustries,hard-to-abatematerialproducersectors(cement,mining,textiles,chemicals,steel,aluminium)havethehigheremissionintensity(CO2/product)butsmallermargins(income/product),makingaffordabilityofemissionreductionmeasureschallenging22

– longinvestmentcyclesforheavymachinery/processingplants– performanceandconcernsaboutcost/willingnesstopaybyclients/consumers– intransparencyofsupplychains

Transport 6.9GtCO2(14%)

– electrifylight-dutyroadtransport,mostlythroughbatteryelectricvehicles– modalshifts(increasepublictransport,moreefficientmodesforlogistics)– fuelswitch(biofuels,hydrogen/ammonia,syntheticfuels)inheavy-dutyroadtransport,shippingandaviation

– improvefuelefficiency– substituteandoptimisetravel(remotecollaboration,longer/lesstrips,etc.)

– increaseddemandformobility– increaseinglobaltrade– airplanes,trainsandshipswithincreasedlongevityseetotallife-cycleadjustedusagecostdecline,anargumenttokeepoperatinginefficienttransportmeans/infrastructure

– lackofinfrastructurepreventsadoptionatscale(eg,fewsuperchargingstationsforelectricvehicles)– transportinfrastructureinvestmentsarelongtermandtiedowncapital.

Buildings(operationsonly)

3.1GtCO2(6.4%)

– improvebuildings’energyefficiencytechnology(appliances,heatingetc)– advancebuildingautomationandcontrolsystems/meters(smartbuilding)– buildingconstruction:replacefossil-fuelledbuildingtechnologywithlow-carbonalternatives(rooftopsolar,heatpumps,biofuels,districtheating/cooling)

– slowrenovation/renewalcycleforbuildings(andenergyintensiveappliances)– concernsoverhigherinvestmentoutweighsbenefitsfromlowerrunningcost23

– lackofaccesstofinancing

Source:SwissReInstitute

14 TableisbuiltontheFifthAssessmentReportbytheIPCC(2014)andamendedbasedonauthors’judgementandfurtherliteratureasindicatedseparately:Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,IPCC,2014.Forfurtherreference,othersourcesusedwereClimateEngineering:Risks,Challenges,Opportunities?GermanResearchFoundation,January2019;andCO2-neutralbis2035:EckpunkteeinesdeutschenBeitragszurEinhaltungder1,5-°C-Grenze,WuppertalInstitute,2020.

15 SeealsoSONAR2020,SwissRe,op.cit.

1617181920212223

16 Engströmetal.,“Carbonpricingandplanetaryboundaries”,NatureCommunicationsvol.11,202017 Measuring Fossil Fuel Subsidies in the Context of the Sustainable Development Goals.UNEP,OECDandIISD,2019.18 Derisking renewable energy investment. A Framework to Support Policymakers in Selecting Public Instruments to Promote Renewable Energy Investment in

Developing Countries.UNDP,2013.19 Redirecting Agricultural Subsidies for a Sustainable Food Future,WorldResourcesGroup,21July2020.20 “CurblandgabbingtosavetheAmazon”,NatureEcology&Evolution,vol3,2019.21 L.Gubler,S.A.Ismail,I.Seidl, Biodiversity damaging subsidies in Switzerland, Swiss Academies Factsheet 15, 2020; and The Economics of Biodiversity:

The Dasgupta Review,UKTreasury,202122 Net-Zero Challenge: The supply chain opportunity WorldEconomicForumandBostonConsultingGroup,2021.23 Energysavingscanrelativelyquicklycoverinvestmentcosts.SeeGlobalEnergyAssessment.CambridgeUniversityPress,2012.Thereportestimatesa

USD24billiontotalinvestmentneedtorealizeambitiousclimategoalsforbuildings,incontrasttocumulatedUSD65billionenergysavingsby2050,inducedbytheseinvestments.

The case for carbon removal

Anewindustrytakingshape

TolimitglobalwarmingtotheParisAgreementtarget,thecaseforcarbonremovalisclear,butthecommercialrationaleisstillunfolding.Somecarbonremovalsolutionsarewellestablishedbuthavenotyetbeenwidelydeployed.Othershavenotyetmovedbeyondearlyresearchstage.Intheabsenceofuniversalcarbonpricingpoliciesandassociatedfees(polluter-pays-principlecomparabletoamunicipalwastecollectionfee),pollutershavelittleeconomicincentivetocut,collectanddisposeofemissions.Inotherwords,carbonremovalstilllacksabusinesscase.

Thissituationhasbeenchangingsince2019,aftertheIPCC(attherequestofthepartiestotheParisAgreement)publisheditsspecialreportassessingwhatitwilltaketolimitglobalwarmingto1.5°C.24Thenumberofagents/companiesdevelopingcarbonremovaltechnologies,practicesandserviceshasincreasednotablysincethen.25Thescale-upplansreachfromafew10000tonnesremovaltodaytohundredsofmillionsoftonnesbytheendofthedecade.Thefrontrunnersareattractinginvestorinterest,includingthosedevelopingtheleastmatureandmostexpensivesolutions.26

Theprivatesectoristhemaindriverofcurrentmomentum.Sinceearly2020,increasingnumbersofcompanieshavepledgedtoachievenet-zeroemissionsfromtheirownoperations,attimesincorporatingtheirsupplyand/orentirevaluechains.Somehavepledgedtoreversehistoricemissionsaltogether.27Many(butnotall)ofthecommitmentsacknowledgetheneedtobalanceunavoidedemissionsviacarbonremovalandsomefirms,includingSwissRe,havealreadyboughtfirstremovalservices.28,29Buyersrequireattestationthattheservicecapturesandstoresacertainamountofcarbonfromtheatmosphere.Theattestationisusuallyintheformofacarboncertificatepertonneremoved.Thepriceofthecertificateisthepriceabuyeriswillingtopayvoluntarilytocompensateforunavoidableemissions.Thusthefirstbusinesscasesforcarbonremovalservicesarebeingbuiltonthesalesofcarbonremovalcertificates,and2019sawthefirstmarkettradingofsuchcertificates.30

