MOL, partners launch facility for technical carbon removals
On 23 May, five companies from across Asia, Europe, and North America announced their plan to join the NextGen CDR Facility as founding buyers to scale up carbon removal technologies and catalyze the market for high quality carbon removals.
Founding buyers in NextGen will include Japanese shipping company Mitsui O.S.K. Lines (MOL), American consulting firm Boston Consulting Group, Liechtenstein-based private banking and asset management group LGT, Switzerland’s reinsurance company Swiss Re, and Switzerland-based investment banking company UBS.
As a first step, NextGen plans to purchase over one million tonnes of verified carbon dioxide removals (CDRs) from projects generated from a range of technologies by 2025, with verified CDRs to be delivered by 2030.
The establishment of NextGen follows last year’s announcement by South Pole, recently approved as an Implementing Partner of the First Movers Coalition (FMC). Its development was strongly influenced by the Carbon Removal Climate Action Group of the World Economic Forum Alliance of CEO Climate Leaders.
The FMC, a partnership between the U.S. State Department’s U.S. Special Presidential Envoy for Climate and the World Economic Forum, is an ambitious alliance of companies harnessing their purchasing power to create early markets for innovative climate technologies.
Companies joining the NextGen facility are making an immediate impact by providing the financial mechanisms to scale up high-quality solutions that aim to meet robust industry standards set by the International Carbon Reduction & Offsetting Alliance (ICROA). Credible CDR solutions must be scaled up exponentially to achieve the removal of 3 Gigatons of carbon annually by 2030 in order to avoid overshooting the 1.5°C global warming target.
However, the cost of carbon removals from technological projects today is very high, preventing mass market adoption that is critical in reaching this global climate milestone in less than a decade. Purchasing CDRs that can be realized this decade allows technology providers to finance their operations and to scale up, resulting in lower prices over time. By aggregating the demand for CDRs from leading companies, NextGen will create a market for more permanent technical carbon removals and allow these innovative projects to scale.
NextGen has successfully curated a pipeline of projects using five innovative removal approaches (Biomass Carbon Removal and Storage (BiCRS), Direct Air Capture and Storage (DACS), Enhanced Weathering, High-Temperature Biochar, and Product Mineralization) that require capital for deployment.
Going forward, NextGen will continue basing its purchase decisions on the best available science and with reference to best-practice guidance as it continues to evolve. Despite growing interest for technical CDRs, purchases of CDRs remain limited, with estimates of purchases in 2021 amounting to less than 100 ktCO2 tonnes.
Nonetheless, projections from a recent study suggest demand for these removals could increase by as much as 623 MtCO2 per year by 2030. However, supply of removals needed to meet this demand – especially high-quality and verified CDRs – remains severely limited. Projections from the same study indicate supply could fall short by as much as 66% of this demand in 2030. To address this gap, NextGen will ensure alignment with ICROA-endorsed methodological frameworks including the CCS+ Initiative, an alliance of organizations focused on establishing credible, scientifically backed methodologies and verification standards that advance carbon accounting for a range of carbon capture, utilization, storage and removal technologies, to ensure environmental integrity.
“Investment in emerging climate technologies is needed today to unlock their potential and achieve net-zero emissions by 2050. We look forward to becoming an anchor buyer in the Next Gen Facility and supporting pioneering carbon removal technologies that will permanently remove emissions from the atmosphere at scale,” Christoph Schweizer, CEO of Boston Consulting Group, said.
“We are still a long way from achieving our climate goals. Business, society and politics are moving in the right direction far too slowly. To become net zero as quickly as possible, we need innovative technical solutions for CO2 removal. We are convinced that NextGen is exactly the right model to find, promote and scale these carbon dioxide removal (CDR) solutions. Because it pools the commitment and ensures that the money flows into the right projects,” Prince Max von und zu Liechtenstein, Chairman LGT, commented.
“Recognizing the coming 10 years will be the decisive decade for our livable future, we are thrilled to become an anchor buyer in the Next Gen CDR Facility to support carbon removal technologies which must scale to limit global warming to safe levels. This effort is a part of MOL’s broader goal to achieve net-zero emissions by 2050. By taking responsible actions before regulations tell us what to do, we will ensure a prosperous future by contributing to the sustainable growth of people, society, and the planet, for all life living in the next generation,” Takeshi Hashimoto, President & CEO of Mitsui O.S.K. Lines (MOL), said.
“We are halfway between the Paris Agreement and 2030, by which time we need to have halved our emissions to be on track for net zero in 2050. Yet we are nowhere close to meeting that goal. Technological carbon removals are one important tool in our toolbox to tackle this enormous challenge. South Pole is proud to have been part of developing a facility that can create a removals market today by buying over 1 million tonnes of emission reductions by 2025, developing credible standards and using significant financial commitments to scale up emerging technologies that help remove gigatons of carbon dioxide from the atmosphere,” Renat Heuberger, CEO of South Pole, noted.
“Ensuring the quality of carbon removals will be central in building a credible carbon removals market. What this facility is doing is instrumental to the creation of such a robust removals market. Science-based targets and the use of carbon credits for Beyond Value Chain Mitigation require a full verification and assurance of the related corporate climate claims, and the use of carbon removals is no exception. Regardless of the type of investment or timeline, there is still a need for clear benchmarks and verification when it comes to corporate climate action,” Mark Kenber, co-Executive Director, Voluntary Carbon Markets Integrity initiative (VCMi), added.
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