DIY CDR: Why companies should look internally for carbon dioxide removal opportunities

Whether or not carbon credits can be used to help companies reach net-zero is currently the subject of fierce debate among all those passionate about decarbonisation. What is not up for debate is that in order to reach net-zero, when all possible emissions reductions have been made, carbon removal will be required to offset the residual emissions. That is what puts the “net” in net-zero. The conventional approach to this has been for companies to start purchasing Carbon Dioxide Removal (CDR) credits now to help advance the technology, scale the market and build relationships with suppliers so that when they reach their net-zero year there is a plentiful supply of CDR credits including some they may have locked in through early engagement. While this is a very valid strategy, in many cases, especially in the hard-to-abate sectors, the best thing companies can do to scale the supply of carbon dioxide removal is to do it themselves.

 One man’s trash…

The primary reasons for this are practical, physical and chemical. CDR is in many ways similar to extractive industries in that it relies on specific physical resources to be successful and hard-to-abate sectors have a lot of these resources on hand. Enhanced Rock Weathering (ERW) and mineralisation need a supply of alkaline rocks or industrial residues. Biomass with Carbon Removal and Storage (BiCRS) relies on a supply of waste biomass. Direct Air Capture’s (DAC’s) primary requirement is low carbon energy, and lots of it. Imagine a vertically integrated aluminium company; it mines the bauxite; refines it to alumina, ships it to smelters, produces hydroelectric power for electrolysis and then ships aluminium around the world. Depending on the local geology the residues from bauxite mining and refining could be used for ERW, alternatively, the mine could be used for biomass burial at the end of its life. Red mud which is a by-product of refining bauxite to alumina is high in calcium oxide and can be used for CO2 mineralization. Many aluminium producers generate their own hydroelectric power, any excess of which would be perfect for powering DAC plants. In just this one example value chain there are at least four potential CDR projects and the same is true in many others. Alkaline minerals and wastes are common across the mining, metals, cement and lime industries in the millions of tonnes. Waste biomass is ubiquitous in the food, paper and timber industries. These are huge opportunities waiting to be exploited. 

Business Opportunities

One of the major factors holding back companies from buying more CDR credits is their high cost but by doing it themselves companies can turn CDR from cost to revenue. There will be companies (tech, consulting, aviation) that can’t generate CDR themselves or reach their net-zero year much earlier, so they will have to buy CDR credits. A company selling those CDR credits would be able to use that revenue to pay for emissions reduction activities with a lower cost of abatement, allowing the impact of that one tonne of CDR to be multiplied and accelerate the journey to net-zero. When the net-zero year is reached the company can use the CDR credits internally to offset their residual emissions instead of having to buy them from outside and there is no better way to guarantee the quality of a carbon credit than generating it yourself. On a practical level, many of the materials that are resources for CDR are wastes that cost money to dispose of, so diverting them to CDR projects could be a cost-saving right off the bat. 

The skill of scale

Scale is a skill all of its own and one that companies in the hard-to-abate sectors have mastered. A mining company may not have the internal expertise to measure the rate of weathering of basalt on farmland, but they do know how to extract, store and ship millions of tonnes of rock. And not only that but they have the equipment and people to do so right now. The mass movement of material will be at the core of the CDR industry reaching gigaton scale and anyone who underestimates its difficulty does so at their peril. The CDR companies that have today framed themselves as suppliers of CDR credits could have a many times greater impact by enabling companies already at scale to enter the fray. That could mean joint ventures, technology licenses or MRV as a service rather than being the owner-operator of every project. CDR is set to be the next trillion-dollar industry but it first has to become a billion-tonne industry and in order to get there everyone needs to be playing the role to which they are best suited. 

ecosecurities is helping corporations to find and develop carbon removal projects within their value chains. Please contact dougal.heap@ecosecurities.com to learn more.