- Corporations need not only to stop emitting greenhouse gases (“GHGs”) to prevent climate change, but they also need remove and sequester “legacy” emissions from the atmosphere.
- Corporate GHG emission reduction targets set at levels above 100% create new challenges for corporations around measuring their past emissions, setting appropriate targets, and deploying strategies to remove carbon from the atmosphere.
- Despite the challenges, the new opportunities for value creation from carbon removal for corporations are significant.
A number of large companies have recently introduced pledges to eliminate carbon emissions entirely in their efforts to fight climate change and grow in a sustainable manner. While eliminating future emissions is an important first step on the pathway to stabilizing our climate, few companies are talking about how they can deal with the fact that a significant percentage of their emissions from previous decades of doing business still remain in the atmosphere, contribute to climate change, and affect the sustainability of their operations going forward.
Scientific context. Carbon dioxide is considered a “long-lived” pollutant, meaning that it resides in the atmosphere for centuries (on average). This leads to a pesky problem — we could decarbonize our economy entirely, and we still could face the consequences of climate change caused by pollution from decades past. As a result, it is increasingly likely that we will need to employ carbon removal solutions — i.e. processes capable of removing and sequestering carbon from the atmosphere. While there is increasing activity to develop such carbon removal solutions, proven and scaleable carbon removal solutions have yet to emerge.
Challenges for corporations. Carbon removal creates a number of challenges for corporations seeking to set meaningful GHG emission reduction targets.
- Measurement. It is frequently difficult for companies to asses their historic contributions to carbon emissions. Companies can usually get a rough order-of-magnitude estimate of historical emissions, but it is very difficult to tell using legacy systems that might not have captured necessary data to get a more precise estimate.
- Targeting. Even if companies have a good sense of their total historical emissions, it can be difficult to set reduction timelines. New science-based methodologies are being developed to help inform forward looking targets, but it is unclear whether they will incorporate negative emissions. A more fundamental question is how companies might deal with legacy emissions not directly attributable to them, but that still affect how they do business in the future.
- Action: Given the current state of development of many carbon removal approaches, companies could face challenges around generating scalable and verifiable net-negative emission levels. Many carbon removal approaches today are expensive to deploy and/or measure, so companies are unlikely to deploy these such technologies at scale without further development.
Opportunities for corporations. Despite the challenges associated with adopting greater than 100% emission reduction targets, corporations that strive for such targets stand to seize valuable business opportunities — even in the sort-term.
Above: data from the CDP 2012 disclosure scores, with my own analysis of carbon removal potential.
For one, carbon removal offers new growth opportunities for companies thinking about providing carbon-negative products and services. Today, startups like Newlight Technologies are developing carbon-negative plastics that can substitute directly for carbon-emitting products — similar carbon-removing products could provide a great way for companies in commoditized industries for differentiating their offerings.
Above: AirCarbon packaging used by Dell. Source: packworld.com
In addition, carbon removal solutions can help improve operational and supply chain efficiency. For example, agricultural carbon removal solutions such as restorative farming approaches hold the potential for increasing crop resilience, reducing water and fertilizer needs, and even enhancing yields.
Above: biochar field trials. Source: International Biochar Initiative.
Lastly, corporations that move early to set net-negative emission reduction goals stand to generate large brand leadership benefits. Consumers are hungry for innovative climate solutions, and are likely to reward corporations for their leadership in enabling consumers to vote with their wallets for carbon-removing products and services. With strong corporate leadership and academic partnerships, we could start seeing carbon-negative products across numerous industries, including: foods, cements, fertilizers, and even gasoline.
Moving forward. It is clear that companies still have a long way to go just to get to carbon neutrality. But it is important for corporate managers to think about how the long-term pathway to sustainability might involve net-negative emission reduction targets, and how early movers can start generating value through carbon removal today. Right now, little changes in reporting standards and protocols could go a long way to achieving this potential. For one, the CDP could update its Leadership Index and the GRI could update its reporting guidelines to encourage companies to employ net-negative emission strategies. In addition, the LEED green building rating system could encourage the use of more carbon-removing materials. But most importantly, early corporate leaders will have to stand up and commit to a “beyond-neutrality” goal, and show that it is possible to make steady progress towards that goal with a combination of the mitigation technologies of today and the carbon removal solutions that hold promise for our future.