The planet's carbon removal scarcity problem

The UNFCCC Paris Agreement commits 196 countries to limit climate change to “well below 2°C” and establishes an aspiration of limiting warming to around 1.5°C.

Assuming those countries most able to pay for emission reductions shoulder the burden then achieving the Paris Agreement implies that OECD and EU countries need to cut their net emissions by almost 90% by 2050.

Simply focusing on cutting emissions is not going to be enough. Many of the most important sectors of the economy (steel and aluminium manufacturing, and producers of chemicals and cement) are highly energy and emission intensive and are not going to be able to abate their emissions in the timeframe required.

Carbon removals will need to be ramped up significantly if the world is going to have any chance of meeting this goal.

There must be no room for ‘greenwashing’, not even a hint. High quality carbon credits have a pivotal role to play, and that means that all credits must represent additional permanent reductions in emissions.

What does that imply for future supply and price of carbon credits? How does the carbon credit industry need to evolve if credits are going to be 100% effective? Recently published analysis notes the stark challenge ahead for the world if it is to meet, and even go beyond this goal. It also highlights the opportunity for investors who can position for the significant growth required over the next decade and beyond.