24 IPCC,2018,op.cit.25 See,forexample“Removecarbon.RestoreForests”,pachama.com;“EnableremovalofCO2fromthe

air”,climeworks.com,bothaccessedon8February2021.26 See,forexample,“PledgebyAmazon:TheRightNowClimateFund”, us.1t.org;“SwissCarbonCapture

StartupRaisesUSD76minFundingRound”, bloomberg.com,2June2020;“BlamedforClimateChange,OilCompaniesInvestinCarbonRemoval”,The New York Times,7April2019.

27 See,forexample, Carbon Removal Coprorate Action Tracker,InstituteofCarbonRemovalLaw&Policy,7May2020;Net-zero emissions: do our best, remove the rest,SwissRe,12April2020.

28 “Swiss-Rebackedcarbonremovalmarkettargetsgigatonscale-up”,theenergyst.com,June2020.29 See,forexample,R.Orbuch,“Stripe’sfirstcarbonremovalpurchases”,stripe.com,18May2020;

“FightingfortheFuture:ShopifyInvests$5MinBreakthroughSustainabilityTechnologies”,shopify.com,15September2020;Microsoft Carbon Removal – Lessons from an early corporate purchase,Microsoft,2021.

30 Forexample,“Carbonremovalstartshere:Theworld’sfirstB2Bmarketplace,standardandregistryfocusedsolelyoncarbonremovals”,puro.earth;“TheNoriCarbonRemovalMarketplace”,nori.com,bothaccessedon8February2021.

Theneedforcarbonremovalisclearbutthebusinesscaseisstillunfolding.

Theindustryisgainingafoothold...

...andtheprivatesectoristhemaindriver.

Alltold,thecarbonremovalindustryisstillinearlystagesofdevelopment.Thereisalongwaytogoandlittletimetoreachthebillion-tonnesscaleofremovals.Barrierstodeploymentexistalongtheentirevaluechain.Keyconstraintsonthesupplysideincludehighcostandresourcerequirements,lackofeconomicincentives,lackofknowhow,resistancetochange,aswellascompetitionforland-useanduncertaintiesregardingthepermanenceofstorage.Onthedemandside,firstmoversareinclinedtowaitandseeinviewofhighinitialprices(free-riderproblem).Otherdemand-sideconstraintsincludelackofmarketaccess,lackofregulatoryrequirements,andtheperceptionthatsupportingcarbonremovalmaydeteractiontoreduceemissionsinthefirstplace(moralhazard).Supplyanddemandequilibriumisbeinghamperedbythelackofstandardisationofcarbonremovalservices,smalltransactionvolumes,limitedfungibilityandlackofregulationofinternationaltransfersofremovaloutcomes.

Allconstraintsaside,toanswerthecallofscienceandpreventtheworstimpactsofawarmingworld,thecarbonremovalindustrywillhavetoscalefromsome10000tonnesofnegativeemissionstodaytoaround10billiontonnesby2050.That’safactorincreaseof1millionoveraperiodofthreedecades,oracompoundannualgrowthrate(CAGR)ofcloseto60%.31Toreiterate,thetaskismassive.Oncetheindustryhastakenshape,furtherscalingwillrequirede-riskingandfinance.Thisiswherere/insurerswithappetiteforthejourneycanplaytotheirstrengths.

31 SwissReestimatesaCAGRof58%tomovefromafew10kilotonnesofnegativeemissionsservicesin2020to10gigatonnesby2050.Ifonsetofscalingupcarbonremovalservicesisdelayedto2025,theCAGRrisesto74%.Delayto2030=CAGRof100%.

Thebarrierstodevelopmentofcarbonremovalspansupply,marketplaceanddemand.

Thecarbonremovalindustryhastoscaleatanunprecedentedspeed.Thisrequiresde-riskingandaccesstocapital.

Theremovalindustrylandscape

CarbonremovalsolutionsdifferinhowatmosphericCO2iscaptured,processed,transportedandstored.TheyareoftenreferredtoasNegativeEmissionsTechnologies(NETs),butnotallrelyonthedeploymentoftechnologicalmeans.Therearethreemaincategoriesofcarbonremovalsolution(seeFigure2).

Nature-based solutionsthat use biological processes to capture CO2 from the atmosphere and store it in the form of organic matter. Examples: afforestation; soil carbon sequestration

Hybrid solutionswhich combine nature-based and technological processes. Example: bioenergy and carbon capture and storage (BECCS)

Technological solutions that use engineering tools to filter CO2 from air and store/process it in concentrated form. Example: direct air capture and storage (DACS)

Source:SwissRe

Scientistsagreethatnosingleapproachorsolutionhasthescalepotentialtoremoveenoughcarbontolimitglobalwarmingtowellbelow2°C.32Aswithotherclimatechangemitigationstrategies,aportfolioapproachthatexploitsnichesandsynergies,alignstothevariedneedsofcommunities,landscapesandeconomicpriorities,andfollowsriskdiversification,isrequired.Thepurposeofthischapteristoprovideabetterunderstandingofthecarbonremovallandscape,illustratedinFigure3.Thevaluechainofeachsolution—fromCO2capturefromair,toprocessing,transportandpermanentstorage—isdescribed.Thereafter,Table2providesanassessmentofthesolutionsfeaturingkeyparameterssuchascost,co-benefitsandpossibleadverseeffects.

