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The Carbon Lowdown #27
Welcome to The Carbon Lowdown! A fortnightly newsletter from Supercritical.
⭐️ Supercritical highlight ⭐️
We are so pleased to have Nathan Bratby, our new Head of Product on board 🚇 Keep your eyes peeled for what comes next…
🍃 Carbon removal
What is happening in the world of carbon removal?
💭 To offset or contribute? That is the question…
The VCMI (Voluntary Carbon Markets Integrity Initiative) has published its Claims Code of Practice for what companies can claim about the carbon offsets they purchase from the Voluntary Carbon Market (Bloomberg article).
The VCMI defines carbon markets in the new code as “a way to help finance CO2 reductions around the world, test new policy approaches and encourage companies to shed emissions”.
They are calling on all large companies to implement the Claims Code, which has three tiers of claims; Platinum, Gold and Silver. Each of these recognises investing in GHG emissions reductions and removals beyond corporate action to meet science-backed targets.
The Code requires companies to show near-term mitigation efforts though;
publish annual emissions
set scientifically backed targets
show lobbying and advocacy work consistent with Paris Agreement
Beyond this, the Code explains companies can then purchase carbon credits of the “highest quality” (judged by the ICVM core carbon principles) to contribute to climate mitigation.
One issue which has been highlighted from the VCMI’s guidance is double counting between the compliance (countries) and the voluntary market (companies). We had a previous explainer on this right back in The Carbon Lowdown #6 (scroll to the very bottom to read ⬇️)
Currently, companies and countries can claim the same offset, as they are in different markets. One side argues that this impacts additionality and the other argues both public and private sector subsidies are required for a project to be feasible.
The VCMI guidance tries to clear these muddy waters by asking companies to disclose whether their credits are also being used by a country to fulfill a Paris Agreement pledge.
This has led people to believe companies should drop ‘offsetting’ altogether and opt towards a contribution model. This was initially suggested in COP27 UN talks as a potential middle ground to this debate and is something the Gold Standard have discussed in their recent partnership with Klarna.
The SBTi also currently has a public consultation underway (See edition #25) on how companies can best give support to such projects as carbon removal. This Beyond Value Chain Mitigation (BVCM) makes the case for supporting climate work outside of your own value chain, whilst working on reduction efforts. However, the SBTi isn’t linking BVCM to a science based target. In other words, there’s no incentive or reward for doing BVCM.
Fundamentally, carbon removal needs to scale and that means we need early, innovative buyers. As things stand, offsetting is a simple and understandable method of incentivising action for a company’s own emissions. For a contribution model to be effective, it would need clear incentivisation or reward.
There is much to ponder in this space. Here at Supercritical, we are in the camp of removing alongside reducing. We need to deploy CDR at such a scale by 2050 that we just can’t wait.
🗣 How should you talk to your neighbour about carbon removal?
For those of us engrossed in the carbon removal debate, it is easy to forget that most people have never heard of it before. The public perception of carbon removal is important to get right if we are to get widespread adoption. This article has some suggestions on how we can better publicly communicate CDR.
Inform the public about carbon removal using clear language and analogies but make clear how it differs from these existing processes.
Avoid framing carbon removal methods as “nature-based” or “natural” and instead refer to specific methods and/or use scientific terminology.
Stress that carbon removal is not a substitute for necessary and urgent emissions reductions: reductions first, removals second.
Communicate the social arrangements of carbon removal as well as the technical objects; articulating the alternative trajectories that carbon removal implementation could take.
☑ Microsoft and Carbon Direct publish criteria for high-quality CDR
Over 1 billion carbon credits have been registered to date yet only 3% are from pure carbon removal projects. Only a fraction of that 3% is what we call ‘high-quality’. One of the biggest contributors to low-quality projects is a lack of common frameworks for determining what good look like. Microsoft and Carbon Direct have published their 2023 report “Criteria for High Quality Carbon Dioxide Removal” covering solutions from soil carbon sequestration to DAC.
🔗 🚗 Mini links: Carbon removal
🗺 Here’s a neat map of known CDR projects that have been announced or that are in operation worldwide
🌾 The world’s first carbon removal credits derived from industrial hemp farming could soon be available
🌎 Climate and Net Zero
What is happening in the world of climate and net zero?
🌳 An update on the wonderful world of forests
One of the original removal solutions, what are the recent findings with trees?
Firstly, a huge positive - the rate of deforestation in the Amazon dropped about 34% in the first six months of 2023 compared to the same period in 2022. New research from the WRI also finds that Brazil can grow its economy by at least $8.2 billion a year by 2050 while ending deforestation in the Amazon rainforest.
