Analysis of Corporate Carbon Removal Strategies: A Mismatch with Net - Zero Goals

This article was initially published on Grist and is part of the Climate Desk collaboration.

The Imperative of Carbon Removal for Net - Zero by 2050

As per the Intergovernmental Panel on Climate Change, the world's leading authority on climate change, achieving net - zero greenhouse gas emissions by 2050 necessitates the removal of carbon dioxide from the atmosphere. However, not all forms of carbon removal are equally effective. Alarmingly, the types of carbon removal that major companies are investing in are largely not the most effective ones.

Findings of the NewClimate Institute Report

A recent report from the NewClimate Institute, a European think tank, reveals that 35 of the world's largest enterprises are relying on short - term tree - planting and other “nondurable” carbon removal methods to claim neutralization of some of their climate - related pollution. Moreover, the few companies investing in more reliable carbon removal generally do not couple it with deep decarbonization, i.e., the complete elimination of carbon emissions.

The organization, in a press release, stated that there is a “dangerous discrepancy between corporate climate assertions and the actual requirements for attaining global net - zero.” Reaching net - zero by 2050, where all inevitable human - induced climate pollution is offset through carbon removal, is deemed essential to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit).

Understanding Carbon Dioxide Removal (CDR)

Carbon dioxide removal (CDR) involves capturing CO2 after it has been emitted into the atmosphere and storing it in rocks, land, ocean reservoirs, or human - made products. The NewClimate Institute designates the most reliable forms of carbon removal as “durable CDR,” which involve injecting carbon into geological formations or converting it into rocks, ensuring its sequestration for at least 1,000 years – approximately the same duration that CO2 from fossil fuel combustion remains in the atmosphere.

Currently, these durable techniques are not scalable, accounting for merely 0.1 percent of global carbon removal annually. The majority of carbon removal is based on methods such as tree - planting, wetland restoration, and soil carbon burial. While these are more cost - effective, they can only keep carbon out of the atmosphere for a few decades to a few centuries at most.

Government and Private - Sector Roles in Scaling up Durable CDR

Government investment and regulations are crucial for scaling up durable CDR. Experts consider the next decade “critical” for the development of this technology. The private sector can also play a part by funding durable CDR projects and research. In industries like construction, where complete decarbonization is not yet feasible, companies may need to utilize durable CDR to offset residual emissions as part of a credible climate strategy.

Sector - by - Sector Analysis of Durable CDR Investment

The NewClimate Institute analyzed 35 of the world's largest companies across seven sectors: agrifood, aviation, automobiles, fashion, fossil fuels, tech, and utilities.

• Tech Sector: Tech companies showed the highest investment in durable CDR. Microsoft alone is responsible for 70 percent of all durable CDR ever contracted. However, the report criticizes the sector for planning to claim “potentially substantial amounts” of both durable and nondurable CDR towards net - zero targets. Since tech companies can fully decarbonize without offsets, their emissions targets should not rely on carbon removal.

• Aviation Sector: Aviation was another sector with significant support for durable CDR. However, only Japan's All Nippon Airways had a “reasonable” plan to use the technology to neutralize residual emissions by 2050. Three airlines lacked concrete plans.

• Other Sectors: Among the 15 companies in the agrifood, automobiles, and fashion sectors, only H&M and Stellantis are investing in durable CDR. Of the five utilities in the report, Eon and Orsted are supporting durable CDR projects. However, it is unclear whether Eon intends to use removals towards its net - zero goal, and some of Orsted's removals may be double - counted in the emissions reduction targets of both Denmark and Microsoft. The five fossil fuel companies analyzed – Equinor, Exxon Mobil, Shell, Sinopec, and TotalEnergies – are mainly focusing on carbon capture and storage, which intercepts CO2 at the point of emission before it enters the atmosphere, without reducing atmospheric CO2 concentrations.

