Net Zero Investments Part 5: What About Removing Carbon from the Atmosphere?

“No problem is so complicated that you can’t make it more complicated” – Andrew Grove, Ex-Intel CEO and third employee

In this series we have looked at many different aspects of net zero investments:

• Part 1: The concept of net-zero provides a clear framework to structure climate-related investments
• Part 2: Net-zero investments provide a way of making wider ethical choices building on the success of the divestment movement.
• Part 3: Structuring thinking in terms of net-zero investments allows investors to consider the transition risks of moving to a net-zero world.
• Part 4: How fund managers and investment professionals are able to use the different net-zero target dates to build investment products to suit a range of clients.

Parts 2, 3 and 4 of this blog series have centered on companies and investments which emit large amounts of carbon dioxide. But the concept of net-zero involves balancing the rate of CO₂ emission and absorption.

The UN’s Intergovernmental Panel on Climate Change (IPCC) has recognised that the removal of carbon dioxide from the atmosphere by a range of means will play an important role in our attempt to limit global temperature rises to 1.5℃ above pre-industrial target level [1].

So the logical question to ask is: is it feasible to increase the rate of carbon absorption enough to offset the emissions by carbon intensive industries? Are industries such aerospace, oil and gas, and steel going to be let off the hook by being able to offset their carbon emissions?

Below we will run through a brief outline of some of the different methods of carbon removal currently available; as well as some examples illustrating the effectiveness of carbon dioxide removal relative to produce less emissions in the first place.

Methods of Removing Carbon Dioxide from the Atmosphere

Carbon dioxide removal (CDR) can be performed by a spectrum of techniques that range from purely natural processes to purely technological processes. The removal and storage of carbon by natural or technological processes is also referred to as carbon sequestration.

Harnessing Natural Processes

At one end of the spectrum are methods of carbon sequestration which rely purely on natural processes and once setup require relatively little in the way of continued human intervention. These solutions all rely on photosynthesis to remove the CO₂ from the air and bind the carbon in the form of organic compounds.

Reforestation is the most well known of these methods. Trees will need to be planted by the million, which are then left alone (or sustainably managed) to convert atmospheric CO₂ into complex organic compounds. These carbon rich chemicals are then locked away in the roots, branches and trunks of the trees.

Trees and plants actually do far more than just sequester carbon through storing it in their own biomass. They are able to help regenerate the soil around them to store even more carbon. Excess carbon which is drawn down into the tree’s roots is fed to microorganisms in the soil, which stabilise the carbon via a process called humification [2].

In fact it turns out that soil is a much larger carbon sink than trees and plants. Soil can hold 2,500 billion tonnes of CO₂, whereas plants, trees, and animal life combined only amount to 560 billion tonnes. By way of a comparison the atmosphere currently holds about 800 billion tonnes of CO₂ [3].

Other forms of natural carbon sequestration include regenerating peatland, coastal, and wetland ecosystems to absorb and store carbon [4].

Technological Methods

Purely technological methods sit at the other end of the spectrum, these methods principally look to capture large amounts of gaseous CO₂; and store it underground or under the sea [5, 6].

Direct air capture (DAC) is one example of a purely technological solution which uses (renewable) electricity to drive a reversible chemical process to remove CO₂ directly from the atmosphere. Once captured it can be stored or used in industrial processes [7]. 

An example of a hybrid natural/technological method is a process known as bio-energy with carbon capture and storage (BECCS), whereby biomass is burnt (trees, forestry waste etc.) to produce electricity, using very similar technology as a coal fired power station. The CO₂ emissions from the combustion process are then captured and purified. However, instead of being released into the atmosphere and the CO₂ emissions are placed in long term storage underground, typically in depleted natural gas fields [8].

Issues With Natural and Technological Carbon Sequestration

Both categories of carbon sequestration have their drawbacks. One of the primary drawbacks of land based natural methods is that they will compete with food production for fertile land, pushing up food prices and interfering with biodiversity. Natural methods also involve complex ecosystems and carbon uptake rates can be difficult to accurately assess over wide varieties of ecosystems and large areas.

With technological methods there are risks of unintended consequences. If, for example, the sustainability of the biomass sources for BECCS is not rigorously monitored then biomass growers might adopt harmful practices to boost production yields, potentially disrupting local agriculture or the soil’s natural carbon sequestration process.

