Picture a giant bathtub with greenhouse gases (GHGs) pouring in from the taps and draining out at the bottom. Right now, that tub is dangerously close to overflowing and the plug is stuck.

The Paris Agreement’s goal is to turn the taps down and take the plug out, keeping global warming below 2℃ compared to pre-industrial levels and hopefully closer to 1.5oC. This is referred to as balancing GHG emissions sources and sinks, or net zero emissions.

Simply turning the tap off or reducing the flow isn’t enough. We need to start pulling the plug out and fast. Enter CO₂ removal (CDR), the pathways which put the ‘net’ in net zero emissions. As lawmakers scramble to define what qualifies as truly net zero, businesses grapple with how to measure progress and markets try to find their footing, we find ourselves at a critical crossroads.

Durable CDR encompasses a range of techniques that can store carbon for centuries or even millennia. Examples include bioenergy with carbon capture and storage (BECCS) and direct air carbon capture and storage (DACS) in geological formations. Also, atmospheric CO₂ integrated into construction materials, biochar made from waste biomass, and enhanced rock weathering – a process that accelerates the conversion of atmospheric CO₂ into carbonates and bicarbonates in the soil.

These integrated and sometimes referred to as technological approaches allow for CO₂ to be removed from the atmosphere and stored for at least 100 years.

How do carbon removal markets work?
Carbon markets operate as a system where companies and individuals can purchase carbon credits to compensate for carbon emissions. There are many players in the market. Here’s an overview of the key parts of carbon markets:

• Projects which remove GHG emissions and are issued carbon credits, where each credit typically represents 1 tonne of CO₂ or equivalent GHG.
• Verification of the projects after the removal has occurred by independent third-party auditors, known as validation and verification bodies (VVB), who ensure the project has followed the rules set by the carbon-crediting programme.
• Issuance of the carbon credit by carbon-crediting programmes, also called carbon standards, and publication of this issuance into a public registry.
• Market intermediaries, such as brokers, exchanges and online platforms, which facilitate the buying and selling of credits. They connect credit suppliers with buyers and may provide additional services such as project vetting.
• Buyers, such as companies, organisations or individuals purchasing credits, who are essential to provide the climate finance. Motivations can include corporate social responsibility, marketing, or preparation for future regulations.
• Retirement of a credit once it is used. Credits are ‘retired’ and cannot be resold. This ensures each credit is only used once. This retirement is published in the carbon-crediting programme registry, see here.
• Finally, buyers often report their activities in sustainability reports or carbon disclosure initiatives.

Diving deeper into the issuance of credits
Issuance under a high-integrity carbon standard or carbon-crediting programme, such as the Puro Standard, plays a pivotal role in how the market works. The foundations of a carbon-crediting programme are its methodologies, the set of rules the projects must follow. These rules include carbon-accounting formulae to establish the amount of CO₂ removed and stored, and rules to ensure the environment is protected, so they must be rigorous and science-based.  

Methodologies are co-created with scientific experts and are approved by the Independent Advisory Board through a clear and transparent process.

Durable CO₂ removal encompasses a range of techniques that can store carbon for centuries or even millennia – examples include bioenergy with carbon capture and storage and direct air carbon capture and storage in geological formations.
 

Defining net zero emissions
The world has started to discuss and agree on how to define net zero emissions in legislation. We see progress in three main areas.  

First, on the rules that projects must follow. The United Nations, European Union (EU), UK, Canada, Japan, Australia, to name a few, are discussing and agreeing the quality criteria which CO₂ removal needs to meet. The Integrity Council for the Voluntary Carbon Market (IC-VCM), a voluntary rule-setter, also provides guidance on the quality of carbon credits and is assessing many carbon-crediting programmes and their methodologies. We welcome these initiatives and ask them to set a high-quality benchmark for CO₂ removals.

Second, we see governments and voluntary rule-setters looking at marketing and communications of environmental claims in order to protect consumers. We are watching the consultations from the Voluntary Carbon Market Integrity Initiative (VCMI), the discussions and research from the Science Based Targets Initiative (SBTi), as well as the discussion on the EU Green Claims Directive on how corporates can use carbon credits.  

We call for clear guidelines which will enable companies to participate in voluntary carbon markets as a complement to their own mitigation activities. Neutralisation milestones on the pathway to net zero emissions are essential to help scale demand for CDR.

The third area of progress is compliance markets. Some markets already accept certain forms of durable carbon removal, and Japan’s announcement this year to include durable CDR in its emissions trading system is a welcome step. The Carbon Offsetting & Reduction Scheme for International Aviation (CORSIA) is an example of where we see voluntary and compliance carbon markets coalescing, as carbon-crediting programmes are submitting their programmes for assessment to become CORSIA eligible.  

We already see the UK consulting on this issue, and we look to the compliance markets of California, the US, and British Colombia in Canada that have already included durable CO₂ removal. Further building out the role of carbon removal within emissions trading systems this decade is essential. However, the carbon price from compliance carbon markets is often too low to incentivise these activities, so additional measures will be required to make the business case for investment.

We recommend that governments support CDR in both voluntary and compliance carbon markets, as this dual strategy will be crucial in building the necessary capacity in the coming years. Engaging with voluntary carbon market participants, such as Puro.earth, can help leverage existing infrastructure and ensure the delivery of high-quality, carbon removal credits in a swift and robust manner.

Sometimes when in the middle of a key political moment, we don’t have time to realise where we are and what we are building. Here, we recognise that we are now defining net zero emissions in legislation. This is a great opportunity.  

Urgent action is needed to accelerate CDR and achieve the Paris Agreement’s goals. Governments must act now to define net zero emissions in legislation, focusing on three key areas: establishing rigorous certification criteria for CDR, creating clear guidelines for environmental claims, and integrating CDR into compliance markets.

We call on policymakers to support both voluntary and compliance carbon markets, leveraging existing infrastructure to deliver high-quality carbon removal credits. While CDR is essential, it must complement, not replace, economy-wide emission reduction efforts. Clear rules from voluntary rule-setters are needed to support the growth of durable CO₂ removal on the pathway to net zero emissions. This action is needed now.    

The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.

• Further reading: ‘Global carbon pricing revenues hit record level but ‘still too low’ says World Bank’. Carbon pricing revenues reached a record $104bn last year, up from $95bn in 2022, but prices remain too low to meet the Paris Agreement goals, according to a recent report from the World Bank.
• Reducing CO₂ must remain the priority for policymakers; removing it from the atmosphere and permanently storing it can only complement decarbonisation, not replace it. Policy expert with climate advocacy organisation Carbon Market Watch Fabiola De Simone explains.