Should carbon removal be included in institutional climate plans? It’s a debate that’s taken place across business, government, and science in recent years.
The rise of the net-zero framework has sharpened the focus on how and when organizations should decarbonize. And how carbon removal fits in.
Last week two influential organizations weighed in on how they plan to use carbon removal in the coming years.
The Net-Zero Owner Alliance, a UN-convened group of 84 large investors, declared that their members will not be able to invest in carbon removal to reach their climate goals until at least 2030.
And the European Commission released its draft Green Deal Industrial Plan, a new set of policy objectives to build out their climate infrastructure. It includes support for many decarbonization technologies, but at least one CDR NGO says it doesn’t do enough for carbon removal.
We’re pleased to announce the return of long-time friend of the show Holly Jean Buck. Welcome back, Holly!
On a less happy note, it is the last episode for Chris Barnard as a regular panelist. Chris, you will be missed.
On This Episode
Resources
European Commission’s Green Deal Industrial Plan
Carbon Gap post about Green Deal
Reuters article about US/EU trade dynamics
Clean Energy is Cheaper Than Coal Across Whole US, Study Finds
Connect with Nori
Nori’s other podcast Reversing Climate Change
Nori’s CDR meme twitter account
Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Radhika Moolgavkar: Hello, everybody, and welcome to the February 9th, 2023 version of Carbon Removal Newsroom. Today we’ll be talking about policy. As usual, we have Chris Barnard, VP of External Affairs at the American Conservation Coalition. Hello, Chris.
Chris Barnard: Hello, good to be here.
Radhika Moolgavkar: And I am very excited to have the return of Holly Jean Buck, Assistant Professor of Environment and Sustainability at the University of Buffalo. Holly, welcome back.
Holly Jean Buck: Hello, thanks so much. It’s great to be back.
Radhika Moolgavkar: Yes, we’re happy to have you. And then I am Radhika Mulgothkar, Head of Supply and Methodology here at NORI. So the band is back together again, but only for a week, because sadly, this is Chris’s last week with us. So Chris, thank you for your time. We will certainly miss you, but obviously you are moving on and upwards at your organization. So congratulations.
Chris Barnard: Thank you. It’s been a fun ride.
Radhika Moolgavkar: It sure has. So it’s kind of a bittersweet day, but it’s nice to sort of end where we began. And let’s just jump into it. So should carbon removal be included in institutional climate plans? It’s a debate that’s been taking place across business, government, and science in recent years. There has been a rise of the net zero framework, which has sharpened focus on how and when organizations should decarbonize and how carbon removal fits within it. Last week, two influential organizations weighed in on how they plan to use carbon removal in the coming years.
The Net Zero Owner Alliance, a UN convened group of 84 large investors, declared that their members will not be able to invest in carbon removal to reach their climate goals until at least 2430. And the European Commission released its draft Green Deal Industrial Plan, a new set of policy objectives to build out their climate infrastructure, It includes support for many decarbonization technologies, but at least one CDR NGO says it doesn’t do enough for carbon removal. So today we’ll talk about those two different plans and we’ll start with the Net Zero Owner Alliance, which as I mentioned, is a group of financial institutions working together to make their funds net zero by 2050.
And it’s part of the larger UN effort called the Glasgow Alliance for Net Zero, whose members represent $11 trillion in assets globally. Holly, I’ll start with you. The Net Zero Owner Alliance’s new rule prohibits members from counting CDR investments towards their climate plans until at least 2030. What do you think about that decision?
Holly Jean Buck: I actually think this could be good because we have a fundamental issue with net zero, which is how do we limit residual emissions? How do we make sure that carbon removal is compensating for emissions that are from truly hard to decarbonize sectors. Currently, we have no way of doing this. And I think this is a problem because I think we need to start considering CDR capacity as being limited. It’s limited by land. It’s limited by energy. I think we want to use our, you know, renewable electrons directly probably at this stage rather than for carbon removal.
