Intergovernmental Panel on Climate Change (IPCC) scenarios indicate carbon dioxide removals (CDR) of 5-16Gt a year are needed globally by 2050 to limit warming to 1.5°C this century. The UK Climate Change Committee (CCC) estimates that the UK will need to remove 83-169MtCO²/yr by 2050. It is clear that in addition to reducing emissions, we need to remove carbon from our atmosphere to reach net zero.

Recent analysis by Boston Consulting Group estimates global annual demand for durable carbon removals at around 40–200Mt in 2030, translating into a $10-40bn market opportunity in that timeframe and growing thereafter. The GFI is working closely with the market to overcome a series of barriers to financing carbon dioxide removals. These barriers include:

Policy clarity around technologies – UK Government has the opportunity to set up a transparent system to define high quality carbon removals and create a policy environment flexible enough to support multiple technologies.

Revenue certainty – The contracts for difference (CfDs) that the UK Government has announced for CDRs are an attractive option. Keeping policy flexible to support a range of solutions – perhaps with different tCO² price points – is beneficial.

Addressing other investment risk – Tailored capital solutions will be needed to attract debt and lower costs of capital for developers. Guarantees, for example, will be fundamental in bringing the banking sector on board.

Shaping standards – Standards for the durability of carbon removals are key to market integrity, and should underpin any guarantee provisions; especially for nature-based solutions, but also for ensuring the climate effectiveness of emerging new approaches.