Carbon Sequestration’s Time Will Come… Eventually

In terms of tonnes of CO₂, the potential for carbon sequestration is quite large. As an illustrative example, according to the IPCC Climate Change and Land Reportreport, if BECCS, reforestation, and afforestation (planting trees in barren land, usually to prevent desertification) were all sustainably implemented at scale they could remove up to a combined maximum of 30 billion tonnes of CO₂ per year combined [12]*. This is in comparison with total global CO₂ emissions of 36 billion tonnes of CO₂ per year in 2017 [9]. 

*to get this value we simply added the three values stated in the report, and assumed they were independent of one another.

However, this is a huge oversimplification of a very complex problem involving non-linear and interrelated systems. Forests take time to start to sequester carbon and reach their full carbon sequestration potential [10] whilst none of the technological methods are currently being implemented at a scale. For example, one of the largest BECCS projects in the world, the Drax power station in the UK, predicts they are still ten years from being climate negative [11]. Other issues also remain, for example, the continued deforestation of the Amazon means that any attempts to reforest other regions of the world are already starting on the back foot and, as mentioned above, there may also be unintended consequences for food supply.

The IPCC Climate Change and Land Report also states that potential consequences of the three carbon sequestration methods – BECCS, reforestation, and aforestation –  include: an extra 150 million people would be at risk of hunger; food prices would increase by 80%; and hundreds of millions of people at risk of undernourishment [12]. All unacceptable consequences that will hit the world’s poorest the hardest.

Therefore, we cannot rely on the quick fix of carbon sequestration alone and reducing CO₂ emissions will need to be prioritised in order to meet the net-zero by 2050 goal.

Essentially, by 2050 (or sooner) global emissions will have to fall far enough that carbon dioxide removal can be rolled out on at a sufficient scale so as to mop up the CO₂ emissions. But that those carbon sequestration schemes will hopefully be at suitable scales to mitigate the disastrous side effects.

Conclusion

Creating a net-zero world relies on balancing the rates of carbon emissions and absorption. There is a risk that some may look upon this simple statement and think that by increasing carbon absorption rates some of our most polluting industries can mitigate their emissions, either by natural or industrial means.

The rates of carbon absorption required to meet our current emissions are wholly unfeasible: there would be significant collateral damage and we cannot just turn on the taps and replant billions of trees etc. 

Therefore, the focus of net-zero investments must continue to be on emission reduction. These reductions are required until the appropriate carbon sequestration methods are in place and emissions can be absorbed at rates which have no major side effects. Then we get into the negative emissions territory, start to reduce the level of CO₂; in the atmosphere and the healing process can start.

References

1. https://www.ipcc.ch/sr15/
2. https://www.sciencedirect.com/topics/earth-and-planetary-sciences/humification
3. J. Schwartz, Soil as Carbon Storehouse: New Weapon in Climate Fight?, 2014, Yale Environment 360, https://e360.yale.edu/features/soil_as_carbon_storehouse_new_weapon_in_climate_fight
4. Nellemann, C., Corcoran, E., Duarte, C. M., Valdés, L., De Young, C., Fonseca, L., Grimsditch, G. (Eds). 2009. Blue Carbon. A Rapid Response Assessment. United Nations Environment Programme, GRID-Arendal, www.grida.no
5. https://www.theguardian.com/environment/2019/jun/27/uks-biggest-carbon-capture-project-is-step-change-on-emissions
6. https://uk.reuters.com/article/us-norway-ccs/norways-co2-seabed-storage-project-gets-boost-from-industry-eu-idUKKCN1VQ1SP
7. https://carbonengineering.com/
8. https://www.drax.com/press_release/drax-sets-world-first-ambition-to-become-carbon-negative-by-2030/
9. https://ourworldindata.org/co2-and-other-greenhouse-gas-emissions#how-have-global-co2-emissions-changed-over-time
10. Role of forest regrowth in global carbon sink dynamics, Thomas A. M. Pugh, Mats Lindeskog, Benjamin Smith, Benjamin Poulter, Almut Arneth, Vanessa Haverd, Leonardo Calle, Proceedings of the National Academy of Sciences Mar 2019, 116 (10) 4382-4387; DOI: 10.1073/pnas.1810512116
11. https://www.drax.com/about-us/our-projects/bioenergy-carbon-capture-use-and-storage-beccs/
12. IPCC, 2019: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems