The Carbon Lowdown #26

Welcome to The Carbon Lowdown! A fortnightly newsletter from Supercritical.

🍃 Carbon removal

What is happening in the world of carbon removal?

💰Who should pay for carbon removal?
A report released by the Institute of Labor Economics looked into the willingness of consumers to pay for carbon credits. The paper reveals a substantial discrepancy between stated and revealed preferences, with consumers stating they would pay €200/t against what they actually paid €20/t. It raises a critical question that the carbon removal industry is attempting to answer - who should pay for carbon removal?

To keep things simple, imagine three potential buyers: emitters, businesses and consumers.

In an ideal world, the emitters (fossil fuel cos.) should be paying through some form of carbon tax. This would increase the price of fossil fuels and encourage the shift to renewables. Unfortunately, the world is not that simple and carbon removal is not nearly at the scale where this could work.

You could argue that consumers should pay for carbon removal, for example, to remove their flight emissions, however, as Tom Greenwood noted in this newsletter, the carbon footprint was invented by the fossil fuel industry making the climate crisis “our” problem, shifting the focus away from them.

The final option then is businesses. Should it be asset-heavy like cement and steel manufacturers or asset-light such as tech or finance? We believe that asset-light industries should be the early buyers. Asset-heavy industries should rightly focus their resources on decarbonising their supply chains. In contrast, asset-light businesses have lower footprints per employee and arguably less control over their supply chain (scope 3).

If this has got your mind whirring, this was inspired by Tom Greenwood’s latest post on who should pay for carbon removal.

🌊 What goes up, must come down - but how far down? Carbon removal in the ocean

The oceans are having a bit of a carbon removal moment (see this Time article). Covering 70% of the planet’s surface, they naturally act as a large carbon sink - storing 1/4 of humanity’s carbon emissions.

The ocean removes carbon dioxide from the atmosphere through 2 main ways

1. a natural chemical adjustment system: where the seawater absorbs carbon dioxide from the atmosphere

2. by photosynthesis of organisms like seaweed

There’s a variety of new projects emerging which aim to amplify these processes, from enhancing ocean alkalinity (such as Vesta mentioned in this article in Nature) to removing dissolved carbon gas directly from the ocean (a kind of ocean DAC). There’s also biomass-focused sinking seaweed…! Here’s a useful table on the main methods. Some are currently passing through our rigorous vetting here at Supercritical!

Scientists claim there is still a lot to learn about ocean carbon removal, the impact it has on ecosystems, and ensuring the permanence of the removal. Climate models currently aren’t sophisticated enough and ClearPath has called for a regulatory framework of appropriate legal safeguards to minimise the risks of potential negative environmental and social outcomes.

Additionally, interest in the benefits of “blue carbon ecosystems” as a nature-based solution is growing. They have the potential to store 5x more carbon than tropical forests (at 3 times the pace) However these ecosystems are disappearing at a rapid pace and could all be gone by the end of the century.

📚 What has Microsoft learned from 3 years of buying carbon removal?

Microsoft has committed to be net negative by 2030 (removing more CO2 than they emit) and removing its lifetime emissions by 2050. Microsoft is a true early adopter of carbon removal and as a result, has a LOT of learnings to share. Here are a few we’ve picked out:

• Most global CDR capacity available in 2030 will have been designed by the end of 2025

• The name of the game? Long-term offtakes. For the quantities Microsoft is after, it’s a no-brainer to focus on offtake agreements. Think 1,000t+ quantities.

• CDR has ‘upside down’ market dynamics, with way more marketplaces than large buyers (1,000t+) or sellers. Bringing more large buyers into the market and more projects to fruition are at the heart of this challenge

🔗 🚗  Mini links: Carbon removal

• 📃 Carbon Gap released a piece on Carbon removal: the key to getting the 2040 climate target right → highlighting 2040 as the key milestone and the vital role scaling carbon removal today for hitting those targets

• 🪵 Verra has published their updated biochar methodology

• 📬 The Carbon Business Council published a compelling letter in response to the Article 6.4 deliberations we discussed in this edition

• 🔭 Bloomberg published an article on the importance of MRV (Monitoring, Reporting and Verification)

• 👨‍🌾 Guardian released an article on how improving soils could contribute to keeping below the 1.5 target

• 💬 Alcove published a blog on effective inventory management for high-quality carbon credits

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🌎 Climate and Net Zero

What is happening in the world of climate and net zero?