Concerns Regarding Lack of Risk Disclosure

Silke Mooldijk, an expert with the NewClimate Institute and lead author of the report, was not surprised by the limited support for durable CDR, except from some tech companies. What did shock her was the lack of public reporting on the environmental and social risks associated with the durable CDR projects these companies are investing in. Some CDR methods may endanger biodiversity, while others require large amounts of renewable energy that could be diverted from other uses. Mooldijk stated, “Not a single company in our report disclosed details on potential risks of projects they support and how they mitigate those.”

Company Responses to the Report

Grist contacted all 35 companies in the report.

• Companies Investing in Durable CDR: Amazon, Google, Microsoft, and H&M are currently investing in durable CDR. A spokesperson for H&M detailed the company's purchase of 10,000 metric tons of durable CDR from Climeworks, one of the largest such purchases to date, and its plan to use these for neutralizing residual emissions. The tech companies reaffirmed their commitment to reducing emissions first and then using carbon removal to offset residuals, but did not address the NewClimate Institute's concerns about over - reliance on durable and nondurable CDR for net - zero claims.

• Companies Not Investing in Durable CDR: Adidas and Enel, which are not currently investing in durable CDR, said they would use “high - quality” carbon removals to offset their residual climate pollution after decarbonization efforts. Inditex said it is “exploring” durable CDR to offset residual emissions, with its use of the technology “determined by the evolution of reference scientific frameworks.”

• Other Responses: TotalEnergies' statement to Grist did not address CDR, instead focusing on carbon capture and storage and “nature - based solutions” (short - lived offsets like tree - planting, which the NewClimate Institute deems inappropriate for offsetting fossil fuel emissions). Apple, Duke Energy, and Shein declined to comment, and the remaining 24 companies did not respond to Grist's inquiries.

Expert Opinions on the Report

Jonathan Overpeck, a climate scientist at the University of Michigan and dean of its School for Environment and Sustainability, described the NewClimate Institute report as timely. He said, “Right now the whole idea of CDR … is kind of a Wild West scene, with lots of actors promising to do things that may or may not be possible.” He added that companies seem to be using CDR as a substitute for reducing their climate pollution, emphasizing that “The priority has to be on reducing emissions, not on durable CDR at this point.”

Current State of Durable CDR in Offsetting Emissions

As of 2023, durable CDR is doing little to offset emissions. Only 0.0023 gigatons of CO2 were removed from the atmosphere each year using these methods, which is about 15,000 times less than the annual climate pollution from fossil fuels and cement manufacturing.

Recommendations for Voluntary Initiatives

The NewClimate Institute contends that voluntary initiatives cannot replace government - mandated emissions reduction targets and investments in durable CDR. However, if such initiatives exist, they should:

• Provide a clearer definition of “durable” carbon removal.

• Determine companies' responsibility for scaling up durable CDR based on their ongoing and historical emissions or, more realistically, their ability to pay.

• Require companies to set separate targets for emissions reductions and support for durable CDR, reinforcing a climate action hierarchy that prioritizes mitigation over offsetting. As the report puts it, companies should not “hide inaction on decarbonization behind investments in removals.”

Mooldijk believes that voluntary initiatives can encourage investments in durable CDR by recognizing “climate contributions,” perhaps through simple statements about companies' financial contributions to durable CDR rather than claims about theoretical CO2 neutralization.

Standard - Setting and Future Outlook

Some of these recommendations were submitted to the Science - Based Targets initiative, the world's leading verifier of private - sector climate targets, earlier this year. The organization is preparing to update its corporate net - zero standard with new guidance on the use of CDR. The International Organization for Standardization, another standard - setter, is also set to release new net - zero standards, which could curtail dubious corporate climate claims and boost support for durable CDR.

John Reilly, a senior lecturer emeritus at the MIT Sloan School of Management, argues that ultimately, governments must regulate corporate climate commitments, including those related to durable CDR. He said, “Companies are happy to throw a little money into these things, but I don't think voluntary guidelines are ever going to get you there.”