Although Brazil has some positive news this year, the tropics lost 10% more primary rainforest in 2022 than in 2021, according to new data from the University of Maryland and available on WRI’s Global Forest Watch platform. This is the equivalent of losing 11 soccer fields of forest per minute and the loss produced as much carbon dioxide emissions as India's annual fossil fuel emissions.
Gold Standard in partnership with Spatial Informatics Group, LLC, is working on a consistent protocol to evaluate Earth Observation methods to ensure the accuracy of carbon removal calculations - they currently have an open consultation active.
A paper has been released in Nature assessing forest fragmentation 2000-2020. Unfortunately, tropical forest regions, high in biodiversity like the Amazon and Borneo have suffered severe forest fragmentation. Positively fragmented forests in Europe, the US and South China are recovering due to afforestation and protective measures and 75.1% of global forests saw a decline in fragmentation during the first two decades of the 21st century.
⚡️ Which countries have scaled solar and wind the fastest?
Last week System Change Lab published new analysis showing that eight countries have already grown solar and wind generation at rates faster than what’s needed to limit global warming to 1.5°C.
This article was published alongside another analysis from the Rocky Mountain Institute, in partnership with the Bezos Earth Fund, which finds that if solar and wind continue to grow at an exponential rate, they will be closely in line with the International Energy Agency’s net-zero emissions pathway.
This is positive to hear for us also, considering the growth which is required for the carbon removal industry it is great to see what can be possible.
🧑🤝🧑 Big-tech sustainability reports are out and supply chains take the stage
Both Google and Amazon recently released their sustainability reports. In a bid to reduce their emissions, both are exerting more pressure on their supply chains, with Amazon mandating that suppliers share emissions data AND set reduction targets (Amazon is also building tools to support their suppliers to do this)!
🔗 🚗 Mini links: Climate
🌎 The IPCC has made an interactive atlas where you can flick between different levels of warming in the coming decades
⏳ NASA has also made an interactive ‘climate time machine’ showing how some of Earth's key climate indicators are changing over time
🛳 The first cargo ship running on green methanol is setting sail
New partnerships, fundraises and exciting initiatives going on in carbon removal!
🌳 Sylvera, a carbon credit data and ratings platform has raised $57m Series B from the likes of Balderton Capital. Its long-term goal is to incentivise investment into meaningful and high-quality carbon credit projects (both avoidance and removal).
🧾 On the topic of high-quality credits, another startup Isometric is launching with $25 million in funding to build a registry and science platform focused on “high-quality, long-duration” carbon removal credits.
🔦 Carbon removal project spotlight
A fun and innovative carbon removal project to highlight
💡 Avnos, a LA based DAC startup using a CO2 adsorbent, raised $80M from ConocoPhillips, JetBlue Ventures, and Shell Ventures.
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.
Did anyone else do Barbenheimer over the weekend or was it just us?
The Carbon Lowdown #6 recap: Voluntary vs Compliance markets
Broadly speaking, a carbon market facilitates trade between buyers and sellers of carbon credits i.e. avoidance or carbon removal. The concept of a carbon market came about off the back of the Kyoto protocol during COP3 in 1997 (older than some of the Supercritical team…!)
Carbon markets generally fall into two buckets; compliance markets (Supercritical doesn’t operate here) and voluntary markets (Supercritical operates here)
🏢 So what is the compliance market? Compliance markets are regulated emission requirements set by law. Simply put, large emitters are legally compelled to cap their GHG emissions in order to meet national climate goals.
The compliance market can be broken down into two tranches:
Cap and trade system - Governments CAP emitters with a maximum amount of GHG they are allowed to emit in a given time period. Emitters can then TRADE their surplus supply of GHGs amongst themselves, establishing a price for the carbon traded. Nations can also trade amongst themselves.
Example - Company X & Y are both capped at emitting 100tCO2e per year. Company X only emits 90tCO2e whereas Y emits 110tCO2e… Company Y can ‘buy’ additional carbon allowances from X
Baseline and credit system - Under this system, there is no fixed limit on emissions, but polluters that reduce their emissions more than they otherwise are obliged to can earn ‘credits’ that they sell to others who need them in order to comply with regulations they are subject to. This is more akin to the avoidance credits we know well - see deep dive above on Offsets vs RECS and REGOS
🤠 What is the voluntary market? The voluntary market functions outside of compliance markets. Any company or individual can purchase carbon offsets on a voluntary basis with no intended use for compliance purposes. Simple!
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