FEATURE: Public acceptance of CDR 'critical' to market success: Microsoft
Quantum Commodity Intelligence – Public acceptance of the need for carbon dioxide removals (CDR) technologies to meet climate goals is critical to the success of the sector, according to an executive from the biggest buyer of CDR credits in the market.
Ole Henrik Ree, industry lead at tech giant Microsoft, told a podcast on the CDR market released by the Oxford Institute for Energy Studies (OIES) on October 1 that in order for the sector to grow to the gigatonne scale that is needed the general public needs to support carbon removals.
"I think we need to tell these stories to the public. I think we need to work with the press and actually educate them that there is no scenario in which we can reach our climate goals that does not include carbon dioxide removals," he said.
"Getting the public behind all of this can very much make or break the industry at this early stage," he added.
Negative media
Ree noted that there are negative media stories about several CDR technologies, such as bioenergy and carbon capture and storage (BECCS), which has faced questions over whether or not biomass feedstocks are sustainably sourced.
He said that the industry needs to ensure that projects are backed by scientific certainty and that there is clarity that credits actually represent carbon dioxide removed from the atmosphere.
"I think we're at a critical tipping point for the industry. We need to get this right now. I'm super worried that projects will steam ahead and actually sell what I would call bad credits, credits that will later be discredited by the press as not actually being removals," Ree told the podcast moderator, OIES head of carbon management Hasan Muslemani.
"That would be super harmful for the industry right now … Because again, a backlash now would be devastating for the industry and we need to get it right immediately," he said.
He noted that the company's big BECCS purchases have been in Scandinavia, a region where Ree lives.
"Here in Scandinavia … there is a very, very long history of sustainable forestry related to the paper industry, meaning forestry that are really scrutinized, certified and following every principle for positive regrowth," he said. "We as a company, again, working with partners like Carbon Direct and others, have worked out our own set of criteria for the sustainable sourcing of biomass," he added.
Microsoft is by far the biggest buyer of CDR credits in the market – pre-purchasing almost 17 million credits out of over 17.5 million contracted between May and the end of August, according to analysis by Quantum last month in Carbon Insights.
New CDR deals
And since the start of September, the company has announced several other agreements to buy CDR credits, including separate deals for credits from enhanced rock weathering with US-based Lithos Carbon and UK-based Undo.
Ree said he thinks more companies will turn to removals in the future when they realise that there will be part of their carbon footprint that can only be covered by CDRs. "I'm absolutely confident that we will see an influx of way more buyers into this market as we move along. My hope is that all the companies that have made net zero pledges don't realise that they need to buy this in 2029," he said.
"I'm worried that there will be this tremendous market imbalance when all these companies suddenly realise that the only way for them to reach their published net zero target is by procuring CDRs and they figure that one out a year before their target date," he added.
Ree said it is a "big danger" for the sector if too many companies wait too long to enter the market, because by then it will be too late as projects won't have been built.
"I think actually having corporates going out there now, making those commitments now, getting these projects to FID [final investment decision] is crucial. So again, there is a sense of urgency now and it needs to start today, not in 2029," he said.
"I think a lot of projects are currently waiting for that final investment decision because they haven't sold credits yet. I really hope that we'll see more buyers coming into the market, putting up capital, actually committing to buy and getting these projects going," he added.
Currently BECCS and biochar make up most of the supply, mainly because those technologies have been easiest to scale, the Microsoft exec said.
But other technologies could rapidly develop, such direct air capture (DAC), to deliver "big volumes" to the market, he added.
Microsoft has bought a small amount of CDR credits from Switzerland-based DAC developer Climeworks at what Ree called a "pretty insane" price.
Support
But, he said, the company wanted to support the technology. "And what we've seen is that the capture medium, the technologies are developing at such a speed that this can really scale up way quicker than perhaps many thought".
Ree acknowledged that the CDR market is still in its "early days" and the company has to carry out much of its own due diligence on projects that it is considering pre-purchasing credits from.
"This isn't a liquid market yet, so we still have to spend a lot of time going into every single detail and aspect of the projects that we are engaging in. And we have said that we are willing to do that," he said.
The company is keen to share its buying experience with others looking to enter the market, but Ree admitted that the purchasing process takes a lot of work and commitment.
"So far it has been pretty challenging and it demands a lot of work and time and investment from us to actually really scientifically go through all the projects that we are procuring credits from," he said.
"Obviously we would like nothing more than the CDR market to become a liquid and functioning market where we could just go out to a marketplace and buy the credits we need. Right now that's not possible," he added.
Ree said he thinks that the CDR sector will "really scale" when it is a fully functioning liquid traded market, whether this is a private, government or regulated market. The details do not necessarily matter; "It just needs to be liquid," he said.