By George Hope
We must rapidly reduce greenhouse gas emissions to tackle climate change, but scenarios show that we will also need Greenhouse Gas Removal (GGR). We need GGR technologies at scale – the sector needs to be capable of removing 83-169 million tonnes of CO2 every year by 2050 in the UK, according to the Climate Change Committee.
This presents an enormous challenge for this new industry, as chair Alyssa Gilbert of the Grantham Institute and CO2RE explained at a recent CO2RE event. There are barriers for the government and private sector to overcome to establish, develop and scale this new sector. It also presents a significant opportunity.
At the panel event hosted at Imperial College London, four experts discussed the balance of the role of government and the private sector required to deliver this ambitious GGR sector development.
The speakers were:
- Craig Paul Berry, Associate Professor in Economic Policy, Institute for Innovation and Public Purpose, UCL
- Duncan Preston, Business Development Manager, Mission Zero Technologies
- Sarmad Qureshi, Chief Business Officer and Co-Founder, CO2CO
- James Richardson, Chief Economist, National Infrastructure Commission.
Here are some key takeaways.
GGR provides a major opportunity for the UK economy
Because of the scale of Greenhouse Gas Removal needed, there is a major economic opportunity for the UK. James Richardson of the National Infrastructure Commission (NIC), referred to the NIC’s report on GGR, which estimates that this new sector could have revenues of £2 billion by 2030, and in the tens of billions by 2050.
The new GGR sector needs to be huge – the size of the water sector or the oil and gas industry, the panelists explained. Duncan Preston, Business Development Manager at GGR start-up Mission Zero Technologies, noted that 190,000 people are employed in the oil and gas sector in the UK, demonstrating the enormous potential for job creation but also providing a warning about the scale of re-skilling that will likely be needed.
The GGR sector is very small now compared to where it needs to be, and although the scaling up process will be challenging, it presents a huge capital market and investment opportunity. The UK already has a significant services industry. GGR presents an opportunity to add another arm to that, potentially by removing CO2 for other countries, Preston indicated. Even where GGR may be better done in other locations around the world, there are other trade opportunities, for example around technology innovation and deployment, and manufacturing. The UK can build on its successful history of selling ideas around the world, Richardson suggested.
There are benefits for GGR suppliers and innovators being based in the UK, the panel maintained, including its proximity to Europe with its Emissions Trading System, the potential for geological storage of CO2 in areas like the North Sea, and the relative consensus on climate change that exists across the political spectrum in the UK, unlike in many other countries.
Leadership is being shown by US, with incentives for the private sector being put in place by the Inflation Reduction Act. The UK can do more to help innovators through the ‘valley of death’, for example by providing appropriate financial instruments and greater infrastructure certainty, the panel agreed.
The private sector has a role to innovate and deliver major projects in GGR
The private sector is essential to scaling Greenhouse Gas Removal and will play the central role in innovating new solutions and eventually delivering major projects. In early stages, government needs to share technological and commercial risks with the private sector.
In the longer term, a fully functioning market with private sector players could emerge, and government can step back from being a counterparty, as explained by James Richardson.
Players in the private sector have taken the initiative as climate leaders which has led to technology innovation. Nonetheless, Sarmad Qureshi, Chief Business Officer and Co-Founder of GGR start-up CO2CO, questioned why government has been absent in providing standards, which has led to uncertainty.
An upcoming CO2RE event on Wednesday 8 February 2023 at the University of Oxford will explore some of these issues. The event, titled ‘Exploring risk and uncertainty in the new Greenhouse Gas Removal sector’, will explore how the new GGR sector should be structured to enable confidence and rapid growth.
Government must set standards and provide certainty to create the environment in which the new GGR industry can thrive
The government has an important role to play in getting the new GGR sector going.
The private sector needs clarity and certainty to scale up and deliver GGR. The government can help create that environment by demonstrating long-term commitment to growing the sector and providing a clear and stable policy environment. It can also help with setting standards on both the supply and demand sides. This is essential because consumers of GGR such as industry and financial players need to know that CO2 credits are reliable, and the public need to know that companies are undertaking activities that result in real benefits for the climate.
On the supply side, the government can oversee areas such as Monitoring, Reporting and Verification (MRV). Robust rules will allow the deployment and effectiveness of GGR projects to be tracked, providing certainty for buyers, investors and the public. In turn, this will help the industry to grow.