If you’re talking about geologic storage, it could be limited by the rate of injection. So if you have this limited carbon removal capacity, you don’t want to be using it up initially for these things that we could decarbonize by other means. And so if you say, okay, we’re going to put a hold on this until 2030, I think it makes some sense. I don’t think it’s the best approach. I see it as kind of an emergency measure. I think that We really need two things. We need some actual policy on how we’re going to limit residual emissions.
And I think we need public investment in R&D and in natural climate solutions. So we’re not relying on the private sector for being able to bring costs down by learning by doing and like figuring out some fundamental stuff through these startups. I think there’s a much stronger role for government in Understanding the basics, especially when it comes to some of the more frontier approaches like enhanced weathering or some of the ocean carbon removal techniques.
Radhika Moolgavkar: Yeah, that’s a really interesting perspective, Holly. And I think one that’s pretty different from a lot of people within CDR who saw this as sort of doom and gloom. But I appreciate the nuance there. And I think you’re right about the many limitations till 2030 around CDR tech. Chris, kind of curious from your perspective, you know, the UN has convened this global effort of large financial institutions in the fight against climate change. And, you know, what is your thought on the potential of this kind of voluntary effort and its larger impact within the climate space?
Chris Barnard: Yeah, I mean, I think it’s obviously broadly very positive. I think the overall assets of these 160 plus companies was around $70 trillion, which is just mind bogglingly huge. And I think at the end of the day, you need the private sector completely bought in on this if you want to get the change necessary. So I see this as a huge positive. I see it as a response also from a lot of those companies to where consumers and people around the world want them to be heading in that direction. And so I think that there’s a lot of, it’s really good news.
And I think there’s a lot of potential from the private sector leading this because it allows them to Compete on different solutions to find what works best for their particular company or business model. And at the end of the day, because they still have to respond to the price motive, they need to do it in a way that also makes economic sense and doesn’t trade economic security to tackle climate change and shows that they can do both. So I think the voluntary nature of it and the fact that the private sector is so involved in such a huge way is actually A really positive thing.
Radhika Moolgavkar: I mean, just as a follow-on question, Chris, do you ever, you know, how do you respond to the argument that basically these are voluntary commitments and therefore, you know, if the market goes into recession or their multiple trillions gets narrowed down a lot, these environmental commitments will kind of get Sent to the wayside, and particularly if they’re not committed upfront to CDR investment and the like, it’ll just kind of get left behind because it’ll have other priorities.
Chris Barnard: It’s a great question and I mean I think it kind of shows the reality of life right that sometimes there are trade offs between things like the reason that we’re not going to 100% renewables tomorrow is because we’re simply not capable of doing that and we can’t just get rid of oil and gas overnight, and so I think. When there is a downturn, for example, in the economic health of the world and they have to pare back some of these investments, I think obviously from a purely climate perspective, that is unfortunate.
But for other reasons, there might be more need for that money to be spent on something else, like making sure that people aren’t dying from the cold or whatever. You’re seeing right now in Europe that a lot of people are really struggling Literally sometimes people freezing in their homes because they can’t afford heating, then obviously you don’t want to tackle climate change at the expense of people’s heat and their ability to live comfortable lives. And so I think that this gives more flexibility to allow to do that. But obviously at the end of the day, There’s a lot of talk about the fact that wind and solar are now economically competitive with fossil fuels.
And so if that’s truly the case, then you’d expect that there would be continued investment. And you even look at the investment that happened over the last year, despite us being in a quasi recession, like the finance that has been flowing into renewables and clean energy has far outweighed the finance that has gone to fossil fuels. I think something like 90% has gone to clean energy. So I think at the end of the day, the market is heading in that direction, regardless of the economic situation, but obviously that might differ here and there.
Radhika Moolgavkar: So Holly, I mean, global finance to the rescue, kind of on a similar line to what I asked Chris, what do you think about like self-enforced rules amongst banks and investors truly leading to meaningful decarbonization? And, you know, why are these sort of Obscure type groups subjecting themselves to climate commitments and what would help them continue with those climate commitments?
