Introduction

In today's rapidly changing climate landscape, the need for effective carbon removal strategies is more pressing than ever. In our latest podcast with Elisabeth Harding, we delve into the recent developments in EU policy surrounding carbon dioxide removal (CDR) and discuss the implications for businesses and the environment.

Elisabeth, who serves as the policy manager at the Negative Emissions Platform, gave us insights into the EU's commitment to carbon removal. The organisation represents various technologies such as direct air capture, bioenergy with carbon capture, and marine carbon removal. As Elisabeth explained, the EU is increasingly focusing on not just the policies at the EU level but also on national levels where significant advancements can be made.

"We have to be going to negative emissions if we want to have a stable and habitable planet for generations to come."

- Elisabeth Harding, Policy Manager at the Negative Emissions Platform

TL;DR

• The EU Scientific Advisory Report on Carbon Dioxide Removal (CDR) outlines nine key recommendations for policy improvements.

• There’s a strong need for separate targets for gross emissions reductions and carbon removals.

• The Clean Industrial Deal aims to boost the EU’s clean tech industry amid global competition.

• Integration of carbon removal into the EU’s Emissions Trading System (ETS) is essential for creating demand.

• Public-private partnerships and funding initiatives are crucial for advancing carbon removal technologies.

The EU Scientific Advisory Report

One of the main topics we explored was the recent EU Scientific Advisory Report on CDR. This report, developed over two years, offers a scientific foundation for advancing carbon removal technologies. It outlines nine key recommendations across policy, carbon markets, and governance.

The report also highlights the need for building CO2 infrastructure, which is critical for transporting and storing captured carbon. Elisabeth pointed out the importance of integrating carbon removal into the ETS, which covers a significant portion of the EU's economy. This integration is crucial for creating a demand signal for carbon removal technologies.

"The proof is in the pudding, and now it's really up to the EU to take this forward in the climate law."

- Elisabeth Harding

Implications of the Clean Industrial Deal

As part of our conversation, we also discussed the Clean Industrial Deal, which aims to position the EU as a leader in clean technology while addressing competitiveness concerns. The deal outlines various initiatives to support hard-to-abate industries in decarbonizing their operations.

With the establishment of the Industrial Decarbonization Accelerator Act, new opportunities are emerging to drive demand for carbon removal, particularly in challenging sectors that are traditionally hard to decarbonize. Elisabeth expressed optimism that these policies will help build a more robust market for carbon removal technologies.

Looking Ahead

As the demand is projected to rise, it has become clear that the next few years will be pivotal for carbon removal in the EU. Companies and stakeholders in the carbon removal space need to prepare for upcoming compliance markets and engage with the evolving policy landscape. Elisabeth emphasised the importance of starting small, encouraging companies to begin purchasing carbon removals to build experience and confidence ahead of more stringent regulations.

With the groundwork being laid now, it’s an exciting time for those invested in climate action. The consensus on the need for carbon removal is growing, and the focus is shifting from “if” to “how” and “when” these technologies will be integrated into broader climate strategies.

Conclusion

Our conversation with Elisabeth Harding highlighted the crucial intersection of science, policy, and technology in the realm of carbon removal. As the EU continues to refine its approach to climate action, it is clear that the path forward will require collaboration, innovation, and a steadfast commitment to achieving negative emissions. The future of our planet depends on it, and it is up to all of us to engage in this vital conversation.

Introduction

In the ongoing battle against climate change, nature-based solutions (NbS) have emerged as a crucial strategy for carbon removal and ecosystem restoration. By leveraging the natural processes of our planet, we can sequester carbon, restore biodiversity, and engage communities in meaningful ways. In our latest podcast featuring Kahlil Baker, CEO of Taking Root, we explore the importance of NbS, the differences between centralised and decentralised reforestation efforts, and the significance of community engagement in these projects.

TL;DR

• Understanding nature-based solutions and their role in carbon removal.

• The critical differences between centralised and decentralised reforestation efforts.

• The importance of community engagement in successful NbS projects.

• How economic incentives can align land use with environmental benefits.

• The role of local partnerships in building trust and ensuring project success.

