We Are Not Decarbonizing Fast Enough.
It’s a simple enough statement - one that mainstream scientists and economists continue to confirm over, and over (and over and over) again. But strangely enough, the implications of this reality do not seem to be fully understood when we talk about the urgency of climate action, and the prioritization of climate solutions.
If we know we need to decarbonize, and we know it’s not happening fast enough, we need to look for ways to dramatically accelerate this transition. What leverage can be exerted over the heaviest-emitting, hardest to abate industries? How can we make low-carbon technologies the economical option today, instead of waiting for years of public funding to make them cost competitive?
From our vantage point, the emerging carbon removal industry looks like a pretty great tool to speed this process up. When companies are willing to pay for carbon to be removed, it provides a fixed price on carbon that exerts a pull through the entire supply chain. The investments that are made in scaling each carbon removal business - in transportation, large production facilities, raw materials - are made with carbon fixed at the top of the budget. But that starts with a proper definition of carbon removal.
A carbon removal credit is an attribute of a fully accounted carbon-negative supply chain - moving as much mass as possible, on a net basis, from the fast to slow carbon cycle, as efficiently as possible. What you remove, minus what you emit to remove it, equals what you can bring to market.
Carbon removal and decarbonization are linked at the hip. Neither is enough to reach our climate goals without the other, and there is no carbon removal industry without a whole lot of clean energy and carbon-free materials and assets to build it.
Where we’re going
The climate goalpost, so to speak, that we are collectively aiming for is to zero out our global emissions fast enough to limit the planet’s average warming to a 1.5°C increase (2.7° Fahrenheit) since the beginning of the Industrial Revolution. 1.5°C was the goal codified by the Paris Agreement in 2015, and while there is some debate as to whether the exact degree figure is more of a political number or hard planetary boundary, it’s a pretty darn good proxy for the limit we need to maintain to avoid the worst impacts of climatic change to come - massive flooding, large-scale population displacement, and ocean die-offs, just to name a few. (The 1.5°C goal doesn’t account for the continued increase in ocean acidification and the associated biodiversity crisis, and 1.5°C itself is already a pretty grim reality - but let’s not overwhelm ourselves too quickly here).
Unsurprisingly, these risks are interconnected - staying close to 1.5°C reduces the likelihood of triggering climatic “tipping points” - rapid, irreversible events, such as ice sheet loss and ecosystem collapse - that spring negative feedback loops and create domino effects towards 3°C, 4°C, or worse. The Guardian, based on tipping point risk analysis from the Potsdam Institute for Climate Impact Research, provides a great example of one such event.
When you read the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report - a report that António Guterres, Secretary-General of the United Nations, so colorfully referred to as an “atlas of human suffering” - the clear message was that to keep the goal of 1.5°C alive, emissions need to peak before 2025 at the latest, and be roughly cut in half by 2030 compared to 2010 levels. For 2°C, global greenhouse gas emissions would still need to peak before 2025, and be reduced by roughly a quarter by 2030.
Keep in mind, this estimate is just to have a reasonable chance at staying below 1.5°C, not even a guarantee - and even if we were able to do that, it is “almost inevitable that we will temporarily exceed this temperature threshold but could return to below it by the end of the century [via negative emissions technologies]”.
I can schedule a dentist appointment in 2025. It sure doesn’t seem like a global shift away from widespread fossil fuel consumption is going to happen in between the time it takes me to get my teeth cleaned (which, I promise, I won’t wait three years to do).
That sentiment might seem unfair given the massive progress we’ve seen recently, especially in the US with the passage of the Inflation Reduction Act and the massive investment it is expected to catalyze.
But unfortunately, the experts (and the data) agree. Global CO₂ emissions rebounded to their highest level ever in 2021 following a slight COVID-related decline. COP26 emission reduction pledges from every country, the most ambitious to date, only got us to an expected warming of 1.8°C - and that is before factoring in the massive gap between ambition and action that we have seen to date, which our most cheerful Secretary General described as “a litany of broken climate promises”, which “reveals the yawning gap between climate pledges and reality” (Fun!).
Based on the UN Environment Programme’s latest Emissions Gap report released this week, additional country pledges made since COP26 in Glasgow will lead to estimated cuts of less than one percent of projected 2030 emissions compared to the ~45% we need for 1.5°C. As we head into COP27 in Egypt next week, our current global policies have us on track for almost 3°C warming - before we even think about those tipping points that could be triggered.
For fun, let’s do some climate “napkin math” on our remaining carbon budget. I will note I am not a climate scientist, simply an informed citizen with an unhealthy penchant for reading long, technical documents about our unfolding global climate crises.