Holly Jean Buck: I mean, I would see this as one natural step. I don’t think it’ll solve everything in terms of why they are subjecting themselves to climate commitments or embracing, we might say, climate commitments. You know, I see that as an empirical question. We would have to go ask them in ways in which they’d Answer, honestly, I think optimistically, I would hope that we’re seeing kind of one fraction of capital rise up against another. So on one hand, you have fossil capital that wants to continue production. You also have all these sectors that are going to be at risk from climate change.
And so maybe they will be battling it out. And I hope that, you know, Whether it’s agriculture or insurance or whatever else is aligned to actually doing something about this problem will win out.
Radhika Moolgavkar: Don’t you think, I mean, I think about this a lot like how you bring along oil and gas, they seem like they are a necessity to getting meaningful carbon removal, particularly geologic storage. In place, they’re the experts and they’ve been doing it for years. So Holly, how do you think about that industry as just a microcosm?
Holly Jean Buck: Yeah, I think there’s different ways for the industry to transform. And I think it’d be interesting to map them out. I mean, a lot of the expertise is in the talent. There are some oil and gas professionals that are, you know, having kind of moral deliberations with themselves that would be interested in working in another sector. So how does that happen? I mean, is it led by CDR startups that poach this talent and their experience? Well, what do you do about kind of the fixed capital? Resources, can you see like larger CDR companies or buying up, you know, assets and hiring from the oil and gas industry?
I’m not sure what that transformation looks like. And I’m not sure how much it needs to involve sort of the entities that we have right now. And I think I could be persuaded in different directions here. But right now, I don’t think we’ve had really deep thinking about what that transformation looks like.
Radhika Moolgavkar: Yeah, fair enough. Chris, last question on this topic. To scale by 2050, many say the CDR industry needs investment now. Do you think this move distracts from getting early support from carbon removals or for carbon removal companies?
Chris Barnard: Yeah, I mean, I think that one of the things about carbon removal is the UN is quite clear that we’re going to need it, right? And At least from my perspective, the sooner you can get it to make economic sense, the sooner you can start removing carbon from the air and tangibly reduce the impacts of climate change from taking carbon out of the air. It seems to me that a priority would be to get it to economic cost competitiveness as soon as we can. So I would think it’s probably short-sighted to exclude it altogether.
I think Holly made some good points. But maybe there’s a way to kind of strike a balance and say only a certain percentage of the funds that get spent can go to CDR so that they’re not under investing in other areas. So maybe that’s a balance, but I know it seems a little bit short-sighted to me to just completely exclude it from this investment.
Radhika Moolgavkar: All right. Well, we are going to move on because we have another topic to discuss, which is the Green Deal Infrastructure Plan. Last year, the U. S. passed the IRA, which provided huge investment in domestic production of clean technologies. This draft European policy has been described as a response to that. And just I believe today, Climeworks announced their first U. S. -based DAC project. So definitely you can see the impacts maybe of the IRA already. Chris, can you describe the geopolitics at play and Could this or is this the beginning of a clean energy trade war?
Chris Barnard: Yeah, I mean, it’s interesting. It’s kind of turning into a little bit of a subsidy war. Europe is... Worried that the US is giving out all these tax credits and subsidies to clean energy companies in the US and that a lot of companies in Europe would be swayed to go take advantage of those in the US rather than staying in Europe. And then obviously Europe would lose that economic activity and that economic advantage. So in a way, Europe right now is just saying like, hey, maybe you should pump the brakes because a lot of this could Could really economically disadvantage the Europeans, which is kind of interesting because Europe historically has always been the continent that’s kind of taking the lead on subsidizing things, right?