Why Nature-Based Solutions Matter

Nature-based solutions are essential in the fight against climate change because they allow nature to do the heavy lifting. Through photosynthesis, plants remove carbon dioxide from the atmosphere and store it in their biomass. However, the conversation around climate change often focuses narrowly on carbon concentrations, neglecting the broader roles that ecosystems play in climate stabilization, such as regulating water cycles and cooling the planet.

"If we built machines that removed all the parts per million to where we wanted to 350 or whatever, I still think we'd have a climate crisis on our hands."

- Kahlil Baker, CEO of Taking Roots

Centralized vs. Decentralized Approaches

When it comes to reforestation, two primary approaches exist: centralized and decentralized. Centralized efforts often involve acquiring large tracts of land and implementing reforestation without local input. While this method simplifies logistics, it can ignore the socioeconomic realities of local communities. On the other hand, decentralized approaches empower local farmers and land managers to engage in reforestation on their own terms.

This decentralized model has proven effective in scaling restoration initiatives, as it taps into the existing knowledge and practices of local communities. By encouraging participation and collaboration, we can achieve not only carbon sequestration but also additional benefits that enhance local livelihoods.

Community Engagement: The Heart of Successful Projects

Community engagement is vital for the success of nature-based solutions. Engaging local stakeholders ensures that projects are designed with their needs and livelihoods in mind. By conducting community consultations, we can tailor restoration projects to align with local economic activities, whether it's cattle ranching, coffee production, or agroforestry.

"You want to create a program for it to be successful; a lot of people need to buy into it."

- Kahlil Baker

Building Trust and Ensuring Success

Trust is a fundamental component of successful community engagement. Working with local partners who understand the cultural context and existing social dynamics is crucial. These partnerships not only facilitate trust but also help navigate the complexities of local land-use patterns.

Moreover, it’s important to recognize that while carbon credits are a transactional unit, the broader goals of these projects often extend beyond carbon sequestration. Addressing biodiversity loss, improving local livelihoods, and enhancing ecosystem services are all critical components that can be integrated into carbon market projects.

Conclusion

Nature-based solutions offer a promising pathway in our fight against climate change, but their success hinges on understanding local contexts and fostering community engagement. By embracing decentralized approaches and building trust, we can unlock the full potential of NbS to create resilient ecosystems and empower communities. As we move forward, it's essential to remember that effective climate action requires not just innovative technology but also the wisdom and participation of the communities that live alongside nature.

Introduction

In the ever-evolving landscape of carbon markets, the definition and categorisation of carbon credits have become focal points for discussion. This episode features Donna Lee, co-founder of Calyx Global, to explore what carbon credits really are, their classification as credence goods, and the implications of this classification for the quality of carbon projects.

TL;DR

• Carbon credits as assets, goods, or commodities.

• Introduction of the concept of credence goods in relation to carbon credits.

• The unique characteristics of carbon credits compared to traditional commodities.

• The importance of quality in carbon projects and the role of ratings agencies.

• Discussion on the need for transparency and regulation in the carbon market.

What Are Carbon Credits?

Carbon credits are units that allow the holder to counterbalance the specific amount of carbon dioxide or other greenhouse gases. The debate surrounding whether these credits are merely commodities or unique goods garners significant attention. Donna emphasises that carbon credits possess unique characteristics akin to artisanal goods rather than being straightforward commodities. Each carbon credit is distinct, much like a snowflake, and comes with its own set of attributes and characteristics.

The Concept of Credence Goods

During our discussion, Donna introduced the term "credence goods," a concept that sheds light on the complexities of carbon credits. Credence goods are products where the buyer cannot easily assess the quality before or after purchase. In the case of carbon credits, buyers often lack the technical expertise to determine the actual impact of their investment. This asymmetry of information can lead to trust issues in the market.

"Carbon credits are kind of like this; they're an asset that a lot of people buy without really understanding what's behind it."

- Donna Lee, Co-founder of Calyx Global

Quality and Transparency in the Carbon Market

The conversation also touched on the critical issue of quality in carbon credits. The existence of various carbon crediting programs creates a landscape where differentiation is necessary. As Donna pointed out, Calyx Global acts as a ratings agency, helping to elucidate the differences between various carbon projects. This differentiation is crucial because, without it, buyers struggle to understand the value of what they are purchasing.

