Fifteen years ago, the idea of sucking carbon dioxide out of the air and storing it underground was an anathema to many in the climate movement, an excuse to avoid the hard work of cutting fossil fuel use. Now, it’s an imperative.

"What the science and the [Intergovernmental Panel on Climate Change] tells us is that carbon removal is crucial to keep global temperature rise within 1.5 degrees [Celsius]," said Elizabeth Willmott, carbon program manager at Microsoft, during a breakout session at VERGE Net Zero. What’s more, "we need all removal types. Nature-based solutions, direct air capture [and] other engineering solutions simply aren't enough on their own."

For Willmott, who joined Microsoft five years ago, focusing on carbon removal is a big change from her previous roles. "Joining from the climate activist community, I was a real skeptic about carbon offsets overall … and I was even more so about carbon removal," she said. Now Willmott aligns with others in calling for a moonshot for carbon removal — or rather, an "earth shot," as Julio Friedmann, senior research scholar with the Center for Global Energy Policy, Columbia University, aptly puts it.

Corporate demand for carbon removal projects is not only rising, it’s outstripping supply, according to both Friedmann and Willmott. "We're now facing a really tight seller's market and … bluntly, we're concerned about whether or not we're going to make the volume," Wilmott said, referring to the carbon tons targeted by the company’s second request for carbon removal proposals.

If you're doing geologic sequestration, there's no question that calcium carbonate is more stable than CO2. It'll last for centuries or millennia.

Although it’s heating up, the market is still nascent and largely voluntary. It needs standards, regulations, transparency, investment and even human capital — project managers are in short supply — to reach the annual multi-gigaton capacity that’s necessary — and it needs to that fast.

Here are some key takeaways from the breakout sessions about carbon removal markets at VERGE Net Zero:

1. Wanted: A common definition for 'quality' carbon removal

Carbon removal means taking carbon dioxide out of the air and oceans and binding it into durable form, Friedmann said. That could mean engineered solutions, such as direct air capture and storage, or mineralizing it into a calcium carbonate brick, or using certain nature-based solutions, such as soil carbon sequestration.

Afforestation (planting new trees) and wetland or peatland restoration remove carbon from the atmosphere by putting vegetation into areas where it’s been removed. Schemes such as REDD (Reducing Emissions from Deforestation and Forest Degradation), for avoiding deforestation, are not carbon removal; they’re avoided emissions. Similarly, agroforestry or other forest management strategies reduce emissions, but they’re not carbon removal.

"People often confuse avoided emissions with reduced emissions, with removed emissions," Friedmann said. "They all have their place to get to net zero, but they're really not the same thing, and so far, mostly what the market has trafficked in has been other stuff, either avoided emissions or abatement through carbon reduction."

Microsoft found that to be true when it issued its first request for proposals for carbon removal projects last year, Willmott said. Out of 189 proposals representing 55 million tons of carbon removal, only 2 million tons qualified as carbon removal by Microsoft’s criteria.

Even some emerging engineered solutions for capturing and storing carbon in concrete or other products are not technically carbon removal, according to Marcius Extavour, executive director of prize operations, energy and resources for Carbon XPRIZE. "The new material will still generate CO2 emissions, but maybe fewer CO2 emissions than the conventional approach [and] … that makes it avoided CO2 emissions," he said. Still, "that is a net win, it's not zero, but it's less emissive."

Panelists pointed to good resources for understanding what is meant by "quality" carbon removal: Carbon Dioxide Removal Primer, Oxford Principles for Net Zero Aligned Carbon Offsetting, and Carbon Direct and Microsoft’s Criteria for High-Quality Carbon Dioxide Removal. But to grow the market, stakeholders will need clear definitions and standards for credits.  

2. Nature-based solutions offer strong potential, but durability is a concern

Half of the 1 billion tons in offset credits on the market today are related to land use changes, according to Matthew Potts, S.J. Hall chair in forest economics at the University of California at Berkeley. And out of those land-based credits, a tiny sliver (5.5 percent) fall into the camp of carbon removal.

Potts sees tremendous potential for expanding the land-use carbon removal market, citing research that shows all natural climate solutions could account for up to 25 percent of climate mitigation between now and 2030. Plus, reforestation offers additional, critical ecosystem benefits, including protecting biodiversity, rebuilding eroded soils and improving water quality.

But forestry carbon credits have their challenges, he warned. Restoration is hard and there are always tradeoffs. Native seeds must be acquired, and saplings take three to five years to establish. Herbivores, like wild pigs, can destroy projects if protections aren’t put into place.  What’s more, "You have to think about …who is actually on that landscape … and how do you integrate your actions … to not just do no harm but have a net benefit for the planet."  

And durability is a concern. As Friedmann noted, "Right now … there’s a whole bunch of carbon that’s been contracted that has literally gone up in smoke in Oregon, California and other places, and it’s not clear how that gets fixed" from a contract perspective.