32 IPCC,2018,op.cit.

Nature-based,technologicalandhybridsolutionsarethethreemaincategoriesofcarbonremoval.

Figure 2 Threemaincategoriesofcarbonremovalsolutions

Tomeetthecapacityrequired,carbonremovalsolutionsneedtodevelopedinparallel.

Nature-based solutions include 1) Afforestation – planting forests on previously woodless land, 2) Soil carbon sequestration – increasing soil organic matter through changes in land manage-ment, 3) Blue carbon – fostering carbon uptake by wetlands; Technological solutions include: 4) Direct air capture and storage (DACS) – filtering CO2 directly from air and storing it permanently, 5) Enhanced weathering – fostering the fixation of CO2 through natural minerals, 6) Ocean alkalinisation – providing chemicals to ocean waters to foster the uptake of dissolved CO2;

Hybrid solutions include: 7) Bioenergy with carbon capture

& storage (BECCS) – extracting heat and power from biomass

then capturing the resulting CO2 from the flue gas and storing it, 8) Biochar –

producing charcoal from biomass and using it eg, as soil amendment, 9) Ocean fertilisation –

providing nutrients to foster algal growth;Storage options for concentrated CO2 from BECCS

and DACS are 10) geological reservoirs similar to an oil filed (porous rock in great depth, sealed by impermeable caprock) or 11) long-lived products such as aggregates, carbon fibres, etc.

9-Ocean fertilization

2-Soil carbon sequestration

4-DACS

8-Biochar1-Afforestation

7-BECCS

3-Blue carbon

6-Oceanalkalinisation

5-Enhanced weathering

11-Long-lived products

10-Geological storage 10-Geological storage

Figure 3 Carbonremovallandscape

Source:SwissRe

The removal industry landscape

Nature-basedsolutions

PlantsremoveCO2fromtheatmospherethroughphotosynthesisanduseitasbuildingblockstoproducetheirbiomass(leaves,wood,roots),inwhichthecarbonremainsstoredaslongastheplantlives.Deadbiomassdecomposesandreleasessomecarbonbacktotheatmosphere,andsomeisconvertedtohumusorpeat.Mostnature-basedsolutions–likeafforestationandpracticestoimprovesoilcarbonsequestrationarewell-establishedandrelativelyinexpensive.33,34Otherareasofnature-basedcarbonremovalactivitylikebluecarbonremainlessexplored.35Ifundertakencorrectly,nature-basedsolutionscanyieldco-benefitsbeyondcarbonsequestration,includingfloodprotection,droughtresilienceandotherbenefitslikebiodiversityconservationandthemaintenanceofessentialecosystemservices.

Onthedownside,nature-basedsolutionsrequirelandandwaterresources.Theycompeteforlandwithfoodandfodderproduction,andotherhumanactivities,whichsetsalimittotheireconomicfeasibilityandscalability.36Moreover,theydonotproducenegativeemissionsinstantaneously:ittakesdecadestogrowaforestoraccumulatehumus.37Anotherriskisthedurabilityofstorageduetoenvironmentalandhumanimpacts.Globalwarmingandchangingprecipitationaltertheabilityoftreesandvegetationtosequestercarbon,andwildfiresorchangesinlandmanagementmayquicklyreleasetheCO2backintotheatmosphere.Thethreemainnature-basedsolutiontypescurrentlyareafforestationandimprovedforestmanagement,soilcarbonsequestrationandbluecarbon.

Afforestation and improved forest managementAfforestationistheplantingoftreesonpreviouslywoodlessland.Improvedforestmanagementseekstoincreasethecarbonstockofanexistingforest.38

Capture:treesandundergrowthcapturecarbonfromtheatmosphereviaphotosynthesis.

Processing: none. Transport: movingseedlingsorsaplingstofinalplantingsite. Storage: intheformofmaturingandmatureforests,includingthelivingbiomass

andthecarbonstoredinforestsoils.Notethatthewoodybiomassmayalsobeharvestedandmanufacturedintolong-livedconstructionmaterialslikemasstimber,whichcanremain(storecarbon)inbuildingsforseveraldecades.

33 S.Fussetal.“Negativeemissions—Part2:Costs,potentialsandsideeffects”,Environmental Research Letters,vol.13,2018.

34 C.Beuttler,S.Keel,J.Leifeld,TheRoleofAtmosphericCarbon Dioxide Removal in Swiss Climate Policy,FederalOfficefortheEnvironment,October2019.

35 Coastal Blue Carbon – methods for assessing carbon stocks and emissions factors in mangroves, tidal salt marshes, and seagrass meadows, ConservationInternational,IOC-UNESCOandIUCN,2014.

36 P.Smith,etal.,“BiophysicalandeconomiclimitstonegativeCO2emissions”,Nature Publishing Group, Nature Climate Change,vol.6,2016.

37 Dependingonspeciesandgeography,onaverage,agrown-uptreecanabsorbroughly22kgCO2peryear.See Forests, health and climate change, EuropeanEnvironmentAgency,2011.Asasapling,itwillabsorbmuchless.IttakesaUKbroadleaftreeitsfulllifetimeof~100yearstocapture1tonneofCO2.SeeHow much CO2 can trees take up?TheGranthamInstitute,2015.