How Can We Improve the Market?

To enhance the quality of carbon credits and encourage more buyers to engage with the market, a multi-faceted approach is necessary. Here are some suggestions:

• Encourage collaboration among various stakeholders to ensure diverse perspectives and interests.

• Implement regulations to provide clearer standards for what constitutes a high-quality carbon credit.

• Foster transparency in the market, helping buyers to make informed decisions.

• Engage scientific communities to bring empirical rigor to the development and assessment of carbon credits.

The Future of Carbon Credits

The future of carbon credits hinges on our ability to understand and navigate their complexities. As the market matures, it is essential to address the challenges posed by information asymmetry and the varying quality of credits. By recognizing carbon credits as credence goods, we can better understand the implications for market structure and buyer behavior.

"If we want this to be a successful industry, there is some homework to do on fixing some of these things because lack of quality is really the main driver undermining this market."

- Simon Bager, Co-founder and CIO of Klimate

Looking Forward

As the carbon market evolves, it becomes increasingly important to recognise that carbon credits are not mere commodities but distinct assets with unique characteristics. Viewing them as credence goods offers critical insights into the need for rigorous standards, transparency, and effective regulation. With collaborative efforts and clear benchmarks, the market can enhance the overall quality of carbon projects, paving the way for more reliable and impactful climate solutions.

Introduction

Examining Europe’s role in scaling carbon dioxide removal (CDR), this episode focuses on its long-term regulatory frameworks, geographical advantages, and market dynamics. We explore the challenges CDR faces— from political opposition to compliance market integration— and the importance of high-quality standards in building a sustainable carbon removal ecosystem.

TL;DR

• The importance of Europe’s long-term planning and regulatory frameworks in CDR.

• Geographical advantages in Europe for implementing carbon removal technologies.

• Challenges faced by CDR initiatives, including political opposition and market structures.

• The potential benefits of integrating CDR into compliance markets.

• The necessity for high-quality standards in carbon removal technologies.

• Understanding the opposition to CDR from certain political and environmental groups.‍

Europe's Position in CDR Development

Europe is uniquely positioned to lead in the field of carbon dioxide removal. As Sebastian emphasises in the podcast, Europe has consistently prioritised long-term planning and predictability. This foundational regulation is crucial as we work towards scaling CDR technologies. While some areas of the U.S. may be moving faster, Europe’s methodical approach allows for a more stable development environment. One of Europe’s significant strengths lies in its existing industries and resources. For instance, the agricultural sector in Europe has established systems that can effectively utilise resources for carbon capture. Moreover, Europe boasts geological storage capabilities across interconnected markets, allowing for more efficient carbon storage solutions.

Challenges in CDR Implementation

Despite these strengths, challenges remain. Concerns persist about the feasibility of transporting across borders and the high costs of renewable energy in some regions, which complicate the scaling of CDR technologies across Europe. Moreover, some political factions, particularly those on the left, have expressed skepticism about CDR, viewing it as a potential excuse for delaying necessary reductions in emissions. As noted in the conversation, “There’s a weird sort of dichotomy around CDR.” This sentiment highlights the need for a unified understanding of CDR’s role alongside emission reductions.

Integrating CDR into Compliance Markets

Compliance markets present a vital opportunity for scaling CDR technologies. As noted in the discussion, much of the carbon removal activity occurs in the voluntary carbon market, which is growing while has inherent limitations in its capacity to drive substantial reductions. The European Emission Trading System (ETS), for example, was valued at €900 billion last year, showcasing the potential scale of compliance markets compared to voluntary ones.

“The voluntary carbon market can only get us to a couple of megatons, but compliance markets can achieve gigatonnes.”

- Sebastian Manhart, Senior Policy Adviser at Carbonfuture

However, there are concerns about the quality and permanence of carbon removal methods being integrated into these markets. The discussion offers insights from multiple perspectives. Sebastian emphasises the importance of establishing stringent and high-quality criteria to determine what qualifies as acceptable carbon removal, ensuring that only the most effective technologies gain access to these markets.

