International carbon markets for carbon dioxide removal

Abstract

International carbon markets are potentially a very powerful tool for mobilizing carbon dioxide removal in line with Paris Agreement ambitions to limit global warming to well below 2°C. This requires reaching global net-zero emissions between 2050 and 2070. Yet, carbon market regulators have not approached removals in a systematic manner. This review assesses the highly fragmented treatment of removals under compliance and voluntary carbon markets, including baseline, credit and cap-and-trade systems. The Kyoto mechanisms and the large voluntary carbon market standards have long focussed on biological removals without inherent storage permanence and only recently started to develop methodologies for removals with geological storage, mineralization or biochar. Driven by high prices for credits from emerging removal technologies and advance market commitment initiatives targeting high permanence removals, various newcomers in voluntary markets are currently establishing their own approaches for generating removal credits. However, they disregard key concepts safeguarding market quality such as additionality, which risks triggering scandals and tainting the entire market for removal credits. Given the diversity of credit prices spanning three orders of magnitude from 1 to 1000, as well as of volumes ranging from a few hundred to tens of millions of credits, the current “gold rush” atmosphere of removal markets needs to quickly be replaced by a coordinated approach, ensuring credibility, and enabling removals to play the required role in reaching global net zero.