What does Microsoft’s carbon removal purchase tell us about the removal market?
The supply of permanent carbon removals needs to become tens of thousands of times bigger than it is today.
Microsoft’s recent purchase of 1 million carbon dioxide removal (CDR) credits gives a great insight into the market of removals since they published all the proposals they received in their call for CDR-projects. Stripe did the same with all the proposals they got in May last year. The thing that stands out the most to me is how few permanent removal projects there are, and how small each project is.
99% of the removals Microsoft bought were land-based removals with low permanence or durability as the company prefers to describe it. These are projects like reforestation, improved forest management, and soil carbon sequestration through regenerative agriculture methods. 1 percent of their purchases went to permanent removal projects. Namely direct air capture through Climeworks, biochar from three sellers through the Puro marketplace, and sequestered bio-oil from Charm industrial. (For background on different CDR methods see this excellent overview www.cdrprimer.org).
Just buying 1 percent permanent removals sounds extremely unambitious but Microsoft probably bought a very large share of the available supply of permanent removals.
Microsoft purchased 1900 tonnes of biochar, 1400 tons of Direct air capture with storage (DACCS), and 2000 tonnes of bio-oil. Judging from the bids that Microsoft got there might not exist many more permanent credits to buy. Puro.earth a marketplace for removals is sold out on biochar and Climeworks, the direct air capture company that Microsoft bought credits from only has a capacity for around 4000 tonnes per year. Charm industrial claims in the bid that they can supply 20 000 tonnes which would make them the permanent CDR supplier with the largest available supply.
There were many proposals to Microsoft with plans for projects that would remove CO2 in the future but that is not operational right now. That includes all BECCS-projects (except for the BECCS-plant in Decatur Illinois that is running but it is unclear if it has net-negative emissions when an LCA is done). There were also proposals from Greensand for carbon removal through mineralization where olivine replaces for example gravel in infrastructure projects. Although effective, these projects can take hundreds of years to capture carbon which makes it difficult to judge how many removal credits should be issued from them today.
Some of the proposals regard very promising ideas but where more research needs to be done before they can be scaled up and removal credits quantified. This for example includes projects where macro-algae is grown and sunk to the bottom of the sea, such as C-Combinator, and Project Vestas approach where ground olivine rocks are spread on beaches capturing CO2 in contact with water.
No one knows exactly how much CO2 the world will need to remove but there is a strong consensus that it at a minimum will need to be several billions of tonnes (gigatons) per year by mid-century. If we want to go beyond net-zero and bring down CO2 levels in the atmosphere, many more gigatons will need to be removed.
Regardless, the supply of permanent carbon removal needs to grow enormously fast. Today it likely stands at less than 100.000 tonnes per year. In order to reach 1 gigatonne, the market would need to become at least 10.000 times larger and 100.000 times larger for 10 gigatonnes. To achieve such growth by 2050 is going to be a challenge, to say the least. Many more companies and countries need to follow Microsoft, Stripe, and Shopify’s footsteps and start investing in carbon removal today. They should also follow the best practice that Microsoft set up regarding transparency and differentiating between permanent and projects with low durability.
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I am a policy and communications professional spending a lot of time exploring carbon removals. See my Oxfam discussion paper Removing carbon now, and follow me on Twitter or LinkedIn for more on CDR and climate.
(This post was edited 1 Feb 2021)