Who should pay for carbon removals?

Yesterday I met up with Tom Previte from carbon removal company Supercritical, who are based just up the road from us in London. Sitting in the sun in the courtyard at Somerset House, we chatted about how things have been going since we last met.

We talked a little about his current role getting deep into the carbon removal sector and he mentioned that there are mixed opinions on the concept of carbon removals. Not everyone is enthusiastic. Then he asked me a dangerous question;

“What do you think about carbon removals?”

I believe my answer began with something like “my views are nuanced and complex”.

What then followed was probably only semi-coherent but it ended with Tom telling me that I should write an Oxymoron post about it. And so here we are!

Drawing down

In a post last year about Net Zero, I suggested that as our historical emissions have already locked in a significant global temperature rise, simply achieving Net Zero emissions wouldn't be enough to solve the climate problem even if we did it today. In light of this, and the fact that we are many years or even decades away from realistically achieving global Net Zero, we're way behind the curve.

Whether we like it or not, we face a future where we’re going to need to find ways of removing greenhouse gases from the atmosphere in enormous quantities. I should emphasize that this is different from offsets that pay other people to reduce their emissions. I’m talking about actually drawing down greenhouse gases from the atmosphere and locking them away safely for the long term. There are some existing solutions that will help, but we're also going to need to develop some new technologies, whether they're nature based or completely man-made.

Biochar is an interesting carbon removal technology that can be implemented at the community level or at a large industrial scaled (Photo by Tim Brunauer)

Whatever methods we use though, there’s one thing that we can be pretty much sure of… it's going to cost money.

So my view on carbon removals is that we need to find ways to draw down greenhouse gases at an unimaginable scale and that someone is going to need to pay for it.

The next question is, who should that be?

The polluter

In my earlier post about the uncomfortable origins of carbon footprinting, I hinted that carbon accounting is done at the wrong end of the chain. As it stands, businesses like mine and like yours, who are far removed from coal mining or cutting down forests, are faced with the complex headache of trying to calculate our own carbon emissions. The job of carbon accounting has been pushed far away from the root of the problem, to the opposite end of the value chain where the data is woolly and the root causes are hard to influence. I don’t think this is an accident.

My perspective is that the problem should be dealt with at the beginning of the chain instead of the end of the chain. It should be dealt with at its source and the polluter should pay. In practice this would mean accounting for greenhouse gas emissions at the point of fossil fuel extraction and at the root stage of other activities such as deforestation. The cost of carbon removal would then be levied at the source, effectively as a global carbon tax that would be used to fund carbon removal projects around the world.

Not only would this approach be far simpler, more reliable and easier to enforce than our current model of trying to get every organisation in the world to calculate and drawdown its own emissions, but it would make polluting activities more expensive and therefore rapidly accelerate the adoption of cleaner alternatives. It would apply the pressure of market forces at the point of greatest leverage.

Furthermore, it could even make the task of calculating the emissions of individual organisations, products and services far easier, as theoretically the emissions could be registered on a blockchain and traced through the supply chain to their final destination. This would enable organisations and citizens to make more informed decisions about what they buy, what services they use, and what activities they pursue.

Tell me I’m dreaming

Having said all of that, I have to admit that none of it is particularly relevant because that’s not the world we live in. We seem a long way from a meaningful carbon tax ever becoming a reality and so we have to ask what the next best solution might be.

From that perspective, I think it's important that companies who are keen to lead by example continue to calculate their own emissions and if they can afford to, also draw down their own emissions voluntarily. This will help move the conversation forward and fund the development and scaling of a variety carbon removal solutions. Talking to Tom at Supercritical, it seems that there are two prime groups ready to pour money into the carbon removal sector.

The first group are high profit service businesses such as tech companies, consultancies and financial services, who have low emissions relative to their revenues and can afford to splash money on carbon removal projects. If they've got the money and they're prepared to spend it then I think that's a good thing, even if some of them are just doing it to make themselves look good.

The second group that's well positioned to help fund carbon removal technology is the fossil fuel industry. They might not be lining up to pay for removal of their own emissions but they are showing interest in investing in the technology itself. For example, Chevron, Occidental Petroleum, the Australian mining giant BHP and the oil sands financier Norman Murray Edwards have all invested in Carbon Engineering, a Canadian company developing Direct Air Capture technology. The interesting thing about fossil fuel companies is that not only do they have money to burn, but they also have deep engineering expertise that might actually be useful in developing solutions that work at scale.

While this makes some sense to me, it also feels really icky.

If their intentions were pure, I would honestly be happy to see the fossil fuel industry helping develop carbon removal solutions but the truth is, it scares me.

What could possibly go wrong?

I think there are two main things that I'm afraid of. The first is sabotage.