🥶 Climate investment is cooling

VC funding is falling across the startup landscape and the climate space is not immune. Funding in the first six months of 2023 totalled $13.1B, down 40% from H1’22. To caveat this, the total deal count & amount going toward seed funding actually increased. Our read on this, less big capital is available for later-stage climate tech but the seed stage is seeing some joy. Thanks, CTVC for such a detailed breakdown on this!

🦋 A win for nature? - EU narrowly passes law to protect nature

As the age-old saying goes “Nature can live without us, but we cannot live without nature.”

Nature is in decline, faster than ever before. A recent study found the abundance of farmland birds has halved in the past 40 years - it is unclear if even the dinosaurs died out that fast. Nature’s decline is driven by climate change, pollution and human influence over the land and sea. We are creating such an impact on the Earth that we have created our own geologic age - the Anthropocene.

The nature restoration law, which passed narrowly yesterday, will place recovery measures on 20% of the EU’s land and sea by 2030, rising to cover all degraded ecosystems by 2050. The European Commission calculates that between €8/€38 will be returned in ecosystem services for every €1 invested in restoration. There were powerful vested interests from farmers which threatened the law from being passed, however, scientists have rejected the claim that restoring nature is bad for food and the economy. In an open letter signed by 6,000 scientists, people opposing the law “not only lack scientific evidence but even contradict it”. The scientists highlighted studies showing that restoring nature would improve food security, help fisheries, create jobs and save money.

For us as well as the planet, we need to restore our ecosystems, re-wild nature, green our cities, pollute less, and ensure a healthier life for the people of this planet. How do we get buy-in to this? Solitaire Townsend has some interesting thoughts around the claims of nature positive which are beginning to emerge.

🥵 Too hot to handle, a week of records

Last Monday was the world’s hottest day on record. The next day, the record was broken… Global temperatures this week have been 0.26C higher than the previous record, from 2016. Experts expect this to be exceeded in the near future.

Additionally, the UK had had its hottest ever June, the southern US has experienced an intense heat dome, in parts of China there has been an endured heatwave above 35C, North Africa has experienced temperatures near 50C, and winter in Antarctica has registered anomalously high temperatures 🫠 🥵

Another record was broken last week too - the highest-ever number of flights in one day. There are great things being done with Sustainable Aviation Fuel, however, which reduces emissions by about 70-80%. Yet this can not be a total solution as it could not fill the current demand. More incentive for us to scale CDR!

🔗 🚗  Mini links: Climate

• 🦘The government of Australia is set to implement mandatory climate related mandatory climate disclosures for financial institutions and companies

• 🦋 Re-wilding your garden is an increasingly popular idea! Here is some tips to ensure you have a positive impact.

• 🐟 Sea temperatures off the north-east coast of England and the west of Ireland, were reported to be several degrees above normal, an ‘unheard of’ marine coastal heatwave

• 🌎 Humans pumped so much groundwater Earth shifted on it’s axis and the Earth’s poles have drifted by 80cm

• 🪜The new international IFRS ISSB standards will take over the responsibility of the TCFD

• 💬 A recent 2023 Fidelity International ESG Analyst Survey, found 60% analysts say companies’ ESG claims were not backed up by action

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🤑 Commercial

New partnerships, fundraises and exciting initiatives going on in carbon removal!

🪵 Bury that wood!

Carbon Lockdown, a wood harvesting and storage CDR company (biomass burial) has sold it’s first 1,000 tonnes to investment group Kinnevik. More of these, please!

🎸 A sky full of ‘carbon’

Coldplay published its first-ever sustainability report. This is the first of its kind from a band doing a global tour and it’s a fascinating read. They have also bought carbon removal! Viva la Coldplay!

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🔦 Carbon removal project spotlight

A fun and innovative carbon removal project to highlight

💡 CarbonCure

CarbonCure is a carbon storage company that injects waste CO2 into concrete in order to improve the product's compressive strength, alongside storing CO2 permanently! They have just secured a new round of funding to the tune of $80m. Tom, interviewed CarbonCure on The Carbon Removal Show.

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This newsletter is carefully crafted by Fi Watters and Tom Previte

Fi is a Climate Consultant at Supercritical with a MSc in Climate Change from King's College.

Tom specialises in selling carbon removal at Supercritical and hosts The Carbon Removal Show podcast.

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Algae and seaweed need more attention 🥺