Similarly, Simon notes that many carbon dioxide removal technologies are still in their early stages—comparable to where wind and solar power were in the 1980s and 1990s. He also highlights the support of government policies and setting appropriate standards are crucial for the development of these technologies.

“We have to avoid picking winners, and that is rarely a good idea when you try to design something like this…ensuring we don’t set the bar the wrong way because we shouldn’t set it too high and exclude methodologies in one way but we also shouldn’t be too lenient.”

- Simon Bager, CIO of Klimate

Addressing Opposition to CDR

One of the more contentious topics was the political opposition to CDR, particularly from environmental groups that have traditionally championed emissions reductions. Both Sebastian and Simon recount their experiences with this opposition. Although CDR attracts significant attention, which prompts some to argue that too much investment is being directed towards it, they point out that there is a gap between “actually getting funding” and “getting potentially attention”.

To address concerns, Simon mentions that effective solutions underpinned by robust data is the key to help stakeholders understand that CDR works in tandem with emissions reductions instead of ignoring the climate crisis. Meanwhile, Sebastian stresses the importance of targeting the right audience. He has found that his efforts are more productively spent when focused on converting neutral individuals to supporters rather than trying to shift the opinions of those who are firmly opposed.

Looking Forward

The conversation highlighted the complexity and urgency of integrating carbon removal into Europe's climate strategy. Despite these challenges, both speakers remain optimistic about the future of CDR.

In conclusion, the journey towards effective carbon dioxide removal in Europe is filled with challenges and opportunities. By focusing on collaboration, quality standards, and clear communication, Europe can position itself as a leader in the global effort to combat climate change through innovative CDR strategies.

In their own words, those around us shared in a fun and oh so relatable way exactly why we do what we do. Their responses and fresh perspectives remind us of the meaningful impact we’ve delivered through carbon removal this year.

This is possible thanks to our clients, great group of partners and carbon removal suppliers, but also the support of those closest to us.

As the year comes to a close, we wish you moments to reflect on your own impact and celebrate your achievements. We hope you’re able to do the same.

Happy holidays from all of us at Klimate!

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What is net zero?

The term ‘net zero’ refers to a state where the amount of greenhouse gasses (GHGs) emitted into the atmosphere is balanced by the amount removed from it.

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Achieving net zero emissions typically involves: 

• Reducing emissions: This is done by adopting cleaner technologies, using renewable energy sources, and improving energy efficiency across sectors like industry, transportation, and agriculture.
• Carbon removal and offsetting: For emissions that cannot be eliminated, techniques like biochar production or carbon capture and sequestration are used to remove carbon from the atmosphere. Some entities balance out their own emissions by purchasing carbon credits to fund projects that reduce or remove emissions elsewhere.

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Net zero is also a target countries, cities, and corporations often set – typically aiming for around or before 2050 – in alignment with the Paris Agreement. The global goals of the agreement include limiting global warming to 1.5°C above pre-industrial levels.

Companies and any private target setters use net zero standard setting organisations like the Science Based Targets initiative (SBTi) and the Oxford Net Zero Principles to ensure the targets they set are good, timely, and achievable.

On the topic of net zero, it should be noted that the terms ‘net zero’ and ‘carbon neutral’ are often mistakenly used interchangeably. ‘Carbon neutral’ refers to when a company offsets the same amount of carbon emissions as they are responsible for. To be classified as a net zero company, however, a company must offset all of their carbon emissions – enough to no longer emit any GHGs at all.

Read more: ‘Carbon neutral vs net zero – what is the difference?’

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What is a net zero strategy?

A net zero strategy is a comprehensive plan that an organisation, country, or entity develops to reduce its GHG emissions to as close to zero as possible and balance out the remainder of their emissions through carbon removal. 

The overarching goal of a net zero strategy is to effectively contribute no additional emissions to the global atmosphere.

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A net zero strategy typically includes the following eight key elements: 

1. Emission reduction targets

A net zero strategy begins with setting specific, science-based targets for reducing emissions across the entire value chain (Scope 1, 2, and 3 emissions).

These targets are aligned with global climate goals, typically include both near-term (e.g. 2030) and long-term (e.g. 2050) goals, and often follow guidance from organisations like the Science Based Targets initiative (SBTi), which we will revisit later.

