This report delves into the multifaceted dimensions of carbon dioxide removal methods. The report discusses the role of carbon dioxide removal methods in contributing to attaining the long-term goal of the Paris Agreement and investigates best practices in the implementation of the collaborative instruments under Article 6 for their incentivisation and scaling. The present climate policy and actual decision-making are still centred on achieving net-zero carbon emissions but the long-term challenge is the inevitable reversal of the overshoot, requiring carbon removal to outpace residual emissions, leading to net negative emissions globally. The report discusses the need to assign responsibility for climate overshoot reversal in order to guarantee the viability of a global net-negative GHG economy. The report analyses and proposes ways to address risks associated with carbon removal, including mitigation deterrence, that carbon removed from the atmosphere might be re-released, carbon-leakage effects, and challenges related to monitoring mitigation outcomes. It offers recommendations based on these deliberations.
Limiting global warming to close to 1.5°C by 2100 requires deep and rapidgreenhouse gas emission reductions and carbon dioxide removals (CDR) on amassive scale, presenting a remarkable scaling challenge. This paper focuses onthe financing of bioenergy with carbon capture and storage (BECCS) in Sweden.BECCS is one of the most prominent CDR methods in 1.5°C-compatible globalemission scenarios and has been assigned a specific role in Swedish policy fornet-zero. A Swedish state support system for BECCS based on results-basedpayments is planned. Furthermore, demand for CDR-based carbon credits is onthe rise on the voluntary carbon markets (VCM) for use towards voluntarymitigation targets. Risks involved with the current Swedish policies areanalysed, specifically for the co-financing of BECCS by the planned statesupport and revenues from the VCM.
We find that with the current policies,state support systems will subsidise carbon credit prices on the VCM. We arguethat such subsidisation can lower decarbonisation efforts by lowering the internalcarbon price set by actors, thus undermining environmental integrity. It isconcluded that proportional attribution should be applied, i.e., attributingmitigation outcomes to the state support and VCM revenue in proportion totheir financial contribution to the CDR achieved.
The attribution analysis shouldbe accompanied by adjustments in national greenhouse gas accounting so thatmitigation outcomes that are issued as carbon credits and used for offsetting arenot double claimed (i.e., not used by both a nation and a non-state actor on theVCM towards their respective mitigation targets). If proportional attribution andadjustments in national GHG accounting are not implemented, the credibility andenvironmental integrity of offsetting claims made by carbon credit users areeroded. We recommend that action is taken to operationalise and implementproportional attribution to allow for co-financing of BECCS projects whilemaintaining environmental integrity. Wider implications for ourrecommendations beyond the case of Swedish BECCS are also analysed.
Bioenergy with carbon capture and storage (BECCS) is considered as a future key technology to provide baseload electricity, heat, pulp, paper, and biofuels, while also enabling atmospheric carbon dioxide removal (CDR). Sweden seeks to lead the way in bringing this technology up to scale, introducing a EUR 3.6 billion reverse auction scheme to facilitate market entry of companies producing BECCS. We explore instrument design preferences among politicians, regulators, and prospective BECCS operators to identify trade-offs and explore feasible policy design.
Based on 35 interviews with experts in the latent BECCS sector in Sweden, we identify under which circumstances prospective operators would be willing to place bids and discuss how actor preferences both align with and challenge auction theory. The analysis concludes that at least four dilemmas need attention. These concerns how to: (1) balance the state’s demand for BECCS to be implemented already in 2030 against the prospective BECCS operators’ fear of the winner’s curse, i.e., a fear of bidding for a contract that turns out to be too costly to implement; (2) allocate contracts at the margin of the auctioneer’s demand for BECCS without driving up costs; (3) design compliance mechanism to achieve effectiveness without undermining efficiency, and; 4) integrate the auction with the voluntary carbon market—if at all—in a manner that safeguards the environmental integrity of the auctions.
In comparison to its emissions reductions policy, the European Union’s (EU) policy for achieving carbon dioxide (CO2) removals is underdeveloped. Only in forestry and land use management does current EU law allow its Member States to use removals to comply with their climate policy commitments. This excludes the potential role that novel removals could play for effectively and efficiently addressing climate policy objectives. Novel removals with significant European potential include bioenergy with carbon capture and storage, biochar, enhanced weathering, marine removal options like alkalinity enhancement, and direct air carbon capture and storage. Emissions reductions are crucial to mitigating climate change. However, in the past decade, the world community’s failure to reduce emissions at a sufficient speed to avoid dangerous climate change has become obvious.
This reality acutely necessitates the development of innovative sets of policies to spur the deployment of novel CO2 removals, an urgency that is further underlined by the long lead time for many novel removal methods. Disregarding the potential of novel removals is incommensurate with the scale of the challenge of achieving EU’s commitment to reach net-zero greenhouse gas emissions by 2050. We argue that the current policy framework neither provides Union-wide economic incentives for novel CO2 removals, nor does it encourage EU Member States to develop national policy incentives. Our proposed solutions includes incentivizing removals through a conditional integration into the EU Emissions Trading System (ETS), expanding the portfolio of removal methods in the Land-Use, Land-Use Change and Forestry (LULUCF) Regulation, and to manage anticipations regarding which residual emissions that need to be counterbalanced by removals.