While it might seem harmless to take investment from the fossil fuel industry on the basis that any investment is good investment, I worry that the amounts they are investing are pocket change to them and yet give them a degree of control over this fledgling industry. With that control, they could reap the benefits of short term good publicity while not actually solving the problem. They could slow progress, kill off solutions that aren't convenient for them or even develop technologies that make the problem worse. If you think I sound paranoid, similar things have happened before.

The oil industry has been backing Carbon Capture and Storage (aka CCS) since the 70s, but not to help protect the environment. CCS was actually commercialised in the 1970’s as “enhanced oil recovery”, which means capturing carbon from the burning of fossil fuels and injecting it back into the wells to generate pressure to extract more hydrocarbons. It was only when the climate movement gained momentum that they rebranded enhanced oil recovery as Carbon Capture and Storage, claiming that it would solve the problem of carbon emissions entering the atmosphere. However, to this day, 70% of CCS projects are still used to increase fossil fuel extraction. Furthermore, according to energy finance analyst Bruce Robertson, “close to 90 percent of the proposed global carbon capture capacity in the power sector has failed at the implementation stage or was suspended early”.

Then there’s the question of who killed the electric car? It’s easy to forget, now that Tesla has succeeded in proving that electric vehicles are both technically and commercially viable, but the development of electric vehicles was delayed by the oil and automotive industries by decades and they continue to lobby against them to this day. A number of large auto-makers actually produced decent electric cars in the 90’s in order to comply with the Zero Emissions Vehicle mandate introduced by the California Air Resources Board in 1990. But they would only lease the cars, not sell them, and as soon as they succeeded in over turning the mandate, they recalled the cars from customers and had them all destroyed. Not to mention the continuing promotion of hydrogen as the green fuel of the future despite it only ever really making sense as a strategy to increase future demand for fossil fuels. Check out this interview with Cambridge University’s Professor David Cebon if you don’t believe me.

The General Motors EV1 was a pioneering electric car much loved by those who drove it in the 90’s (Photo by Rick Rowen)

And then there's the history of General Motors systematically destroying local rail services in US in the 1930’s, most notably under its front company National City Lines. National City Lines had financial backing and management from not just General Motors, but Greyhound, Standard Oil of California, Mack Truck, Phillips Petroleum and Firestone Tire, all of whom stood to profit handsomely from the decline of public rail, which at the time represented 90% of the transport market. To this day you’ll find media stories stating that this was all just a coincidence, but they had the motive, means and opportunity and they were prosecuted by the Federal Government for building a monopoly over the local transportation sector in America, sadly a little too late. Each company involved was fined $5000.

My point is that big industry have a history of promoting false solutions and using their power to stifle real alternatives. I might sound a bit paranoid but as Andy Grove, founder of Intel says, “Only the Paranoid Survive”.

But why would they stifle carbon removals?

I'll concede that in the case of carbon removals, fossil fuel companies might not actually have a good motive to stifle their progress. In fact, they might even want them to succeed. And this is the second thing that scares me.

If I were to put myself in the expensive leather shoes of an evil genius running a fossil fuel company, the carbon removal industry would be a dream come true, but only if I owned it.

If I owned it, the successful carbon removal industry would allow me to carry on selling fossil fuels in perpetuity and to double my money by selling the solution to the problem that I was perpetuating.

On closer inspection, though, it would be far better than doubling my money. Let’s do some back of an envelope maths.

The current price of oil is about $70 a barrel. According to the US Environmental Protection Agency, one barrel of oil is equivalent to about 430kg CO₂. Most carbon removal solutions cost more than $100/tonne. In other words, they cost at least $43 per barrel of oil. But Net Zero targets require organisations to draw down not just their Scope 1 emissions, but also their Scope 2 and Scope 3 emissions. This effectively means that organisations are being asked to triple account for their emissions, since everything in Scopes 2 and 3 should theoretically have already been factored into someone else’s Scope 1. So the real price of carbon removals is not a minimum of $43 per barrel of oil, but $129, nearly double the cost of the oil itself. We currently consume around 100 million barrels of oil per day globally, or 36.5 billion barrels annually. This is represents a theoretical carbon removal market of around $5 trillion just for the oil industry. If I was an evil genius, I would want a slice of that pie.

So where does this leave us?

As mentioned, my personal preference at present is for a global carbon tax levied at source and used to fund carbon removal organisations that are independent of the fossil fuel industry.

If that's not possible, I think that companies like Supercritical are doing the next best thing by encouraging the wealthy service industries like tech, consultancy and banking to become early adopters and inject money into this much needed fledgling industry to help it develop the technologies that we’re going to need in the near future. While that might be an imperfect, short term solution, I think anything that moves us a step in the right direction is a good thing.

If this topic has interested you, I recommend checking out Tom’s podcast, The Carbon Removal Show where he dives deep into the many interesting facets of carbon removals.

Thanks again for reading, and please do leave a comment or share this post.