So it’s kind of an interesting reversal that now, oh, they realize that they will never be able to really, if the US decides to subsidize something, Europe will never really be able to compete just because the US economic might is so overwhelming. And so really right now there’s this plan was announced kind of as a response to that, but they realize that no matter how many subsidies the EU spends, the US will always be able to spend more. Not that I’m saying a subsidy war is good, but that’s kind of the reality of it.
So I think at the end of the day, a clean energy trade war is a positive thing in the sense of countries are competing to develop clean energy as quickly as possible. I’m not sure a trade war is like the best way to do that, but kind of like a clean energy arms race where you like China and India and other countries are seeing that clean energy is the oil of the future. And if they fall behind, then they’re setting themselves at a disadvantage and China realizes that. I think that’s one of the ways to have global action on this issue that maybe not by outsubsidizing each other.
Radhika Moolgavkar: Cool. So Holly, are you surprised to see industrial nations competing against each other to support renewables production? And what do you think of this escalation? Is it in the end a good thing for the planet or just kind of politics as usual?
Holly Jean Buck: I do think it’s what we would expect. And I also think that there are security dimensions that get mixed in with this. So You know, this makes a provision for a European sovereignty fund. There’s stuff about microelectronics and AI mixed in with there. I’m concerned about the dynamics of a rush for critical minerals. So there’s like a Critical Raw Materials Act proposed in this plan for securing EU supply of rare earth minerals. I think that, you know, the dynamics of a rush can be really damaging for people around the world.
But I do think that there’s a need to work together to reduce supply chains. I think China processing some 90% of rare earth elements is an issue for everybody. So I’m not sure how all the dynamics work out, but I’m not surprised. I think there’s ways that it could go wrong. I think there’s ways it could be a win-win.
Radhika Moolgavkar: Yeah, I often think about the rare earth mineral question and how are we punting just from one issue to the next, and the next extractive economy is rare earth, but it supports battery electric technology, so it’s necessary. I don’t know how I feel about that current state of being, but Chris, I will move on to a question for you. One of the four main pillars of this plan is a simplified regulatory environment, which seemed kind of funny coming from the EU, for energy and manufacturing. Permitting reform is something we’ve talked about a ton on this show and is obviously an important issue to you.
So what do you think of this element of Europe’s plan? Is it something the US could copy?
Chris Barnard: Yeah, I mean, simplified regulatory environments aren’t something the EU’s particularly well known for, but neither is the US, right? And I mean, it seems to me that on the kind of demand side with all these subsidies, that’s one way of kind of trying to boost this, but on the supply side, like making sure that it’s easy to build this infrastructure or at least a lot easier than it is now would actually probably be A huge competitive advantage for particular regions. I think that’s one of the reasons that the US is talking about this.
One of the reasons that even Democrats that typically have been more opposed to reforming the permitting process are now realizing that all this money spent in the IRA will literally be wasted if we don’t actually have permitting reform to build the stuff that the money is going to. I think Europe has a similar realization. And so actually one of the best things that either of these continents can do to make themselves more competitive within this clean energy arms race is to make it as easy as possible for a company to build a project like this.
And the EU has, similarly to the US, made it very difficult over the years to do that kind of stuff. I will say that broadly speaking, it is easier. The US is more attractive to be able to do Things like that, because we have more space for transmissions lines. We have more space for pipelines to transport captured CO2. Like in general, we have more geographic space to do those things. And so in that sense, I mean, the US has always had a competitive advantage when it comes to resource extraction and production.
So that’s probably the same with clean energy. But I think, yeah, the EU has to try something to be competitive and reducing the regulations is going to be one of the most important steps in that.
Radhika Moolgavkar: So, Holly, what do you recommend the EU do to more support CDR? We were just talking about obviously permitting reform, but are there other things you think they should consider or just stay the course and stay more focused on emission reduction?