38 Notethatinthecontextofclimateprotection,forestmanagementstrategiescanleadto:1)emissionavoidance:upholdingtheexistingforestcarbonstock,alsoknownasavoideddeforestation;2)emissionreversal:restoringtheforestcarbonstockofarecentlydegradedforest,alsoknownasreforestation;or3)negativeemissionsthroughafforestationorimprovedforestmanagement.Allthreeareimportantmeasurestomitigateclimatechange,butonlyafforestationandimprovedforestmanagementshouldbecountedascarbonremoval.Inpractice,af-andreforestationareoftenusedinterchangeably,asthereisnoconsensusonthetimescaletobeappliedfordefining“recentlydegraded”for“previouslywoodless”.The Economist Intelligence Unit (2020)suggeststhatplantingonlandthathasbeenwoodlessforatleast50yearsqualifiesasafforestation,andlessthanthatasreforestation.

Nature-basedsolutionsuseplantstocaptureCO2fromair.Theycanharnessmanyco-benefits…

..butfacelimitsofscalability.Resultsalsotakealongtimetorealise.

Afforestationistheplantingofnewtreestoincreasethecarbonstockofforests.

Soil carbon sequestrationThroughregenerativeagriculturalpractices,soilsaccumulateorganicmatterintheformofsub-surfacebiomassandhumus.Theaimofsoilcarbonsequestrationistodeploylandmanagementpracticesthateitherincreasethecarboninputtosoils(throughcovercrops,croprotations,manure/compost/residueaddition,improvedgrazingmanagement)ordecreasethecarbonlossfromsoils(no-/low-tillage,switchfromannualtoperennialcropsandgrasses).39

Capture:viaplantbiomassgrowthanddecomposition,atmosphericCO2endsupinsoils.

Storage:intheformofsoilorganicmatter.

Blue carbonThisistheconservationandrestorationofcoastalwetlands(mangroves,seagrassmeadows,saltmarshes,macroalgae)andfreshwaterpeatlands,whichcansequestermorecarbonfasterthananyotherecosystem.40,41However,therearegapsintheunderstandingofsequestrationratesandhowhumanscanoptimally(ornegatively)influencethem.42

Capture:viaplantbiomassgrowthanddecomposition,atmosphericCO2endsupinwetlandecosystems.

Transport: movingseedsandsaplingstoplantingsites. Storage: intheformofthelivingbiomass,soilcarbon,peatandsedimentsthat

accumulateinwetlands.

39 K.Paustian,E.Larson,J.Kent,E.Marx,A.Swan,Soil carbon sequestration as a biological negative emission strategy.FrontiersinClimate,16October2019.

40 D.Herretal., Coastal “blue” carbon.InternationalUnionforConservationofNatureandNaturalResources,2015.

41 D.Gordon,B.C.Murray,LPendletonandB.Victor,Financing Options for Blue Carbon: Opportunities and Lessons from the REDD+ Experience.NicholasInstituteforEnvironmentalPolicySolutions,DukeUniversity,2011.

42 ConservationInternational,IOC-UNESCO,andIUCN,2014,op.cit.Thesebodiesclassifyfiveareasinwhichfurtherresearchisstillneeded:geography,sequestrationandstorage,emissionsandremovals,humandriversofecosystemdegradation,andcoastalerosion.

Regenerativeagriculturalpracticesincreasethecarbonstockinsoils.

Restorationandconservationofcoastalzonesandwetlandsincreasethecarbonstockintheseecosystems.

Technologicalsolutions

TechnologicalsolutionsuseindustrialprocessestoremoveatmosphericCO2forcapturing,storageorboth.Theyrelyonmachinery,processingorstorageinfrastructure,aswellaslogisticstotransportthecapturedconcentratedCO2products.Thestepsareenergyintensive.TheenergyusedshouldbefromrenewablesourcestopreventputtingnewCO2intotheatmospherewhileremovingwhatisalreadythere.Forexample,tocaptureonetonneofCO2directlyfromtheairusingcurrentfiltertechnologiesrequires2300kWhofenergy,equivalenttotheenergycontentin0.2tonnesofoil.43Producing,transportingandburning0.2tonnesofoilreleasesroughly0.6tonnesofCO2.Iftheenergytocapture1tonneofCO2fromaircamefromoil,thenetbenefitwouldbejust0.4tonnesofCO2capture.44

Technologicalsolutionsaremorecapital-andoperating-expenditureintensivethannature-basedalternatives.Also,theco-benefitsinvolvedarefewerandlessobvious(eg,jobcreation,re-purposingofstrandedinfrastructure,45innovationspill-over).46

Thishelpsexplainwhytechnologicalsolutionsarestillatanearlystageofdevelopmentanddeployment.Intheabsenceofstringentcarbonpricing,mandatesorvoluntarybuyers,therehasbeenlittlebusinessjustificationtodevelopexpensiveequipmenttocleantheairofCO2.Ontheupside,landrequirementsaresmallandthestorageinchemicalorgeologicalsystemsismoredurablethanthestoragepotentialofbiologicalsystems.Thetwomaintechnologicalsolutionsarecurrentlydirectaircaptureandstorage,andenhancedweathering.

Direct air capture and storage (DACS)CO2isfiltereddirectlyfromambientair,compressedandtheninjectedintogeologicalformationsdeepundergroundforpermanentstorage.

Capture:throughchemicalfiltersinairprocessingunits,CO2isbroughtfromonly0.04%concentrationintheairtocloseto100%concentrationintheresultinggasproduct.Thisseparationtaskrequireselectricitytodrivesufficientamountsofairthroughtheunit(10–20%oftotalenergy),andheattoregeneratethefilters(80–90%oftotalenergy).47

Processing:aftercapture,theconcentratedCO2streamisliquifiedincompressors(>65baratambienttemperature).