Our “carbon budget”, like any good budget, is the maximum amount of CO₂ emissions we can “spend” (i.e., move from slow to fast) that would limit global warming to a given level (like 1.5°C or 2°C) before you go into “the red”. We started eating into this budget the first time we dug up and burned a big chunk of slow carbon from geologic storage and released it into the fast carbon cycle - but we’ve sure been on a spending spree recently. If you prefer the economist’s view, you can think of our carbon budget as the area under a theoretical CO₂ emissions trajectory curve that sticks to limits on cumulative emissions estimates to avoid a certain level of global temperature rise (via UNEP’s previous Emissions Gap report). Again, this 1.5°C mark is not a “true” budget with a hard line, as it represents the multi-year average warming relative to preindustrial levels - but rest assured we’ll get a call from the Bank of the Earth if we overdraft.
We’re not here to vilify 19th century miners or the myriad ways in which the use of fossil fuels has enabled incredible technological and societal breakthroughs - but every action has a cost, and every ton of CO₂ we remove from long term storage brings us closer to exceeding that carbon budget, to disastrous effects. Starting at 2020, the 2021 IPCC report estimated that the global carbon budget was roughly 400GtCO₂e (billion tons of carbon dioxide equivalent) for a 67% chance, on average, of staying below 1.5°C (or 300GtCO₂e for an 83% likelihood).
Emissions from energy use in 2020 and 2021 were roughly 34.2GtCO₂ and 36.3GtCO₂, respectively - or 8.6% and 9.1% or our remaining carbon budget at a 67% chance of limiting warming to 1.5°C. If you factor in those CO₂ emissions from 2020 and 2021, our remaining emissions budget now looks something like this (and let’s assume 10 months of 2022 emissions at 2021 levels, or roughly an additional ~30GtCO₂):
To put this scientifically: yikes!
Putting this remaining budget in context, it is estimated that the world’s energy majors and petro-states have identified roughly 3,000-3,500 gigatons of CO₂e-worth of fossil fuel reserves, the majority of which is treated as an asset or state resource by the entity that claims it (via Carbon Tracker’s Fossil Fuel Registry, as well as The Ministry for the Future for any Kim Stanley Robinson fans). It stands to reason that those future fossil fuels would be seen as potential stranded assets if they are not produced and combusted - meaning that roughly 90% of the fossil reserves already identified would need to be left untouched to maintain a 1.5°C temperature pathway.
So where does this leave us? Well, in a few places.
First and foremost, we need to be pragmatic about the challenges that lay ahead in the path to decarbonization. Even as we continue to invest heavily towards electrifying everything, there is no pathway to 1.5°C where we do not - at least temporarily - overshoot that mark. Speed matters here, because every 0.1°C matters; every day, month, and year that goes by without meaningfully reducing emissions is more carbon we - and really our kids - will eventually need to remove in the future. And those discount rates will not be kind.
In that sense, being pragmatic means, along with meaningful adaptation measures, a tremendous focus on decarbonizing the largest consumers of that carbon budget and finding leverage points to speed up that process. An estimated ~80% of greenhouse gas emissions from the private sector come from 166 companies, largely concentrated in industrial sectors. There is no shortage of initiatives focused on decarbonizing these industries - the First Movers Coalition, the Climate Action 100+, and the Getting to Zero Coalition, to name just a few - and innovative solutions like the First Movers Coalition’s Advanced Market Commitment (AMC) for sustainable procurement of zero emission fuels and low-carbon steel will meaningfully move the needle in accelerating the greening of those industries. But at the risk of sounding like an overtired kid in the backseat, we need to go faster.
In our view, this is where the true work of carbon removal comes in - the supply chain that is physically moving the mass we have taken out of the slow carbon cycle and putting it back into durable storage. There is an incredibly diverse range of emerging technologies looking to solve this problem, from ocean-based solutions to carbon mineralization to enhanced weathering and more; each of these will have to operate their own negative carbon supply chain, where the net carbon removed from their system must dramatically exceed the emissions associated with their operations and consumption of raw materials. If buyers are willing to pay to scale durable carbon removal, every ton of carbon emitted throughout the process represents a measurable opportunity cost - a loss of system efficiency, climatic benefit, and revenue potential.
In practice, this means that the emerging carbon removal industry should have the highest incentive of any industry to drive decarbonization. A $250/ton internal carbon price - Running Tide’s current market rate to remove a ton of carbon - factored into investment decisions dramatically changes the economics of any supply chain choice you make. A ship used in removal operations that burns 3 tons of CO₂e per hour is an additional $750 of “carbon cost” you can no longer bring to market. If that is invested back into decarbonizing your supply chain and processes, you improve efficiency - i.e. more removals, less emissions, and newly electrified, multi-use assets that can serve value chains beyond just direct carbon removal operations. An electrified ship might look a whole lot more expensive at first glance, but when you add in the carbon opportunity cost, it starts to become the more economical option.