Holly Jean Buck: I do think all this action on industrial decarbonization does support CDR indirectly. I mean, if you develop a regulatory framework for carbon capture and storage because you’re decarbonizing cement, that will help progress in CDR. Any progress in industrial emissions is going to help the life cycle analysis of different carbon removal technologies. So I see these things as complementary. I recommend continuing to invest in interdisciplinary research, which is something that the EU has been pretty good on and The progress they make on MRV, for example, is going to help the field broadly.
Radhika Moolgavkar: All right. And last question today, because we are on a little bit of a time crunch. The European CDR advocacy group Carbon Gap responded to the announcement and said it doesn’t do enough to support carbon removal. And they know of CDR startups considering moving to the U. S. for better government support. Does Europe risk falling behind in building a CDR industry? And this question is for both of you. I will start with Holly and end with Chris for his last comments on this podcast.
Holly Jean Buck: I don’t think they risk falling behind because the goal isn’t to build the first CDR industry. It’s to build a lasting carbon removal industry and If things are done poorly, then you could have this unintended consequence of losing support if people don’t believe that the technology works or that the accreditation schemes work or whatever. So there’s kind of a balance to walk with the pacing here. And I think that right now the US has good government support, but people are asking How durable some of these incentives are, what’s going to happen in 10 years.
I’ve heard just a lot of questions about what’s the overall business model. And I do think that the EU is better poised eventually to have a more durable business model, just because they have a lot of planning. They have pretty well-developed net zero commitments that are forcing them to look seriously at carbon removal. So I think it’s like A very long process. The US might look ahead right now, but you know, the old parable about the hare and the tortoise or whatever, right?
Radhika Moolgavkar: And Chris, final word for you.
Chris Barnard: I mean, my general approach to this is a ton of carbon removed In the US versus a ton of carbon removed in Europe is still a ton of carbon removed from the atmosphere right so at the end of the day I don’t really care where. The technology develops or like obviously working in America living in America being American I’d love for that to be an American I think the US should be doing everything it can to like advance the industry, but at the end of the day, I think. If we build that faster and quicker and we’re removing tonnes of carbon out of the air, that also indirectly benefits Europe and the rest of the world because we’re helping tackle climate change, right?
So I think maybe from a purely economic perspective, the Europeans don’t want this industry to develop somewhere else, but I’m thinking from a climate perspective, it really doesn’t matter if they’re falling behind because if the US leads, that’s good. If the EU catches up, that’s also good. I don’t know, that’s kind of my only thoughts there.
Radhika Moolgavkar: What if China takes the lead, Chris?
Chris Barnard: I mean, honestly, I’d be fine with China having good CDR technology that takes carbon out of the air. I don’t necessarily always trust Chinese statistics. And so I’m not sure to what extent what they’re saying they’re doing is actually what they’re doing or achieving. So from like a transparency perspective, Rather the EU and the US, but if China tomorrow develops technology that can remove carbon out of the air a very cost competitive rate, then I think we should all be cheering that I just don’t think it’s very likely.
Radhika Moolgavkar: Alright, and with that final note, Chris, I’m going to do good news for the week, which is, there was a recent study that said that Almost every coal fire powered plant in the country could be cost effectively replaced by local solar or wind and batteries, which I think is just to some of Chris’s earlier and Polly’s earlier points, you know, the clean energy transition is seems to be well underway. And that’s, you know, huge news. It’s a big step forward for the environment for sure. So with that, Holly, so nice to have you back.
It’s wonderful to hear your voice back on the podcast.
Holly Jean Buck: It’s great to be here. I’m just sad that Chris will be departing.
Radhika Moolgavkar: I know. And Chris, we’re going to miss you so much, but you’re always welcome to return anytime, especially if there’s something you want to talk about from a policy perspective. But thank you so much for all your time and work on the podcast. We really enjoyed it.
Chris Barnard: Well, with Holly back, I didn’t want to have like an overload of awesomeness for the listeners. So it was time for me to step down.
Radhika Moolgavkar: Yeah. Well, we’ll miss you, Chris. So hopefully, like I said, you’ll visit once in a while.
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