Transport:aircaptureunitsareideallyco-locatedatarenewableenergysourceorastoragesiteorboth,sothataircapturecantakeplaceanywhere(independentfromaCO2pointsource).Therefore,onlylimitedornoCO2transportinfrastructure–suchaslong-distancepipelines–isrequired.

Storage:thecompressed,liquifiedCO2ispumpedthroughaninjectionwellintogeologicalstructures,usuallyat800(minimum)to2500(maximum)metresdepth.Likeoilorgasfields,thesestructuresconsistofporousrocktoppedbyalayerofdensecaprock.Onceinjectedatapressureslightlyabovethereservoirpressure(minimum80bar,wellbelowfracturingpressure),physicalandchemicalprocessesstabilisetheCO2overtime.48AbenefitofstoringCO2geologicallyisthatexistingdepletedoilandgasfieldscanbere-filledusingoldinfrastructure.

43 Energyconsumptionofdirectaircapturetechnologyis~200tonnesoilequivalent(toe)pertonneCO2captured.Burningatonneofoilroughlyemits~3tonnesofCO2.SeeDirect Air Capture – more efforts needed,InternationalEnergyAgency(IEA),June2020,

44 Ibid.45 “Strandedinfrastructure”areinfrastructureassetsthatseenprematurewrite-downduetoeconomicor

unexpectedregulatoryreasons.Forexample,fossilenergyinfrastructurelikeanoilpipelinemaybere-purposedtoserveforCO2transport.

46 J.Minxetal“Negativeemissions–Part1:Researchlandscapeandsynthesis”, Environmental Research Letters,vol13,2018.

47 IEA,June2020,op.cit.48 Withinthestoragereservoir,theCO2:1)istrappedphysicallybeneaththecaprock(structuraltrapping,

immediatelyeffective):2)getsimmobilizedintheformoftrillionsoftinybubblesbehindporenecks(residualtrapping,immediatelyeffective);then3)startsdissolvingintheporefluidandsinkstothebottom(dissolutiontrapping,takesyearstocenturies);andlater4)reactswiththerocktoformstablemineralcarbonates(mineraltrapping,takesdecadestomillennia).Overtime,thesefoursequentialtrappingmechanismstransformCO2intoevermoredurableformsofstorage.SeeSpecialReportonCarbonCaptureandStorage,IPCC,2005.

Technologicalsolutionsuseengineeringtoolstoremovecarbon,andrequirelotsofrenewableenergy.

Technologicalsolutionsarestillatanearlystageofdevelopment.

DACSdeploysfiltermachinestocaptureCO2directlyfromair.

InNorthAmerica,CO2injectionintomaturingoilfieldsthroughonewellispracticedtoproducemoreoilinanotherwellnearby.ThisisknownasEnhancedOilRecovery(EOR).Intheory,moreCO2canbeinjectedandsequesteredthanthatemittedthroughdownstreamoilusage.AnotherspecialcaseforgeologicalCO2storagehasbeendemonstratedinIceland,wherecapturedCO2ispre-dissolvedinwaterandtheninjectedintobasalts,atypeofrockthatreactwiththeCO2toformstableminerals.49

AircapturedCO2canbeprocessedintolong-livedproductslikecarbonfibre,aggregatesandotherbuildingblocksforconcreteandprecipitatedcalciumcarbonate.Thisisreferredtoas‘carbontech’,orcarboncapture,utilisationandstorage(CCUS).Currently,carbontechmakesuseofjustsome200MtCO2perannum,includingCO2usedforEORandshort-livedproductssuchassyntheticfuelsorplastics(=carboncaptureandutilisation,CCU),meaningitplays/willlikelyplayjustasmallroleintheglobalquesttodelivergigatonsofnegativeemissions(seealsoCarbon removal vs. carbon capture and storage: what are the differences? onp15).

Enhanced weatheringChemicalweatheringisthenaturalprocessbywhichrocksurfacegetsattackedwhenexposedtoatmosphericCO2dissolvedinwater.Thisprocesscanbeenhancedbyenlargingthesurfaceareaofsuitablerocksandoptimallyexposingthemtorain-oroceanwater.50

Capture:alkalinerocksuchasolivineisminedandfinelygroundtoincreasesurfaceareabeforebeingspreadevenlyoversoilorbeaches.CO2inwaterformscarbonicacidthatattacksanddissolvestherockgrains,therebyformingastablemineral/bicarbonatesolution.Enhancedweatheringcanalsobecarriedoutinanengineeredreactorwheretemperature,pressureandpHconditionscanbevariedtoincreasethespeedofreactions(mineralcarbonation,ormineralisation).51

Processing:miningandgrindingrock. Transport:fromthemine/grindertotheweatheringsitesusingtrucks,trainsand

ships. Storage: chemicallyfixedasbicarbonatesolution(pore-,surface-,oceanwater)

andeventuallyprecipitatedascarbonateminerals.

49 See,forexample,theCarbfixprojectinIceland.

50 R.DSchuiling,P.Krijgsman,“EnhancedWeathering:AnEffectiveandCheapTooltoSequesterCO2”,Climatic change,vol74,2006.SeealsoD.J.Beerling,E.P.Kantzas,etal.,“Potentialforlarge-scaleCO2removalviaenhancedrockweatheringwithcroplands.Nature,vol583,2020.

51 K.Lackneretal.,“Carbondioxidedisposalincarbonateminerals”,Energy,vol20,1995.

Inconcentratedform,theCO2canbestoredingeologicalformations...

...andalsoinlong-livedproducts.

EnhancedweatheringacceleratesthenaturalprocessbywhichmineralscanbindCO2dissolvedinwater.

