A Snapshot of the European CDR Ecosystem
We mapped out the carbon dioxide removal space in Europe: promising approaches, innovations and necessary developments.
Reducing emissions is not enough anymore. To reach our climate goals, we have to remove Co2 from the atmosphere at a massive scale. Carbon Dioxide Removal (CDR) plays a crucial role. We shed some light on promising approaches, highlight needed innovation and provide a first comprehensive overview of the emerging European ecosystem.
What is Carbon Dioxide Removal (CDR)?
The world may need to remove as much as 100–1000 gigatons, in other words, 50 to 500 times the annual EU emissions, (IPCC, Eurostat) of carbon dioxide from the atmosphere and store it permanently to stay in line with the 1.5-degree pathway. This means that we need to scale current removal volumes by a factor of 1,000,000x and essentially establish a whole industry the size of the current oil and gas industry from scratch (Scaling Carbon Removal).
Physically taking carbon out of the atmosphere and sequestering it, can take many forms. These range from nature-based approaches such as planting trees and sustainable farming practices to new technologies such as direct air capture (DAC). The figure below provides an overview of the most common technologies. If you want to dive deeper, check out online resources like the CDR Primer.
While companies are working on a wide range of different solutions, the common denominator is that they are removing CO2 and storing it permanently. Therefore, most companies in the CDR space are technology providers or project developers generating supply for carbon markets. Generally, the CDR market is nascent but has great potential to significantly contribute to reaching our emission targets by complementing reduction efforts. However, the space still faces several challenges that need to be solved.
Voluntary commitments by large corporations are currently the main buy-side drivers in the CDR space, but high-cost levels and missing willingness to pay are still a challenge. This needs strong public support. In the US, recent updates to tax credits under the Inflation Reduction Act of 2022 will provide important incentives for the development and deployment of carbon removal solutions (Clean Air Taskforce).
Europe is lacking behind in terms of CDR policy (Ecologic Institute). Besides, the legal framework in Europe is not yet sufficiently incentivising the scale-up of carbon removal approaches. Regulatory framework supporting and incentivizing CDR in the form of tax credits, integration in carbon markets or other government schemes will be crucial going forward. The good news is, the political debate is shifting (SWP) and the upcoming EU certification for Carbon Removal may be a first step in this direction. Given its tremendous impact potential, we must support companies in the sector to scale impact.
The European CDR Ecosystem
The European CDR space is becoming increasingly attractive — to founders and investors alike. Planet A has tracked around 135 start-ups in the wider European CDR space who collectively raised more than € 1.5Bn in funding so far. Besides a few mega-rounds (like Climeworks), most companies are still at an early stage with most funding rounds happening in the field of DAC technologies, marketplaces, and carbon utilization. Strictly speaking, the latter is not directly related to CDR, but is an important player in the value chain and should therefore be taken into account when considering the wider CDR ecosystem.
As we write this article, a total of 655,864 tonnes of removed Co2 with a permanence of 100+ years has been purchased globally. Most of these tonnes will be removed via Biochar (45%), Bio-oil (30%), and DAC (14%). The fact that only 7.2% of these purchases have been delivered so far underlines the magnitude / illustrates the scale of the challenge at hand.
The figure below is a first snapshot of emerging players and technology providers in the field pushing the frontiers of CDR in Europe (If you would like to have access to the full list, please ping us).
Innovations we are excited about
Planet A has been following the CDR space for a while and is excited about innovations in the field. Below is a very high-level overview of some of the areas we are enthusiastic about.
Low-cost, scalable CDR
The biggest challenge we see in the market is bringing down costs since many carbon removal pathways are hardware or asset-heavy and have high capex requirements. Scalable, fast and flexible deployment of carbon removal solutions is crucial. We see incentivizing regenerative practices (dealing with the permanence issue etc.), accelerating enhanced weathering (enhancing carbonation rates, business model challenges, etc.), and ocean-based approaches (mitigating ecosystem impacts, etc.) as promising pathways.
Measurement, Verification & Reporting (MRV)
With Co2 being an intangible and invisible commodity, it needs a range of dedicated intermediaries to measure, verify and certify the generated credits and sell them to customers. Most pathways still lack dedicated, science-based and scalable MRV.
Diverse Revenue Streams
Right now, most of the demand for carbon removal comes from voluntary corporate commitments in the form of advance market commitments or offsets. However, prices are still too low to sustain the high price points of most CDR technologies. We are excited about approaches that offer other non-credit revenue sources as well, by e.g. co-production of hydrogen or the generation of co-benefits (soil fertility, biodiversity).
From an LCA and cost perspective, DAC still suffers from way too high energy requirements. Innovation is needed from air contacting to absorption and regeneration to improve techno-economics through e.g. better reaction kinetics, material innovation and improved processes.
Tackling Point Sources
A final word on industrial point sources: Let’s not forget that the EU still emits 700 Mt CO2e (EEA) at industrial point sources every year. From a thermodynamics perspective, these gas streams with high Co2 concentrations are much easier to handle and we are also excited about new technologies for point source emissions.
There are countless other exciting areas to work on in Synbio, Geochemistry, Nature-based solutions, etc. — they can all help to capture and store Co2 and ramp up the supply of quality removal credits. For those at the frontlines, this database by Frontier points to some other challenges to work on.
If you are active in the European CDR space and feel like Planet A could be a good partner — feel free to reach out. If you have a different opinion on the above — let us know. If you feel like your company is missing in our overview — please contact us.
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