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2. Emission reduction across operations

Net zero strategies focus heavily on reducing emissions from direct operations (Scope 1) and purchased energy (Scope 2). They also address indirect emissions (Scope 3) from the company’s supply chain. Indirect emissions often account for the majority of a company’s carbon footprint, making them crucial to reduce.

A core example of emission reduction is switching from fossil fuels to renewable energy – e.g. solar, wind, or hydropower, or EV adoption. Transitioning to non-fossil energy allows companies to reduce their dependence on carbon-intensive power and minimise emissions from energy use.

Read more: ‘What are Scope 1, 2, and 3 emissions?’

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3. Carbon removal and offsetting

The primary goal of a net zero strategy is to reduce emissions as much as possible. However, every organisation has some degree of unavoidable emissions.

To counter these, companies use carbon removal techniques to remove carbon dioxide from the atmosphere. Companies also use carbon offsetting to fund projects that sequester emissions, enabling them to balance out their remaining emissions. 

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4. Stakeholder engagement and supply chain collaboration

To ensure the effectiveness of a net zero strategy, it is important to engage with a wide range of stakeholders, including suppliers, customers, and governments. Companies often work with suppliers to decarbonise their supply chains. They may also encourage customers to adopt more sustainable practices or use products designed to reduce carbon footprints.

Industry partnerships and other collaborative efforts can also help accelerate progress towards net zero goals.

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5. Reporting, monitoring, and accountability

A net zero strategy should always include clear mechanisms for tracking and measuring progress – e.g. regular emissions reporting and audits. This enables companies to compare with previous results and take action to improve their reductions over time.

Many companies use third-party verification to ensure that their emission reductions are accurate and in line with their targets. 

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6. Social and economic considerations

In addition to environmental goals, net zero strategies often take into account the social and economic impacts of transitioning to low-carbon operations.

This can include protecting jobs, supporting workers in affected industries and ensuring that the transition is just and equitable.

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Net zero strategies and the Science Based Targets initiative (SBTi)

Above, we mentioned the Science Based Targets initiative (SBTi). Net zero targets are often informed by guidance from organisations like the SBTi or the Oxford Offsetting Principles: global efforts that provide companies and organisations with a clear pathway to reduce their GHG emissions in line with climate science. 

The aim of the SBTi is to help companies and organisations set targets consistent with limiting global temperature rise to well below 2°C above pre-industrial levels, with efforts to limit it to 1.5°C, as outlined in the Paris Agreement.

The SBTi plays a crucial role in relation to net zero strategies. It offers a framework for companies and organisations to set science-based targets that align with achieving net zero by 2050.

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The SBTi informs companies on net zero through:

• Net zero standard: The SBTi developed the world’s first corporate net zero standard to ensure companies commit to reducing emissions at the necessary pace and scale to limit global warming to 1.5°C.
• Deep emission reductions: Focusing on making deep cuts in emissions across the entire value chain, the SBTi ensures that the majority of emissions are eliminated before relying on carbon removal or offsets for residual emissions.
• Clear target setting: Companies aligned with the SBTi’s net zero standard must set both near-term (2030) targets to drive immediate action and long-term targets (2050) to map out the pathway to net zero.
• Credibility and accountability: By aligning with the SBTi, companies are held accountable for making real, science-backed progress. This helps prevent greenwashing and keep net zero strategies transparent, measurable, and verifiable.
• Alignment with national and global goals: Countries set their own net zero targets. The SBTi helps companies align their corporate net zero ambitions with broader national and global climate goals.
• Industry-specific pathways: By providing sector-specific guidance, the SBTi enables companies across sectors to develop net zero strategies that are realistic and achievable for their specific context.

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In short, the SBTi is a helpful way for companies and organisations to create credible, science-based net zero strategies. It ensures net zero targets are not only ambitious, but also achievable and aligned with the latest climate science.

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Ensuring a net zero future

Alongside guidance from organisations like the Science Based Targets initiative (SBTi), net zero strategies are vital in addressing and preventing the worst impacts of climate change and creating a more sustainable, resilient, and low-carbon economy.