Hybridsolutions

Hybridsolutionsseektocombineandreapthebenefitsofdifferentfeaturesofnature-basedandtechnologicalapproaches.Whatnaturedoesbestissun-poweredaircapturethroughphotosynthesis.Technology,ontheotherhand,isbetteratconvertingCO2intodurableformsofstorage.

Bioenergy with carbon capture and storage (BECCS)Biomassisconvertedtoheatandpowerinapowerplantortoenergycarrierslikeethanol,methanolorbiogasinanindustrialfacility.TheconversionresultsinbiogenicCO2thatisseparatedfromtheoff-gasthroughconventionalpointsourcecarboncapturemethods.TheconcentratedCO2canbesentforgeologicalstorageorprocessedintolong-livedproducts.The“CCS”partofBECCSisthesameastheconventionalcarboncaptureandstoragevaluechaintodecarboniselargepointsourcesofCO2suchascoalfiredpowerplants(seealsoCarbon removal vs. carbon capture and storage: what are the differences? below)52

Capture:thefirststepofcapturingofCO2fromtheairisthroughphotosynthesisinplants.

Processing: plantbiomassisharvestedandburned,orconvertedtobiofuelsandotherchemicals.TheresultingbiogenicCO2canbethenstrippedrelativelyeasilyfromthefluegas/processgasusingconventionalCO2capturemethods(eg,aminescrubbing).53ThisisthesecondcapturestepinBECCS.TheconcentratedCO2isthencompressedandsentforstorage.

Transport: twomainsteps:1)movingbiomassfromthefield/foresttotheprocessingplants:and2)fromthere,movingcompressedorliquifiedCO2inpipelines(typicallyat100barpressure,ambienttemperature)orusingtrucks/trains(~20bar,–20°C)orships(at7bar,–50°C)toastoragesite.Ideallybiomasssourceandstoragesitesareincloseproximitytokeeptransportcoststoaminimum.54

Storage: thestorageoptionsarethesameasforDACS.

BiocharBiocharresultsfromheatingbiomassunderlackofoxygen(pyrolysis).Itconsistsofcarbonblackwhichdecomposesveryslowlyundernaturalconditions,renderingbiocharamoredurablecarbonstorageformthantheoriginalbiomass.Itisusuallyaddedtodegradedtopsoiltoimprovesoilfertility.

Capture: plantgrowthcapturescarbonfromtheatmospherethroughphotosynthesis.

Processing: theplantbiomassisconvertedintobiocharinapyrolysisplant.Pyrolysisproducesamethaneandhydrogenrichoff-gas(syngas)thatcanbeusedtopowerthepyrolysisprocessorbeupgradedtosyntheticbiofuels.

Transport: biomassismovedfromthefield/foresttothepyrolysisplant,andthebiocharfromthatplanttoitsplaceofuse.55

Storage: intheformofcarbonblack,whichisstableoverdecadeswhenusedasbuildingblocksintheconstructionorchemicalindustries,56andcanalsobeusedforsoilamelioration.57

52 IPCC,2005,op.cit.53 NotethatconventionalCO2capturefromafluegascontaining4–25%CO2requiresmuchlessenergy

thandirectcapturefromaircontainingonly0.04%CO2.Asaruleofthumb,costofcapturescaleslinearlywithdilution(Sherwood’sRule).

54 IPCC,2005,op.cit.55 Mobilepyrolysisunitscouldbeusedtoprocessthebiomassandreturnthebiocharonfieldsite.See

“Useofmobilefastpyrolysisplantstodensifybiomassandreducebiomasshandlingcosts–apreliminaryassessment,”Biomass and Bioenergy,vol30,2006.

56 “Applicationofthebiochar-basedtechnologiesasthewayofrealizationofthesustainabledevelopmentstrategy”,Economic and Environmental Studies,OpoleUniversity,vol.17,2017

57 J.Lehmann,S.Joseph,Biochar for environmental management, first edition.Earthscan,2009.

Hybridsolutionscombinenature-basedandtechnologicalsolutions.

BECCSconvertsbiomasstoenergy,andcapturesandstorestheresultingbiogenicCO2fromthefluegas.

Heatingbiomassunderlackofoxygenproducesbiocharthatismoredurablethantheoriginalbiomass.

Othersolutions

Otherless-developedcarbonremovalsolutionsincludeoceanfertilisationandalkalinisation.TheseacceleratethenaturalcarboncyclebymodifyingoceanchemistrytowardsahigherCO2uptakerate.

Ocean fertilisation providesthemissingnutrient–mostlyiron–thatcontrolsalgalgrowthdirectlyinthesurfacewaterathighsea.Algae(phytoplankton)growsandabsorbsCO2throughphotosynthesis.Itthendiesandsinks,creatingacarbonfluxtotheoceanfloor.

Ocean alkalinisationprovidesalkalinebrinesdirectlytooceanstoraisethepHofthewaterandallowmoreuptakeofatmosphericCO2.Thealkalinityisderivedfromminerals(silicates,limestone)orindustrialby-products(ashes,desalinationbrines).

Thereisstillmuchuncertaintywithrespecttotheeffectivenessandadverseimpactsonoceanecologyofthesesolutions,whichmeritsfurtherresearchbeforeconsideringlarge-scaledeployment.58

58 Uncharted Waters: Expanding the Options for Carbon Dioxide Removal in Coastal and Ocean Environments,EnergyFuturesInitiative,2020.

Otherapproachestocarbonremovalarelessdeveloped...

...andentailmanyunknowns.

