In This Issue: Carbon Dioxide Removal and Carbon Markets
Limiting global warming to 1.5℃ above pre-industrial levels will require a massive economy-wide effort, including significant carbon reductions and, by some estimates, 6 to 10 billion tons of carbon dioxide removal per year by 2050. Meeting this challenge will require not only development and deployment of technologies and projects for emissions mitigation, but also development of new technologies and approaches to carbon dioxide emission removal (CDR) as well as market mechanisms to support the translation of "net zero" commitments (Net Zero Commitments) into tangible results for the climate. As economies around the world strive to affect a clean energy transition and increase energy efficiency, the urgency of the climate crisis has increasingly made clear that CDR is essential for delivering on the Paris Agreement climate goal of pursuing efforts "to limit the temperature increase to 1.5°C above pre-industrial levels".
To the surprise of some economists and policy observers, voluntary carbon markets (VCMs) have emerged over the past number of years as a key driver of new CDR deployments, driven in large part by Net Zero Commitments. But VCMs have had their bumps along the way as well, in part due to questions about the integrity of the underlying credits. Into that breach, and in the absence of broad governmental CDR mandates, a number of new governmental initiatives have emerged to help shore up the integrity of the markets, including most recently the EU Carbon Removal Certification Framework – which Kevin Chen writes about in this issue of CLM. Other governmental entities are playing their part through different types of forced disclosure, such as the Voluntary Carbon Market Disclosures Act in CA and the SEC's issuance of its final rule regarding Enhancement and Standardization of Climate-Related Disclosures for Investors, which our public companies and climate practice colleagues have written about here, here, here and here – all of which, if successful, will provide even more fuel for VCMs to remain strong. Then, there are also governmental entities such as the U.S. Department of Energy creating initiatives to help incentivize this mindset and catalyze voluntary purchases of high-quality carbon dioxide removal credits.
In parallel to the market and governmental/policy developments (the demand side), there is also a need for more support for new technology and deployments (the supply side). In this issue, our colleagues Lucas Watkins, PhD, and Benjamin Vaughan, PhD write about the DOE Carbon Negative Shot, which provides $100 million in funding opportunities for plant-scale carbon dioxide removal technologies. We have also seen many of our clients and clients' portfolio companies on the path to developing and investing in new breakthrough CDR technologies and deployments, including Vesta, a CDR startup that received the first federal permit to run a marine carbon removal test. Vesta is piloting the use of olivine sand to enhance the alkalization process and permanently sequester carbon in the ocean, while also reducing marine acidity and supporting coastal resiliency.
In this issue, we highlight updates in this emerging industry from across private industry groups, various states, the Dept. of Energy and the European Union, among others. Foley Hoag will keep tracking these important issues and more, so be sure to stay tuned.
Read the full report here.
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