7 May, 2021, Zurich – South Pole today announced the development of the Next Generation Carbon Removal Purchase Facility together with Mitsubishi Corporation. The facility aims to procure at least US$300-800 million worth of certified carbon removal credits by 2030. The facility will purchase and retire certified carbon removal credits from nascent carbon removal technology projects that can deliver permanent carbon storage and that show the potential for significant cost reduction over time.
In addition to drastic decarbonization efforts, the removal of carbon dioxide from the atmosphere will be required to meet the goals set by the Paris Agreement and to achieve net-zero emissions by 2050. Both nature-based solutions – such as planting trees – and technological carbon removal solutions are key to meeting these goals. Advanced carbon removal technologies, such as Direct Air Capture (DAC), in combination with permanent CO 2 storage solutions, such as CO2 mineralization or geological storage, will be of critical importance – nature-based solutions alone will not be able to remove the required billions of tons of CO2 per year* in just a few decades.
To make this future a reality, we need to build a credible carbon removal industry that does not yet exist. As of today, the cost of technological carbon removals range from US$50 to over US$400/ton of CO 2 removed. These costs are clearly above the current price levels of most carbon pricing schemes around the world that should incentivize the development of new removal solutions. In order to drive down costs, accelerate technological development, and increase the volume of robust solutions, there is an imperative to start investing in carbon removal technologies today. The Next Generation Carbon Removal Purchase Facility addresses this urgent need by supporting technological carbon removal 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 businesses with ambitious net-zero targets have shown a higher willingness to pay for high-quality technological carbon removals. This pull from the voluntary market can make a crucial contribution to the development of a new carbon removal sector. At the same time, businesses engaging with the facility will be able to comply with ambitious net-zero roadmaps, diversify their carbon removal portfolios beyond nature-based solutions – and work together to reduce the cost of technological removals over time.
“The Next Generation Carbon Removal Purchase Facility will provide a secure revenue stream for new carbon removal technologies to accelerate their development. Importantly, it will help drive down the price per ton of CO2 removed over time," says Patrick Burgi, co-founder and Director of Innovation at South Pole.“By purchasing certified removal credits from our new facility, companies with net-zero commitments can diversify their carbon removal portfolios and create enabling environments for technological carbon removal solutions at scale. In this sense, voluntary carbon markets can support the Paris Agreement goals while bringing down the cost of net-zero compliance globally – for companies, countries, and the planet."
The facility is being developed by carbon market pioneer South Pole in partnership with Mitsubishi Corporation. Mitsubishi Corporation will bring its deep technological and financial expertise to the facility, including access to several CO2 mineralization technology providers and projects, utilizing its global trading, investment and business development experience. Over the next few months, South Pole and Mitsubishi Corporation will work with potential anchor buyers to define the final set-up of the facility. The facility welcomes interested buyers to join these discussions.
“We are proud to work with leading climate action experts South Pole to bring this facility to the market. It's a perfect match: Mitsubishi Corporation's 10 business groups operate across virtually every industry in more than 90 countries, including in the investment and business development for carbon removal technologies. We intend to help a range of stakeholders - from carbon removal project owners to carbon removal credit buyers - gain access to the opportunities provided by the new facility," says Masao Koyama, Manager, Low Carbon Task Force at Mitsubishi Corporation.
In addition to CO2 mineralization and biochar projects, the facility's current portfolio includes the world's largest, premier DAC project under development by 1PointFive. This flagship DAC project is expected to capture up to 1 million metric tons of CO2 annually when fully operational—240 times more than any other DAC plant currently under operation or construction.
The facility will focus on serving companies with net-zero targets, a market that has doubled in size in the past year. As of today, companies with net-zero targets can engage with the facility through forward commitments to purchase carbon removal credits, which will be certified under leading global carbon standards such as the Verified Carbon Standard (VCS) and the American Carbon Registry (ACR).