Carbon removal vs. carbon capture and storage: what are the differences?Thetermscarbonremovalandcarboncaptureandstorage(CCS,orsimplycarboncapture)areoftenusedinterchangeably,butthereareimportantdifferences.CarbonremovalisthecaptureandstorageofCO2fromtheatmosphereforthesakeofproducingnegativeemissions.CCSisthecaptureandstorageofCO2fromthefluegasoflargeindustrialpointsourcesforthesakeofreducingemissionsfromfossilfueluse.59ThereareoverlapsintheCCSvaluechain,andthatofBECCSandDACS,whichallprovideconcentratedatmosphericCO2postcapture.ThethreeprocessescansharethesameCO2transportandstorageinfrastructure.InthecaseofBECCSandCCS,thepointsourcecapturetechnologyisthesame.

AnotherareaofconfusionisthefateoftheCO2oncecaptured,inparticularwhenitcomestocarbonbalance.CO2canbestoredgeologicallyasintheoriginalCCSvaluechain.Itcanbeconvertedtoshort-livedproductsthatwillreleasethecapturedCO2uponconsumption,knownascarboncaptureandutilisation(CCU),oritcanbeconvertedtolong-livedproductsthatholdCO2foralongtime,calledcarboncapture,utilisationandstorage(CCUS).DependingontheoriginoftheCO2(fossilderivedorbiogenic/directlyfromair),thethreeroutesleadtoacarbonbalancethatispositive(moreemissions),neutral(emissionsareavoided)ornegative(carbonisremoved).

TheCCUSrouteispreferableovergeologicalstorage,becauseitgivesvaluetoratherthandisposingofCO2emissionsasawasteproduct.However,thebulkmarketcurrentlyopentoreceiveCO2fromanexternalsourceisjustsome40milliontonnes/year,60andmostofthattakestheCCUratherthanCCUSroute.Thisiswellshortoftheneedformanybilliontonnesofemissionstobesequesteredtobalanceresidualandlegacyemissionsinlinewiththe1.5°Cwarminglimit.ThatiswhymostoftheconcentratedCO2comingfromBECCSandDACSplantswilleventuallyhavetotakethegeologicalstorageroute.

59 Twentyyearsago,CCSemergedasameanstodecarbonisecoal-andgas-firedpowerplantsatatimewhennewrenewableswerestillprohibitivelyexpensive.Today,utility-scalewindandsolararethecheapestenergysourceinmanypartsoftheworld,thustheroleofCCSinthepowersectorwilllikelybelimited.CCSremains,however,asolutiontodecarbonisehard-to-abateindustrialsectorslikecement.

60 TotalbulkCO2marketis230MtCO2/year(PuttingCO2touse,IEA,2019).Ofthis130Mt/yrareforureaproductionandstemmostlyfromtheprocessitself(CO2frommethanereformingtoproduceammonia),and70–80Mt/yrareusedforEOR,wheretodateonly~20%stemfromanthropogenicsources,therestbeingdeliberatelyproducedfromnaturalCO2reservoirsindeepgeologicalformations.SeeClimate Intervention: Carbon Dioxide Removal and Reliable Sequestration,NationalAcademyofScience,2015.

ThevaluechainsofBECCS,DACSandCCSoverlap.

CCUSproduceslong-livedproductsthateffectivelystoreCO2.CCUproducesshort-livedproductsthatdon’tstoreCO2.

CCUSislimitedinstoragecapacity.ThebulkoftheconcentratedCO2hastogotogeologicalstorage.

Figure 4 OverlapbetweencarbonremovalandCCSvaluechains

CO2 from atmosphere

Photo-synthesis

Biomass

Geologicalprocesses

Millions of yearsCoal, oil, gas

Combustion(point-source)

CO2 into atmosphere

capture

concentratedCO2

Geologicalstorage

Utilization &storage

Long-lived products(eg, concrete)

Utilization

CO2 intoatmosphere

Short-lived products(eg, synfuels)

Air capture

Biomassprocessing

Bio-diesel,wood, etc.

Main input Fossil fuels

Output Heat/power,industrialproducts

Heat/power,industrialproducts

CO2 balance Positive

more fuel

Neutral

Biomass (land, water, fertilizer)

Negative

Heat/powerfrom renewables

Negative Neutral for fossil CO2Negative for bio/air CO2

Heat/power(from renewables)

Long-lived products

Positive for fossil CO2Neutral for bio/air CO2

Heat/power(from renewables)

Short-lived products

CCUBECCS

Source:SwissRe

Table 2 Carbonremovalsolutions:literature-basedassessment61

Method Readiness62 Cost todayUSD/tCO263

Energy requirementGJ/tC02

Land requirement ha/tCO2/yr

Scalability64 Permanence of storage74 Possible co-benefits75 Possible adverse effects76

Nature-based solutions

Afforestation (AF), improved forest management (IMF)

MatureAvailableatlargescale

1–100 –65 0.03–0.766

LowBarrierstoupscaling:

– landrequirementcreatescompetitionwithcropandfodderproduction,andconservationalgoals

– fullremovalpotentialunfoldsoverseveraldecades,foraslongasaforestgrows.Afully-grownforestcannotremovemorecarbon

– concernsaboutpermanence– lackofincentives/valuationofecosystem/climateservices

– lackofdemandforwoodinmostmarkets

Riskofreversalfrom:– illegalandlegaldeforestation(policychanges)

– slowdegradation(globalwarming,pests)

– naturalhazards(wildfires,storms)

– protectionandcreationofhabitatsthatconserveandenhancebiodiversity

– preventionofsoilerosion– improvedwaterquality/retention,localairqualityand(micro-)climaticconditions

– reversalofdesertification– jobcreationinforestryandeco-tourism– revenuefromsustainabletimber