How carbon removal can accelerate decarbonization
For Running Tide, the direct supply chain that enables our multi-pathway system - and that we’re working to decarbonize - touches the forestry, mining, and maritime transportation industries, amongst others. For a carbon mineralization company, it could include the steel and cement for the injection sites they build and the energy systems their operations rely on - industries that align pretty darn well with the hardest-to-decarbonize sectors. This means the investments we make to scale our carbon removal businesses - in ports, heavy equipment, and transportation - are made with carbon as a budget line item, increasing the ability and motivation to finance innovative low-carbon technologies.
Obviously, decarbonization of this magnitude can’t happen without supplier and supply chain input, and most removal solutions are still in the pilot stage. Asking small companies to drive the green transition of heavy industry is a lot to ask - but we shouldn’t underestimate the weight that a high-growth industry can have. We’ve seen the influence that Salesforce’s supplier procurement requirements and Walmart’s Project Gigaton have had in driving meaningful corporate climate action.
Even with dramatic progress on emissions reductions, the National Academy of Sciences has predicted that we will need up to 10GtCO₂ of carbon removed annually by 2050 to keep the 1.5°C pathway in reach, and likely more given our current emissions trajectory. At $100/ton, the back-of-the-envelope goal often cited as the landing spot for the carbon pricing cost curve, carbon removal is a $1 trillion industry that has bloomed before investors’ and consultants’ eyes from near-zero and that has to be built in a little over two decades. That is over 1% of current global GDP; not just an economic opportunity and a climate necessity, but real weight tied to our ability to rapidly decarbonize.
More importantly, these investments will have knock-on effects.
Direct investments in the decarbonization of our heavily industrial supply chains serves the removals industry, but will also serve the broader economy and help to overcome green transition bottlenecks.
Port charging capacity, biofuel bunkering capabilities, and green hydrogen infrastructure that otherwise might take decades of public funding to deploy can be financed independently and integrated into existing industrial infrastructure, and every ship, train, and truck that comes through sees their transition cost incrementally lowered. You’re much more likely to switch to biofuels that reduce the carbon intensity of your operations if the necessary infrastructure that reduces costs and eases implementation is already there.
In that way, carbon removal operations can create a foundation for low-carbon industrial economic growth, and create jobs and opportunities for the communities most impacted by climate shifts in the process.
That’s a nice vision. So how do we get there?
Obviously, we’ve got a long way to go to make that vision of a decarbonized future a reality. But there’s a few things we can do in the near term to set ourselves up for success:
First, we need to stop treating carbon removal and decarbonization like they are purely separate entities. Decarbonization alone isn’t enough to stay anywhere close to 1.5°C, and removals can’t happen without decarbonized assets. One of the things you often hear in the climate world is that carbon removal cannot take away from the priority of reducing emissions, and that removals, like avoidance offsets, should be at the bottom of an organization’s mitigation hierarchy. You also hear that the role of carbon removal will be to “clean up” the last ~20% or so of the remaining hard-to-abate emissions once we do decarbonize. This logic falls apart pretty quickly when the needed investments in emissions reductions continue to be delayed or only incrementally achieved, and when emissions reduction targets are kicked down to procurement departments with little or no budget to implement operational and supplier changes.
There are huge investments that must be made to drive the green transition which are completely outside of carbon removal. However, if you agree that we are not decarbonizing fast enough, it follows that we need to pull every lever we can to expedite the process, and carbon removal in practice sure looks like one of the best levers we have at our disposal. Directing the considerable resources and attention being poured into carbon removal towards foundational infrastructure that will enable negative carbon economic growth (and that might not look economically viable for years without a high carbon price attached) drives action on both fronts - and more importantly on the real indicator of success, 1.5°C.
Second, and more tactically, we need to improve carbon removal accounting. The more you have to stack standard emissions factors and industry averages when quantifying your net impact, the less accurate these systems are likely to be. In classic “you can’t manage what you can’t measure” fashion, if you can’t accurately link a carbon reduction activity to the net carbon that is removed, you won’t be able to realize the benefits. We’ll expand on this idea in future posts, but creating best practices for carbon removal accounting across the industry - a GAAP for carbon, so to speak - will reduce the risk of inconsistencies in measurement that reduce trust and climate impact.
The only way we’ll stay at 1.5°C, let alone realize a fully restored and healthy planet, is to deploy interventions quickly and at an extraordinary scale.
We need to find every leverage point we can to accelerate decarbonization, as fast as we can.