When it comes to achieving net zero, reducing your emissions is an important and necessary step in the right direction. However, there is growing consensus that reduction is no longer enough to stay within the goals set forward in The Paris Agreement. 

To truly reach net zero, companies must offset any remaining greenhouse gas emissions through effective carbon removal. Although this can be challenging, understanding and accessing reliable carbon removal options is key to meeting these climate commitments.

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Understanding carbon offsets

When discussing carbon offsets, it’s essential to distinguish between two primary categories: carbon avoidance and carbon removal.

Carbon avoidance projects aim to reduce future emissions. Examples include protecting forests from deforestation, developing renewable energy sources like wind or solar, and introducing energy-efficient technologies such as clean cookstoves. These initiatives are beneficial, but they don’t actually remove existing greenhouse gases (GHGs) from the atmosphere; they only prevent additional emissions from occurring. As a result, the net emissions remain the same, and no negative emissions are generated.

Carbon removal methods, on the other hand, actively extract GHGs from the atmosphere, resulting in negative emissions. This can include technologies like Direct Air Capture (DAC) or nature-based solutions like reforestation.

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Key Differences between avoidance and removal:

• Carbon Avoidance prevents future emissions, while Carbon Removal extracts existing CO₂ from the atmosphere.
• Carbon avoidance helps slow down the accumulation of CO₂, whereas carbon removal actively reduces the total atmospheric concentration of CO₂.
• Both are crucial for addressing climate change, but removal is particularly important for long-term goals like reaching net zero and reversing global warming.

The critical advantage of removal methods is that they address existing emissions, making them more effective for companies aiming to achieve Net Zero. This is the the only pathway to stall warming, as they tackle previous and current emissions that are already warming the climate.

On the other hand, recent news has highlighted issues with avoidance-based credits for lacking quality, integrity, and additionality. This clouds the overall integrity of these types of programs due to inability to measure baselines and prove their additionality. With these issues in mind, companies that hope to avoid future risk and remain ahead of the curve must invest solely in removals.

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Taxonomy of carbon credits.

The difference between the majority of carbon credits is whether they remove or avoid carbon. However, carbon removal credits actually differ in many different ways. The variations in method, storage location and type, and climate all affect the way and length of time carbon is stored, or their risk of re-releasing that carbon back to the atmosphere.

Short-term vs. long-term carbon removal

Removals can be further categorised based on their permanence—whether the removed CO₂ is stored for the short term or the long term. Long-term removal methods, which often have a permanence of hundreds to thousands of years, are essential for tackling the long-lasting impact of existing emissions. These methods are more aligned with emerging regulations and the Science Based Targets initiative (SBTi), which increasingly require the use of long-term removals to substantiate Net Zero claims.

Why shift towards permanent carbon removal solutions?

The Oxford Offsetting Principles emphasise the need to transition gradually but steadily towards permanent carbon removal solutions.

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“An immediate transition to 100% carbon removals is not necessary, nor is it currently feasible, but organisations must commit to gradually increase the percentage of carbon removal offsets they procure with a view to exclusively sourcing [permanent] carbon removals by mid-century.”- Oxford Offsetting Principles

This transition involves two key shifts:

1. From avoidance to removal: Avoidance methods, while useful, do not contribute to negative emissions and are becoming less favoured as regulations tighten. As we move forward, the focus should increasingly be on removal strategies that directly counterbalance emissions.
2. From short-term to long-term removal: Long-term solutions provide a more reliable and permanent solution to GHGs, ensuring that emissions are not only offset but effectively neutralised for the foreseeable future.

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Challenges and the path forward

Transitioning from avoidance to removal, and from short-term to long-term removal, is challenging and cannot happen overnight. The carbon market must rapidly scale up removal technologies to meet the growing demand for permanent solutions. At the same time, companies must be proactive in aligning their carbon offset strategies with upcoming regulations, which are not expected to allow the use of avoidance credits for Net Zero claims.

The key takeaway is that while avoidance projects have played a role in reducing potential future emissions, they do not address the urgent need to remove existing GHGs from the atmosphere. For a credible path to Net Zero, the focus must shift towards removal methods, particularly those that offer long-term permanence. This approach will ensure that companies not only meet regulatory requirements but also contribute meaningfully to the fight against climate change.

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