– ill-managedafforestationefforts(monoculturetreeplantations,plantinginspecies-richecosystemslikesavanna)canharmbiodiversityandlivelihoodoflocalcommunities(displacement)

– foodsecuritycompromised– largewaterneedsforprojectsindryzones– treecoveragemayreducealbedo(reflectionofsunlightbackintospace),particularlyinsnow-richregions,whichmayexacerbateglobalwarming78

Soil carbon sequestration (SCS)

Early adoption – mature

– mostlyavailableatlargescale(afewpracticessuchasperennialisationarestillpre-mature)

0–4067 –68 –69 LowBarrierstoupscaling:

– lackofincentivesforwidespreadadoption,includingchallengesforfarmerswhensubsidysystemsaretiedtohighyieldofmonoculturalcommoditycrops

– resistancetochangeofestablishedpractices– risksassociatedwithtransitioningofpractices,suchasimpactonyieldandlabourinthefarmingpracticetransitionphase

– competinglanduses– timetakenforsoilcarbontobuildup– difficulties/uncertaintiesinmeasuringsoilcarbon– concernsaboutpermanence

LowRiskofreversalfrom:

– goingbacktooriginalpractices(eg,changeofownershipoftheland,policychanges,ceaseofincentives)

– environmentalchangesandhazards(floods,droughts)

– improvedcropyieldsaftertransitiontimewithpossibleloweryieldsforafewyears

– lowerexpensesforfertiliser,irrigationandcropprotectionchemicals,whichalsoreduceenvironmentalimpactsonsoil,water,air,faunaandhumanhealth

– increasedsoilresilienceandmicrobialbiodiversity

– improvedwaterretention(floodprotection)– improvedwaterqualityduetolowerfertiliserinputsandrunoff,andlesssoilwashingintowaterways

– significantreductionsinotherGHGemissions(eg,methane,N₂O)

– possibleincreaseofotherGHGemissions(N2O)

Blue carbon (BC)

Prototype – maturefromprototypes(eg,marinepermaculture)toavailableatlargescale(eg,mangroverestoration)

10–10070 –71 0.272 Low73

Barrierstoupscaling:– conflictsofuseincoastalzones– lackofincentivesforconservationandrestoration– waterpollution– concernsaboutpermanence– negativepublicperceptionofmangrovesandwetlands

Riskofreversalfrom:– land-usechange/ceaseofconservationpolicies

– coastalwetlandsvulnerabletosealevelriseandincreasedstormfrequency/intensity

– intactcoastalwetlandsprotectthecoastandinlandagainststormsurgeandotherstorm-relatedimpacts

– increasedbiodiversity/restoringfishstock– improvedwaterquality/foodsecurityforlocalcommunities

– jobcreation/protection(food,fishery,tourism)

– increasedtraceGHGemissions(CH4,N2O)

61 Theeditorialdeadlinetocompilethistablewas28February2021.62 Innovation needs in the Sustainable Development Scenario – Clean Energy Innovation Flagship Report:IEA,2020.Prototype=TRL4–6,Demonstration=

TRL7–8,Earlyadoption=TRL9–10(TRL10definedbyIEAas“Solutioniscommercialandcompetitivebutneedsfurtherintegrationefforts”),Mature=TRL11,definedbyIEAas“Proofofstabilityreached,withpredictablegrowth”.CommentsonthedevelopmentstatusadaptedfromG.F.Nemet,etal.“NegativeEmissions-Part3:Innovationandupscaling”,Environmental research letters,vol13,2018.

63 AdaptedfromFussetal.2018,op.cit.64 CategoriesdefinedbasedonaveragecumulativepotentialinGtCO2bytheyear2100,compliedfromliteraturebyMinxetal.2018,op.cit.,Table2:Low=0–150

Gt,medium=151–300Gt,high=>301GtCO2.Notethatthepotentialoftheindividualcarbonremovalsolutionsarenotnecessarilyadditiveassolutionscompeteforlimitedland,biomassfeedstock,andsuitablegeologicalstoragecapacity.CommentsonthelimitationsstatusadaptedfromNemetetal.,2018op.cit.

65 Af-andReforestation,andImprovedForestManagementhavebeenfoundtorequirenoadditionalenergyinputcomparedtoconventionalforestmanagement.Numbersdifficulttopinpoint

66 Land Use, Land-Use Change and Forestry,IPCC,2000.67 InformedbyP.Smith,“Soilcarbonsequestrationandbiocharasnegativeemissionstechnologies”, Global Change Biology,vol22,2016,andcurrentmarket

intelligence.68 SCShasbeenfoundtorequirenoadditionalenergyinputcomparedtoconventionallandmanagement.Numbersdifficulttopinpoint.69 SCSrequiresnoadditionallandbeyondwhatisalreadyusedforagriculture.70 NotassessedbyFussetal.2018,op.cit.Costbasedonauthors’judgementandWhat is Blue Carbon?AmericanUniversity71 Noreliablecalculationsorestimationsavailable72 Numberrefersonlytospecificmangroveplantations,otherwetlandecosystemsmaybedifferent.D.M.Alongi2012,“Carbonsequestrationinmangrove

forests”, Carbon Management,vol3,2012;O.J.Eeon,“Mangroves–acarbonsourceandsink”,Chemospherevol27,1993.73 NotassessedbyMinxetal.,2018,op.cit.AccordingtoGriscometal.in“Naturalclimatesolutions”,PNAS,2017.Afforestationandimprovedforest

managementtogetherhaveayearlypotentialof3.9GtCO2/yearin2030,whereascoastalwetlandandpeatlandrestorationtogetherhave0.6GtCO2/year.