Price of going negative
Surprisingly, it is the fossil fuel industry that is perhaps best equipped to harness NET. That's because some 90 per cent of its scientific, technological and engineering expertise is transferrable to the development of CCS technology.3
For other heavy emission industries such as agriculture or fashion, however, carbon removal technology is difficult to deploy at scale.
For these sectors, our experts say, a better solution could be the voluntary carbon market. This fledgling scheme, which operates outside regulated markets such as Europe’s Emissions Trading System, allows companies to offset their carbon emissions through the voluntary (as opposed to mandated) purchase of carbon removal credits.
The voluntary market is currently worth USD400 million but is expected to grow to as much as USD480 billion by 2050.4 This would equate to a drawdown of as much as 3.6 gigatonnes of CO2 equivalent (CO2e) a year, just under a fifth of the amount required by the Paris Accord.
Currently, the average voluntary carbon market price stands at around USD4-5 per tonne of CO2e. But industry estimates suggest could rise to as much as USD140 by 2050.5
In the short term at least, voluntary carbon market activities will be concentrated in land-based carbon-reduction tech, including afforestation, reforestation and improved forest management, which is both low cost and ready to implement. Over time, our Advisory Board members say, the market will expand to cover other emerging technologies, such as CCS.
But for the voluntary carbon market to take off, greater transparency is required. Not least in how offsets work.
For example, companies who buy carbon removal credits generated from afforestation should not expect to be able to apply the offsets immediately. In such cases, their use needs to somehow reflect the time lag between the point at which the carbon is released into the atmosphere to when it will be removed from a forest.
The world should use NETs as part of a broader portfolio of carbon-reduction measures designed to place the economy on a more sustainable footing.
No getting out of jail
For all the excitement around carbon offsetting, its expansion brings into sharp relief a thorny philosophical issue. If offsetting becomes the carbon-reduction tool of choice, it will do little to eradicate the activities that cause emissions in the first place.
Our Advisory Board members say NETs should not serve as some kind of “get out of jail free” card that allows polluters to avoid or delay efforts to cut emissions in the first place.
Rather, they say, NETs should instead form part of a broader portfolio of carbon-reduction measures designed to place the economy on a more sustainable footing.
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