Japanese carmaker Mitsubishi has partnered with Swiss firm South Pole to develop a “purchase facility” to purchase carbon removal credits, with the ultimate goal of lowering the price of carbon capture technologies.
Mitsubishi and South Pole aim to raise at least $ 300-800 million (£ 215-575 million) in certified carbon removal credits by purchasing them from upcoming carbon removal technology projects to give them a secure revenue stream to accelerate their development.
While drastic decarbonisation efforts in energy, transport and industry are needed to keep the world meeting the goals of the Paris Agreement, carbon capture is increasingly seen as necessary to remove the excess carbon that has already been released into the atmosphere.
The International Energy Agency has called for more investment and says the amount of CO2 captured should increase dramatically to 800 million tons by 2030, from about 40 million tons now. Carbon capture can be achieved through both nature-based solutions – such as tree planting – and technological carbon removal such as Direct Air Capture (DAC), in combination with permanent CO2 storage.
The cost of technological carbon removal today ranges from about $ 50 to more than $ 400 per ton of CO2 removed. South Pole said these costs are higher than the current price levels of most carbon pricing schemes around the world that should spur the development of new disposal solutions.
The Next Generation Carbon Removal Purchase Facility seeks to address the need to reduce costs by supporting carbon removal technology projects through the purchase of certified carbon removals over a period of 10 years or more.
Over the past 18 months, an increasing number of companies with ambitious net zero targets have shown a greater willingness to pay for high-tech carbon removals.
For example, in March of this year, e-commerce giant Shopify became the first customer to purchase contract carbon removal units from Canada-based direct air capture company Carbon Engineering.
It agreed to purchase 10,000 tons of disposal from the company, adding to a previous 5,000 tons commitment to Clime works. This pull from the voluntary market can make a vital contribution to the development of a new carbon removal sector.
“The next generation carbon removal procurement facility will provide a secure revenue stream for new carbon removal technologies to accelerate their development.
Importantly, it will help lower the price per ton of CO2 removed over time, ”said Patrick Burgi, co-founder of South Pole.
“By purchasing certified disposal credits from our new facility, net zero-obligation companies can diversify their carbon removal portfolios and create environments for large-scale carbon removal technology solutions.
In this sense, voluntary carbon markets can support the goals of the Paris Agreement while lowering the cost of net zero compliance globally – for businesses, countries and the planet. Masao Koyama, a manager at Mitsubishi’s Low Carbon Task Force, said:
“We plan to help a range of stakeholders – from owners of carbon removal projects to buyers of carbon removal credits – access the opportunities offered by the new facility. “