Flooding in Spain, EU annual emissions reduction and what the carbon removal industry needs

Devastating floods in Spain’s Valencia region highlight urgent climate challenges

Between Tuesday 29th and Wednesday 30th October, severe flooding in Spain’s Valencia region claimed over 200 lives, with rainfall reaching up to 500mm in some areas – the equivalent to an entire year’s rainfall. The floods also inflicted substantial economic losses. While the full financial impact is still being assessed, experts anticipate significant repercussions, including damage to agriculture and disruption to supply chains.

The intense rainfall was driven by a meteorological event known as DANA, or depresión aislada en niveles altos, which translates to "isolated high-level low-pressure system". Experts cited in the Financial Times explain that rising Mediterranean Sea temperatures are contributing to the severity of such phenomena. Mediterranean waters, which peaked at nearly 29°C in August, are warming twice as fast as the global average. This excess heat ‘fuels’ DANA systems, leading to heavier rainfall and more intense flooding.

The Valencia floods underscore the pressing need for global climate action. Extreme weather events like this highlight the importance of both reducing greenhouse gas emissions to limit further warming and investing in adaptation measures, such as flood-resistant infrastructure, to protect communities from the mounting impacts of climate change.

Carbon removal industry needs growth capital to scale

The carbon removal industry has to date been reliant on venture capital to develop new removal technologies – from the well-publicized direct air capture (DAC) to more esoteric enhanced rock weathering – and bring them to market. But venture capital funding is running dry; after peak investments of $1.5 billion in 2022, total funding dropped to $856 million in 2023. A worrying sign for carbon removal evangelicals, this is not only symptomatic of increased pressure on the VC industry as a whole but also reflects a key reality: exit opportunities in the carbon removal space are limited. With the VC market in an endemic state of volatility – and corporate demand for removals dropping – investment theses for credit-based removal providers are a tough sell. The removal space has neither sufficient demand to fund increased supply, nor sufficient supply to meet current demand. Without increased investment from corporate climate champions, or government grants, the removal industry will remain in a state of limbo.

The EU reduces annual emissions by 8%, but more progress is needed

The EU recently reached an impressive milestone by reducing greenhouse gas emissions by 8.3%, according to a new report released by the European Commission. This represents the largest decline in decades, aside from the 9.8% drop during the COVID-19 pandemic in 2020. Unlike in 2020, however, flights are no longer grounded, and factories across Europe are operating at much higher capacities, indicating substantial progress in reducing emissions. This achievement has been largely driven by the decarbonization of the energy sector, with solar and wind power expanding and coal plants being continually phased out, resulting in a 24% year-on-year reduction in emissions. However, not all sectors are decarbonizing as quickly. The agriculture and transport sectors, for instance, have seen much slower progress, with reductions of just 2% and 1%, respectively. This, combined with recent extreme weather events – like the deadly flooding in Valencia – underscores the risks of climate change and the potential consequences if all sectors cannot rapidly decarbonize to meet net zero targets.

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