There is growing international recognition that meeting net zero by 2050 will first and foremost require massive changes in order to cut emissions, but also a significant amount of carbon removal.
More and more carbon reduction strategies are emerging, at national and local levels, as well as within the private sector. However, a systemic approach to support quality carbon removal is far less advanced – in terms of technology, regulation, and large-scale investments.
Without supportive policies that create consistency in standards and measurements, incentivize action, and drive funding and innovation, it won’t be possible to explore and scale up the new technologies and solutions that are so vital to reaching climate targets.
In a recent TED Talk, Microsoft Chief Environmental Officer Lucas Joppa explained the crux of the problem: “We lack a common meaning of the term ‘net zero’. We lack a common unit of measurement to assess the climate impact of any ‘net zero’ approach. And we’re failing to mature the markets the world will need to achieve a net zero carbon economy by 2050.”
The importance of standardization
Carbon reduction strategies are vitally important, but they are not sufficient to limit global warming to 1.5°C and avoid the worst impacts of climate change. Not only do we need to emit less, but we also need to rapidly mature our carbon removal ability.
There is no one route to carbon removal. Alongside nature-based solutions – which maximize the potential of carbon sinks in the biosphere such as trees, plants, and oceans – there are a number of possible tech-based solutions, such as storing carbon in the geosphere – i.e., in rocks. We need to maximize both routes to get us to where we need to be.
As it stands, a lot of tech-based solutions are nascent. They are underdeveloped, costly, and can’t operate at scale yet.
At Microsoft, we have summarized the problems facing the carbon removal market as the three Ms – Meaning (what do we mean by net zero), Measurement (poor measurement and accounting of carbon), and Markets (the urgent need for a whole system of companies and organizations to provide solutions to reduce and remove carbon).
The meaning of net zero
The first M – meaning – is a significant factor hampering the development and affordability of the carbon removal market. Without an agreed definition of what it means to be “net zero”, there can be no standardization.
This means many companies focus on “avoided emissions offsets” – that is to say they still emit carbon but pay someone else to not emit the equivalent amount. Although that individual company may be able to claim they are net zero, cancelling out emissions like this doesn’t actually help us reach net zero on a global scale – it just pushes the problem around.
A far more expensive option – but the route we all need to strive for – is paying someone to remove the equivalent amount of carbon for our activities. This so-called “carbon removal offset” could theoretically offer us the scale we need. But it is limited by the technology underpinning it, which is not available at the scale needed and is too expensive for many to use. This leads to a lack of uptake that in turn deprives the sector of the funds it needs to scale up and innovate.
Taking accurate measurements
Another obstacle to overcome is the lack of common and consistent carbon measurement. And without being able to accurately measure carbon, we can’t know what our impact is and what we need to fix.
The EU is taking the lead on developing the world’s first regulatory framework to monitor carbon removals.
Additionally, the Carbon Call – which Microsoft joined alongside other private-sector, scientific, philanthropic, non-governmental and intergovernmental organizations – is working to improve measurement, reporting and verification of emissions removals. It also seeks to mobilize companies to report their emissions regularly, transparently, and comprehensively.
This is vital, as not all methods used to offset carbon are equal – some may last longer than others or come with more certainty as to their effectiveness. If we count them all the same, we are therefore adding to the dysfunction of the carbon removal market.
It is important to be able to accurately place a value on carbon for both reduction and removal efforts – both from a cost perspective and in terms of climate impact. Without taking this step, organizations may not buy enough removal offsets or buy them in the right places, which will prevent the carbon removal market from maturing.
“In order to support the development of a market in Europe for carbon removal, we need in the first place to set common definitions and standards,” Microsoft’s Sustainability Science Lead for Europe Alberto Arribas explains. Once this is in place, it is essential to help organizations deliver solutions to these standards, he says, and to incentivize the market to create an ecosystem of companies that can provide these services.
Making carbon removal a reality
As a company, Microsoft aims to become carbon negative by 2030, and to remove all of its historical emissions by 2050. As part of this commitment, Microsoft contracted for removing 2.8 million metric tons of carbon dioxide from the atmosphere during the last two years.
We recently published some of the lessons we have learned from this process. Key among them is that demand for solutions that meet Microsoft’s criteria for high-quality carbon removal massively outstrips supply. Scientists predict that we need to scale up the market to be able to remove the required 2-10 gigatons of carbon a year by 2050 – we are nowhere near that at the moment.
Microsoft’s purchase represents about 50% of available supply in the carbon removal market. But the company as a whole emits only about 0.03% of total global emissions, according to its 2021 Environmental Sustainability Report, demonstrating the scale of the shortfall.
Today, no scalable carbon removal ecosystem exists, and the world must build a new market on an unprecedented timeline, starting from almost scratch.
Business-led initiatives like the First Movers Coalition aiming to decarbonize industry and transport are part of the solution. During the latest World Economic Forum in Davos, the coalition added carbon removal to its program. Together with Alphabet and Salesforce, Microsoft made a collective investment commitment of $500 million in carbon dioxide removal by 2030, sending important signals to an emerging market.
The EU is shaping the market
One of the most relevant steps to shape the carbon removal market and address some of the challenges it faces is to recognize that transformation is needed at a systemic level.
This is exactly what the EU Green Deal and European Climate Law are aiming at. They set out targets for the European Union to become climate neutral by 2050, and legislative proposals that specifically aim to develop carbon removal solutions and markets.
For instance, the proposal on land use, land-use change, and forestry – part of the Fit for 55 package presented by the European Commission in July 2021 – sets a binding commitment for each EU Member State. It aims to ensure that accounted emissions from land use are entirely compensated for by an equivalent accounted removal of carbon from the atmosphere through action in the sector.
With the complementary forthcoming EU framework for the certification of carbon removals, the EU is not just providing the policy framework, but also the necessary support and capabilities required to transform the system to net zero.
“Policy will play a fundamental role in creating the conditions for establishing a growing carbon removal market,” says Casper Klynge, Microsoft’s Vice President of European Government Affairs.
“Policy will play a fundamental role in creating the conditions for establishing a growing carbon removal market,” says Casper Klynge, Microsoft’s Vice President of European Government Affairs. “The certification system will be crucial in setting standards for a healthy market, and Europe’s work in this area can also connect with and inspire others.”
Technology can unlock progress
Achieving net zero means both improving our carbon accounting and making strides in decarbonizing all sectors of the economy, including through carbon removal solutions. The good news is that our conversations and capabilities have moved on significantly in recent years.
Artificial intelligence (AI) will be a key tool in accelerating and achieving the transformation we need. It allows us to process large volumes of data from multiple sources, such as satellites, sensors, and written reports.
Its ability to optimize and automate will be crucial, for example, in accelerating scientific progress such as developing carbon-free materials.
There is also great hope that AI can help with unlocking the availability of renewable energy in Europe. Electrification would hugely cut the continent’s emissions, but it is being hampered by problems with variable supply and storage.
Digital technologies will also play a vital role in supporting and enabling carbon policies, and with the measurement and accounting that will be at their core.
A healthy global carbon removal market is vital to achieving net zero. But this can only be reached through setting clear standards, establishing quality oversight, and developing supportive policies.
“We need real action during this decade now,” said European Commission President Ursula von der Leyen at the opening of COP26, the UN Climate Change Conference in 2021. “We need to agree on a robust framework of rules, for example to make global carbon markets a reality. Put a price on carbon, nature cannot pay that price anymore … Innovation and technology is available. Now we have to scale up and deploy it.”