The report contains two parts. Part 1 summarizes the most significantdevelopments in the use of economic instruments in the environmental policies inthe Nordic countries. It provides an overview of new instruments or major changesto existing instruments from 2018 to 2021 a detailed country-by-countrydescription of these developments and a cross-country comparison andassessment. Part 1 also provides “raw data” for further analysis by policymakersand other stakeholders, and presents other findings, including policy priorities andgood practices. Part 2 provides an overview overview of policies and instrumentsthe Nordic countries have used to promote clean technologies.
Rapporten utgör en delrapport inom ramen för ”Klimatberäknings- affärs- och kompetensplattform för en klimatneutral bygg- och anläggningssektor i Malmö 2030” som genomförs med finansiellt stöd från Vinnova. I projektet ingår att föreslå koncept, inklusive möjliga fondlösningar, för kompensation av byggprojektens beräknade klimatavtryck. Rapporten lägger fram förslag om mål och kriterier som kan användas för val av klimatkompenserande åtgärder som har hög miljöintegritet. Rapporten diskuterar vidare förutsättningar och möjliga tillvägagångssätt vid införskaffning av certifierade utsläppsminskningar.
This report proposes goals and criteria that can be used when choosing how to offset GHGs, the purpose of which is to help the user choose offsetting approaches that have high environmental integrity. The report further discusses the prerequisites for and possible approaches when purchasing and using carbon credits for offsetting.Carbon credits that are used to offset GHG emissions can be based either on measures that remove carbon dioxide from the atmosphere (Carbon Dioxide Removal, CDR, or “removals”), or through measures that lead to the reduction or avoidance of GHG emissions. In principle, it makes no difference to the outcome in terms of the net flux of GHG to the atmosphere if the offsetting is based on reductions or removals – provided that the carbon credits used are of high integrity.
The report proposes a set of goals with associated assessment criteria, which can be used as a basis for the assessment of carbon credits. The following goals are included: 1) Robust and transparent management of the certification system, 2) Reliable calculation of the underlying activities’ mitigation outcome, 3) Double counting of mitigation outcomes associated with carbon credits must be avoided, 4) The risk of non-permanence must be managed, 5) Avoidance of negative environmental and social impacts and enforcement of positive impacts, 6) Contribution to the promotion of the societal transition towards net-zero emissions.The market for high-integrity carbon credits based on removals is under-developed and supply is limited. However, demand is rising and expected to continue growing.
Those who wish to offset their emissions on the basis of permanent removals may wish to consider fund solutions. The market for high-integrity carbon credits based on emission reductions is more mature and the range of carbon credits is extensive. However, the transition to the Paris Agreement presents market participants with new challenges and new considerations need to be made when assessing the integrity of using carbon credits for offsetting.
The net-zero greenhouse gas (GHG) emissions concept is emerging as a fundamental principle for initiatives to address climate change ranging from global to corporate scale. Offsetting emissions using carbon credits features in many sub-global net-zero and carbon-neutrality claims and pledges. Assertions that the use of emission reduction credits (ERCs) is insufficient in the context of offsetting emissions for such claims at sub-global scales are gaining acceptance.
Conversely, we show that regardless of whether offsetting is based on the use of ERCs or carbon removal credits (CRCs), the impact on the net transfer of GHG to the atmosphere is the same. Therefore, both ERCs and CRCs are adequate for offsetting with the purpose of achieving net-zero emissions or carbon neutrality. We show that assertions that the use of ERCs is insufficient for offsetting for these purposes are based on an incorrect setting of assessment boundaries and related misconceptions. The results presented in this paper have fundamental implications for what kind of GHG mitigation action beyond entities’ own value chains may be considered adequate in relation to entities’ claims concerning making no contribution to the net accumulation of GHG in the atmosphere, i.e. net-zero and carbon-neutrality claims.
Bland produkter på kapitalmarknaden som syftar till att kanalisera kapital till hållbara investeringar, baserat på gröna kriterier, märks så kallade gröna lån och gröna obligationer. Marknaden för gröna lån och gröna obligationer har vuxit starkt under de senaste åren. Jämfört med gröna lån karaktäriseras gröna obligationer av en högre grad av transparens och standardisering. Det går att urskilja tre huvudsakliga anledningar till att fastighetsbolag efterfrågar grön finansiering. • Att nå ut till en bredare bas av möjliga investerare och långivare. • Att få tillgång till finansiering till lägre kostnad. • Ett positivt signalvärde som kan bidra med varumärkesfördelar. När det gäller frågan om ”additionalitet”, alltså om grön finansiering bidrar till fler och mer långtgående åtgärder i riktning mot hållbar utveckling, har följande tre förklaringar identifierats. • Skuldfinansiering med gröna kriterier innebär ett externt löfte gentemot en finansiär. Ryktesrisken förknippad med att inte uppfylla lyftet bidrar till en starkare drivkraft att leva upp till satta hållbarhetsmål jämfört med enbart interna mål. • Engagemang i grön finansiering öppnar upp nya kommunikationskanaler inom företaget och kan stärka samordningen mellan hållbarhetsfunktionen och finansfunktionen. Detta kan bidra till ett mer sammanhållet och effektivt hållbarhetsarbete. • Prisfördelarna med grön finansiering kan vara en drivkraft till en högre ambitionsnivå i hållbarhetsarbetet.