3. Do your homework on soil carbon credits

Soil carbon sequestration also offers significant potential, but the market is new, and wide variability among the protocols makes it difficult to compare their credits, said Jane Zelikova, senior fellow at research nonprofit Carbon Plan. Zelikova evaluated 14 protocols for soil carbon sequestration for key metrics, including rigor and quantification, additionality, durability and risk handling; and found that "all of the protocols scored relatively low across these four metrics that we thought were really important."

Still, she stressed, "That is not to say that soil carbon sequestration isn't real, and that we don't know how to measure it. I assure you we do, and that there are lots of different instances … where changing practices can sequester carbon in the soil for tens to hundreds to thousands of years."  

Carbon Plan published its analysis into a buyer’s guide and has three major recommendations for buyers: First, screen the projects yourselves because the protocols don’t lay out rules in a rigorous enough way to know that a credit issued is real. Second, ask the project developer to use the most rigorous sampling or modeling requirements for quantifying soil carbon. Third, consider doing a "generous discount" on the credits or buying twice as many credits as you need to cover your risks.

Zelikova also encourages companies to think beyond soil carbon credits and invest directly in agricultural sustainability.

4. Engineered solutions are niche and expensive

The world’s biggest direct air capture and storage plant, Orca, will launch in September in Iceland — but its capacity is only 4,000 tons. Other carbon management companies are emerging, including Heirloom Carbon and 44.01, that use carbon mineralization (employing minerals to form chemicals that naturally bind to CO2) and geologic storage — these projects have potentially vastly more capacity. Heirloom Carbon, for example, aims to remove 1 billion tons of CO2 by 2035.  Biohydrogen production from captured CO2, rather than methane gas, is another promising solution for carbon removal on the near horizon.

Costs for such solutions are running from tens to hundreds of dollars per ton, according to Friedmann, who noted, "If you want to maintain quality, then you're going to be paying more than $2 a ton."

Building the right narrative around [carbon removal] is part of the environmental justice conversation but also the broader conversation of how to build these markets.

Microsoft, which set an initial price for carbon removal at $20 per metric ton, now recognizes that won’t be enough, Willmott said. "We're very aware … having waded into this market, that the theoretical floor price of direct air capture is way higher than that. We're working on how to make that work, but as this market scales, it's going to have to do so on the back of corporates who are willing to pay more."

Besides high costs, Extavour has questions about direct air capture’s energy use, land use and broader sustainability, but, he said, its durability can’t be beat. "If you're doing geologic sequestration, there's no question that calcium carbonate is more stable than CO2. It'll last for centuries or millennia."

5. Not all tons are created equal — diversify your portfolio

Engineered solutions may have higher costs, but land-based offsets will be more subject to questions about durability and verifiability.

Carbon credits have different risks and different return rates, noted Friedmann. "A tree is not a rock, and we shouldn't think about contracting them or managing them in the same way. This isn't going to be a simple commodity market where all tons are traded equally."

Diversity in purchasing will be key, Velikova said. "Having a really diversified portfolio of carbon removal offsets or credits would help… If you are including some credits in a forest that is currently burning up … your broader portfolio would be more resilient to climate change."

Potts agrees. Look to forestry solutions, he said. "I would take risks on some of the newer things. It's just, you're just going to have to do a little bit more of your own homework."

6. Compliance markets need to include carbon removal

Currently, only California’s Low Carbon Fuel Standard recognizes direct air capture in its compliance market, and it doesn’t recognize other CO2 removal approaches, such as carbon mineralization.

Proposed clean fuel standards in Washington state and Canada are considering carbon removal, according to Friedmann, but, he said, "We’re pretty far away from where we need to be to get a lot more options in the compliance market, if we want this stuff to scale quickly."

Additionally, direct air capture is allowed for in some markets, but other emerging pathways currently have no access, Friedmann said. "We have to start building opportunities for these technology pathways to get paid and enter the market," he said, noting that a voluntary market alone is unlikely to achieve multi-gigaton scale.

7. Carbon removal is an environmental justice concern

The infrastructure package that’s making its way through Congress includes investments that could go towards carbon removal, said Shuchi Talati, chief of staff for the Office of Fossil Energy with the Department of Energy. She noted, "DOE and the administration have a huge opportunity to create an industry that is equitable and just from the start."

For Talati, that means carefully selecting where to site demonstration projects and "really going on the ground to different potential communities to talk about what they think about [carbon removal] and what their concerns are." It also means educating frontline communities, who may be skeptical about carbon removal, about the opportunity for bringing jobs and cleaner air to their communities. [Direct air capture] is basically "a giant air purifier," she said.

Talati also sees opportunity to develop projects in disempowered communities, including mining communities, where carbon mineralization provides an opportunity to remediate mine tailings, while removing CO2.

"Building the right narrative around [carbon removal] is part of the environmental justice conversation," she said, "but also the broader conversation of how to build these markets."