Geothermal plant in Iceland with Climeworks direct air capture installation. Photo: Climeworks, Arni Saeberg.
23 Nov 2021, 14:14
What role will negative emissions and carbon offset trading play in German and EU climate policy on the way to net-zero?

Carbon removal and trade - the need, the how, the business case

Net-zero emission targets are the new normal for both governments and businesses. But achieving them is often a different story. Certain emissions are difficult to avoid easily, so neutralising them by investing into climate action projects in developing countries has become a fixture in many companies' climate plans. The voluntary market for carbon emission offsets is booming both globally and in Germany – but could be stopped in its tracks under the strict emission budgeting rules of the Paris Agreement. The UN climate conference in Glasgow (COP26) may present solutions for this market. But some experts are adamant that the next and only sustainable carbon market will be one for CO2 removals. So far, only nature-based carbon uptake is available at a larger scale, but investors are getting ready to grow technological carbon removal and storage solutions. The German government has long been reluctant to embrace underground sequestration of CO2. Other European countries, however, are darting ahead. Meanwhile, critics of both carbon offsetting and removals warn of greenwashing, arguing that a focus on offsets could draw away attention from the really important task of changing energy use and processes in all sectors so drastically that emissions are avoided altogether.

The carbon balancing act: Emission reduction and removal in the bid for net-zero

Afforestation or carbon capture and storage? Researchers say both will be needed to reach net-zero emissions, but politicians in Germany are slow to embrace and support all the different carbon removal options. Photo: Heidrun Heidecke, BUND.

“Achieving net-zero” emissions by the middle of the century is a goal that few would fault. But when it comes to reaching a balance of greenhouse gases and carbon removal – as not all emissions from food and industrial production can be entirely prevented – views start to diverge. Many argue that it is high time countries start building up a new industry of CO2 removers, scale it up and drive down prices, or at least standardise the use of readily available nature-based carbon uptake options. Others warn that relying on removal methods, be they carbon storage in soils or capturing CO2 from industrial processes or directly out of the air and then storing it underground, only draws attention away from the really important task of avoiding emissions altogether. In Germany, the debate on negative emissions is picking up, as all projections show there won’t be a way around them in 2045. But a deep aversion to carbon capture and (underground) storage (CCS) is preventing an easy decision, while the European Commission is preparing carbon removal legislation and other players and nations are darting ahead planning the future carbon offset market and a CO2 infrastructure.

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“Support direct air capture like Germany supported wind and solar” - Climeworks

In September 2021, Climeworks launched "Orca", the world’s first and largest direct air capture and storage plant. Photo: Climeworks.

Their goal is to create an entirely new industry, one that will become as important as today’s oil and gas giants, because the world will be in desperate need of removing carbon to mitigate climate change. Swiss start-up Climeworks has launched the world’s first and largest direct air capture (DAC) and storage plant. It will capture 4,000 tonnes of CO2 per year which will be stored in Icelandic underground rock formations. Quickly scaling this technology is the key to its future, Climeworks Head of Climate Policy Christoph Beuttler told Clean Energy Wire. This will require government support, similar to the feed-in payments that Germany used to expand wind and solar PV, he adds. Without it, the budding sector will thrive elsewhere and Europe could be out of the picture.

Read the interview here.

UK makes carbon capture central pillar of net-zero drive

The UK government is embracing carbon removal technologies as a part of its net-zero ambition and wants to use carbon capture utilisation and storage (CCUS) to revive the industrial heartlands in the North of the country and create tens of thousands of jobs. Pilot projects are underway to sequester CO2 in the North Sea and the Irish Sea, but the involvement of well-known oil and gas companies sparks concerns that carbon storage will allow them to continue to profit from their fossil business model. Meanwhile, natural carbon removal solutions are sidelined, activists warn, and methods such as direct air carbon capture and storage and the use of biochar are still in their infancy.

Read the article here.

Carbon offset market booms despite nagging greenwash concerns

Planting trees in Mexico - one of the CO2 reduction projects pursued by much-criticised German NGO Plant for the Planet. Photo: Plant for the Planet.

Thanks to more and more businesses publicly making “carbon neutrality” or “net-zero” commitments, the voluntary market for carbon emission offsets is booming both globally and in Germany. Critics, however, consider buying into projects that help reduce emissions in the global south, be it wind turbines, efficient cookstoves or forest protection, to be mere greenwashing. Others say they are the best way to transfer money and knowledge for the energy transition to developing countries where people would otherwise be forced to use fossil energy or cut down forests. But the many eager and sometimes too gullible consumers of emission offsets are not always buying emission offsets for the right reasons – and they are often falling for creative carbon accounting by spurious climate projects.

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“I wouldn't play avoiding and removing emissions off against each other” – atmosfair CEO

Ready for your holiday? Atmosfair advert for compensating flight emissions. Source: Atmosfair.

From large car manufacturers to globally operating logistics companies – the number of businesses pursuing net-zero targets and wanting to reduce their carbon footprint is growing. As many of the companies cannot or do not want to reduce operational emissions right away, they fall back on what Dietrich Brockhagen calls “the second-best solution” – offsetting emissions. Brockhagen’s non-profit atmosfair is one of the largest providers of carbon offsets in Germany, which they generate by distributing efficient cookstoves in India or solar power in Madagascar. Using these CO2 compensation certificates is still a step in the right direction that can achieve a lot of climate action and support the energy transition in the global south, Brockhagen told Clean Energy Wire. His company is preparing for the offset market to “roughly double every two to three years”. At the same time, atmosfair is making plans for a time when stricter emission inventories could make companies and countries claiming the same emissions reduction, so-called double counting, a no-go – and seriously disrupt the booming offsetting market.

Read the interview here.

Staying true to the Paris Agreement could hobble booming carbon offset market

The booming voluntary market for CO2 emission offsets is facing a hairy double counting issue that could stop further growth in its tracks. While high-aiming businesspeople are preparing a new standard to scale the market and make it more transparent at the same time, there is growing concern that double claiming of the same emission reductions by countries where they take place and companies that finance them could harm overall climate ambition. Researchers and NGOs propose new ways of letting companies invest in energy and climate projects in the global south – without letting them use carbon credits towards their emission budgets. But others insist that only the selling and buying of actual offset credits will keep the market alive. The UN climate conference COP26 starting in Glasgow next week could bring some clarity on this – if governments can reach a decision on the infamous Article 6 of the Paris Agreement. But even with new guidance from the climate negotiators, the market will take several years to find its feet and adjust to the new rules, experts say.

Read the article here.

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