Government needs to provide financial and enabling support and create demand in the economy for GGR
Currently, there is no fundamental demand in the economy for Greenhouse Gas Removal. There is no marketplace where those who want to remove CO2 can pay removal companies to do so. The government could help create the demand for such a sector by requiring emitters to purchase high-quality offsets and mandating this to increase over time.
Furthermore, government needs to provide financial support, in the short- to medium-term, to help stimulate the fledgling industry and support innovation. Funding is critical to start-ups. Government is providing funding through its phased Greenhouse Gas Removal technologies competition, with £100m funding being allocated across new technology projects, including Mission Zero Technologies who were part of the panel.
Government has an enabling role to play – as Sarmad Qureshi pointed out, government can bring businesses and other parties together, facilitating better understanding and cross-fertilisation of ideas.
Government must also consider the distributional impacts of this new sector. For example, the agricultural industry may need to undertake removal to balance emissions, but this should not come at increased burden of farmers, or consumers, for whom food is a necessity.
Either the private sector or government are GGR customers
A government buying scheme will incentivise the GGR sector, Craig Paul Berry argued, and this is already the case for agricultural GGR. By government procuring GGR from the private sector on behalf of society, it can drive innovation and favour projects that provide public value. Under this system, the state is the customer rather than the polluter. The polluter still pays, but through taxation rather than directly to the GGR provider. Berry pointed to universities and the BBC as examples of public sector procurement that are socially and economically valuable.
Greenhouse Gas Removal may lends itself to a mission-based approach designed to cut across siloes in government and enable multi-faceted interventions, Berry explained. Clarity would be needed around objectives, such as when the mission has succeeded, and decisions such as whether certain GGR technologies would be better managed at local, national or international levels.
On the other hand, perhaps a better role for government is as a reliable rule-setter, with Richardson arguing that government is not a great procurer. In the longer term, there needs to be a market relationship between buyers and sellers. It is fairer for those responsible for emissions to pay, he argued, stating that the person who gets on a plane should cover the carbon costs, not the taxpayer. Markets efficiency grows with maturity.
The UK should keep its options open with a portfolio of GGRs
The GGR sector is going to be huge, meaning it is sensible at this stage to consider a broad and diverse portfolio of GGR methods and projects. Understanding the scope for innovation and improvement, and which techniques will work best in varied contexts, is a key part of the research aims of the CO2RE and the Demonstrator projects.
The UK should take a portfolio approach to GGR. Technologies that exist in small start-ups now might be the successful technologies we need to deploy, Richardson noted. This tells us that we cannot pick technologies yet and must maintain a portfolio. However, he did argue that the government will need to narrow down what the UK will focus on, because we will need to invest large sums into a relatively small number of technologies to bring costs down and get them to scale.
Two start-ups joined the CO2RE discussion, representing two different types of Greenhouse Gas Removal. CO2CO is an Imperial College start-up that grows micro-algae at scale (which removes CO2 from the atmosphere) and processes the carbon into biochar, offering durable sequestration. Their neat slogan is ‘Decarbonising the atmosphere, recarbonising the biosphere’. Sarmad Qureshi explained the importance of government considering the whole range of GGR: technologies are at different stages of maturity, so all need a fair chance to contribute.
The other start-up, Mission Zero Technologies, is developing direct air capture (DAC) technology that will recover CO2 from the air. Duncan Preston said that the start-up supports a portfolio approach and pointed out that all techniques require support and are complex, requiring power, science, infrastructure and logistics.
Public consensus around technologies that the UK invests in is vital – and Berry asked what happens if there is not consensus about investment in GGR. This is a key area of CO2RE research – find out more in this previous blog post by Rob Bellamy.
The UK is already taking an experimental approach, Berry said, but it needs to be more ambitious in investment to maximise the number of potential viable technologies.
This event and blog post form part of the work CO2RE is undertaking to further strategic discussions about the trajectory of the new Greenhouse Gas Removal sector, informed by the best available evidence and research. We are developing a portfolio of robust, implementable and equitable options for policy and governance, and supportive business models for sustainable GGR deployment.
Want to find out more?
- Watch the full event on YouTube
- Attend our upcoming event building on this conversation: ‘Exploring risk and uncertainty in the new Greenhouse Gas Removal sector’, 17:30-20:00, Wednesday 8 February 2023, Oxford Martin School, University of Oxford
- Register for our newsletter or get in touch to keep up-to-date with our work
This blog post is intended as a summary of some of the views presented during the panel event. The views stated here are not necessarily those of all members of CO2RE.