Corporate Demand Is Shaping the Future of Carbon Removal
A Q&A with Leaders at South Pole and the Carbon Business Council
Corporations are increasingly committing to carbon dioxide removal (CDR) as a key part of their climate strategies, alongside cutting emissions. South Pole, a Cornerstone Member of the Carbon Business Council, helps companies develop and invest in climate strategies, and they recently welcomed Mizuho as the newest buyer in theNextGen CDR portfolio — a joint venture with Mitsubishi Corporation, working to accelerate carbon removal by pooling corporate demand through long-term purchase agreements. Mizuho’s participation marks a major step for financial sector engagement in carbon removals and signals growing momentum in the Asia-Pacific region.
In this post, we dive into the current state of the carbon removal market, key trends driving growth, and the importance of collaboration in scaling these solutions. Learn more from Megan Kemp, a leader in carbon removal, and the Global Head of Strategy at South Pole.
Q&A: Insights from South Pole and the Carbon Business Council
Congratulations on adding Mizuho to the NextGen portfolio. Can you tell us more about the impact of this news and the trends driving corporate engagement in carbon removals?
Mizuho joining the NextGen portfolio is a major milestone. As a prominent financial institution, their commitment to purchasing carbon removal credits reflects a broader market shift, signaling growing confidence in carbon removal as a critical part of corporate climate strategies. Their involvement has the potential to catalyze further investments, particularly from financial institutions, in Japan and across the region.
More companies are viewing carbon removal as a long-term business opportunity. Some, like Boston Consulting Group, are actively working to help build the market. Others, including Barclays and JPMorgan, are making strategic purchases not just to meet climate goals, but to deepen their market understanding and inform future advisory and investment decisions. By investing early, these firms can help shape the market infrastructure and legitimize future investments in the space.
There's also a growing recognition that carbon removals will play an essential role in meeting emissions reduction targets, particularly as regulatory pressure intensifies. Companies see value in securing high-quality removal credits now — not only to hedge against future compliance costs, but also to demonstrate environmental leadership.
What are the biggest challenges to scaling corporate demand for high-quality removals, and what can help address them?
Cost remains a significant barrier. High-quality carbon removal credits are still expensive, and many corporations are highly cost-sensitive. Widespread adoption will be difficult until prices decrease, which requires significant upfront investment. Strategic investments over the next one to three years will be key to driving down costs over time. These long-term, capital-intensive projects need substantial funding in the near term, including debt financing from banks. Governments also have a vital role in developing financial mechanisms and policy frameworks that reduce investment risks and encourage early buyers.
Market complexity is another key challenge. The carbon removal market presents over 100 methodologies, multiple standards, and numerous oversight bodies, making it difficult for companies to navigate. Simplifying these frameworks and providing clearer guidance will be essential for companies to make confident purchasing decisions.
Policy and regulatory clarity is equally important. While the Science-Based Targets initiative (SBTi) has made strides in incorporating carbon removal into its latest draft of net-zero standards, clearer guidance is needed on how companies can account for their carbon removal purchases. Establishing interim targets beyond Scope 1, timelines, and better alignment between voluntary standards and government regulations will help businesses take action with confidence.
What do you think of the SBTi’s proposed revisions to corporate net-zero standards, and how will these changes impact corporate climate commitments?
The proposed revisions from SBTi are a welcome development. They provide much-needed clarification around interim targets, permanence, and the role of carbon removals in achieving net-zero goals. However, more work is needed ahead of final drafting to ensure interim targets cover more than Scope 1 emissions; the Oxford Portfolio Principles approach to portfolio composition is incorporated; and the required size of the market by 2030 is taken into account when setting targets.
How can collaboration, such as joint purchasing agreements, help accelerate the adoption and scale-up of carbon removal solutions?
Collaboration is key to accelerating the adoption of carbon removal solutions. Joint purchasing agreements, like those facilitated by NextGen, play a crucial role in scaling the market. These agreements allow multiple buyers to come together and purchase carbon removal credits in larger volumes, making it easier for carbon removal suppliers to secure the necessary financing to scale their operations. By aggregating demand, we can lower transaction costs and make carbon removals more accessible to a broader range of companies.
The power of collective action cannot be overstated. When buyers across industries and regions come together, it helps establish a more resilient market. Buyers’ coalitions create a stronger, unified voice and can drive market growth faster than individual buyers acting alone. This collaboration is vital for making carbon removals a viable solution for large-scale emissions reductions.
What role do you see the APAC region playing in scaling carbon removals?
The APAC region, especially Japan, is playing an increasingly important role in scaling the carbon removal market. Companies like Mizuho, Mitsubishi, and MOL are leading the way by committing to carbon removals as part of their climate strategies. The GX League, for which CDR is under consideration for inclusion to cover up to 5% of corporate residual emissions, is beginning to drive interest in and demand for high-quality credits.
There is also growing interest in how the APAC region can contribute not only as a buyer but also as a key player in project development. The integration of carbon removal into Japan’s broader economic growth strategy will further accelerate the sector’s expansion. The region’s emphasis on innovation and sustainability, combined with the government’s policy initiatives, will continue to drive progress in carbon removal solutions.
How important is it to diversify carbon removal solutions across multiple pathways, and what’s needed to scale them effectively?
Diversifying carbon removal solutions is essential. No single solution will be enough to sustainably meet the global demand for carbon removals. Technologies like direct air capture (DAC), bioenergy with carbon capture and storage (BECCS), and biochar all have their strengths and limitations, and it’s important to invest in a wide range of solutions.
For instance, DAC is energy-intensive but flexible in terms of location, while BECCS has potential to transition legacy industries like coal plants into carbon removal hubs. To effectively scale, we need a balanced portfolio of solutions to ensure that we aren’t relying on one “winner” to solve the problem. Governments and businesses must work together to reduce costs, encourage innovation, and establish clearer regulations to ensure all viable options have the opportunity to thrive. In the end, the market will choose winners based on ability to lower costs and scale.
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