What’s Ahead for Carbon Management: Blog
What’s Ahead for the Carbon Management Industry & 2022 Policy Recap
By Isabella Corpora
2023 begins after a year of major momentum for the carbon dioxide removal (CDR) and management industry. Building on record-breaking private sector investments, significant climate legislation, and innovation from carbon removal companies, we’re on track to see continued growth for carbon removal as we look ahead. Reaching gigaton scale removal is underpinned by scientific consensus that climate restoration is needed to meet the goals of the Paris Agreement, in tandem with the important work of reducing emissions.
As we welcome 2023, the role of innovation will continue to be crucial in scaling carbon management solutions. Innovative companies, including the more than 75 members of the Carbon Business Council, are working on scalable solutions that can help bend the technology cost curve. We continue to see the importance of a level playing field in policy, to spur innovation across carbon management, and avoid the risk of prematurely picking winners and losers in the carbon management space. As we see more pilots and projects break ground this year, the responsible deployment of projects will continue to be paramount.
Governments across the world have moved forward policies and discussions around CDR over the last year, including at the international level. Widespread discussions on CDR were incorporated at COP27, with a variety of events and considerations on CDR usage to reach Paris Agreement goals. In the United States, the Inflation Reduction Act and the announcement of funding for Direct Air Capture Hubs provide increased opportunities for climate and CDR tech scaling, and the European Commission delved into carbon removals with the publication of its proposed framework on high quality carbon removals. They also struck a deal on a carbon dioxide emissions border tariff to assist in the important work of emissions reductions and management.
This momentum is on track to continue through the new year. Through a variety of requests for information over the last year, we saw groups like the United Nations Framework Convention on Climate Change, Integrity Council on the Voluntary Carbon Market, US Internal Revenue Service, and UK Business, Energy, and Industrial Strategy departments seek information about carbon removals and expansions through policies and voluntary carbon markets.
It is exciting to see what 2023 and the future have in store, especially as climate scenarios continue to incorporate removals into abatement scenarios to tackle climate change. But it is not to be forgotten that an integral pillar to this fight is still efficient and equitable mitigation policies in tandem with carbon management.
Looking ahead, we think the year will unlock innovations from companies that will help to accelerate carbon management solutions. This innovation will be underpinned by government policies and private sector investments and commitments as well as international and third party work around MRV. With the IPCC’s goal to reach gigaton scale removals by 2030, we hope this year will be one where progress is even more accelerated than the year prior.
A ton of CDR legislation and funding moved through the US and elsewhere last year, accompanied by a growing climate tech and carbon management industry. Here’s a look-back at key CDR carbon management policy in 2022 that can be built on as the year ramps up:
Congressional Action
The Inflation Reduction Act passed as the largest climate investment in US history, allocating over $369 billion towards fighting climate change. Updates to the 45Q tax credit on carbon storage will allow more companies to qualify for the removal, utilization, and storage of carbon dioxide credit for removals from the atmosphere.
The bipartisan CREST Act was introduced in the Senate and a version has been introduced in the House, allowing for an expansion of the types of carbon removal technologies to be evaluated by the government as well as development of a pilot reverse auctioning purchasing program for CDR market commercialization.
The CHIPS Act allocated an additional $1 billion in funding for CDR research, demonstration, and deployment.
A bipartisan biochar research network act was announced in the House.
The bipartisan SECURE Act was introduced on Class VI well permitting for underground storage of carbon dioxide; the EPA also put out recommendations on Class VI permitting procedures.
Congress allocated millions of dollars in funding for environmental projects for the 2023 fiscal year, including a CDR pilot purchasing program.
Executive Action & Energy Department
The Biden-Harris Administration announced $2.6 billion for carbon emissions reductions programs out of the Bipartisan Infrastructure Law.
$3.7 billion in funding was announced by the DOE to ‘kick start America’s carbon dioxide removal industry’ at the end of 2022, including $115 million towards DAC project prizes.
Over 140 programs were created with the Justice40 Initiative, an important consideration as more projects break ground.
The Mission Innovation Launchpad and Global Net-Zero Government Initiative were launched out of COP27, providing support for carbon removal projects on a global scale, in partnership with the U.S. and other countries.
The Energy Department provided $30 million for atmospheric and oceanic carbon dioxide removal, and we can expect additional funding like this in 2023.
An FOA for Direct Air Capture Hubs came forward by the DOE, partnered with their FAQs on Community Benefit Plans. This will help four direct air capture projects take hold. You can read our statement here.
The DOE held the Carbon Negative Shot Summit for scaling carbon removal solutions and released a notice of intent on MRV for carbon management solutions.
The DOE created their Carbon Matchmaker Tool to strengthen public-private partnerships.
The SEC proposed rules to standardize climate-related disclosures for investors. As companies seek to disclose their carbon emissions, they can look towards emissions reductions and removals projects to help meet their goals.
The Bureau of Land Management started approving applications for permanent underground storage of CO2 on public lands, a first for the division as more companies look to store carbon that’s been removed from the atmosphere.
International
COP27 occurred last year, with a variety of the CDR community in its attendance. This op-ed by Carbon Removals at COP discusses the progress made.
The European Commission proposed a certification framework for carbon removals to reach net-zero emissions, a first of its kind.
The EU proposed the Carbon Border Adjustment Mechanism to reduce carbon leakage around imports.
The UK held its Earthshot Prize, with CDR winners like 44.01 named among them.
The European Research and Innovation Roadmap for Nature-based Solutions had held an open consultation for public comments.
The Global Carbon Removal Partnership has done countless work to help equitably scale carbon removal technologies, and has worked with various heads of state in the Global South to discuss pathways for CDR usage.
With all of this great work accomplished in 2022, we can only expect even more in 2023.
