We loved last Thrusdays's newsletter from van Osdol & Gambill in Keep Cool, calling out some of the problems we see in scaling up carbon removal:

But we disagree with a few of the points made and would like to propose an alternative. 

A warming climate is simple physics: an increase in greenhouse gas concentration in the atmosphere. Physics doesn’t care for Net Zero, Carbon Neutral, ICVCM or any specific implementation framework. 

If we’re serious about combatting climate change, we need to remain focused on bringing the parts per million (PPM) of greenhouse gasses down. 

There is no single or correct solution to achieve this. The dominant mantra of reduce now, remove later is just one approach.

Removing now while innovating to reduce later is a perfectly feasible solution. In fact, if it buys us time to avoid irreversible tipping points, it's the logical path. 

We don’t feel guilty saying you should pay to remove emissions right now. Do it. And show the world how you’re going to reduce over the next decade. 

We disagree on who should be held responsible for the current state of monopsony. Bold buyers of carbon removal are not the problem. Microsoft, Amazon, Google, Meta - they’re the ones using cash to carry the carbon removal industry right now. 

If they’re doing it to avoid being Big Bad tech, does that matter? Their cash gets the job done.

The real bad guys are those companies sitting on their wallets. We shouldn’t cast the first movers in a negative light; those who aren’t following are holding back the carbon market’s growth. 

Our favoured solution is moving away from a voluntary market to a hybrid-compliance version. Climate is a rare space where consensus can be found between competitors and between the private and public sectors. Rather than wishing away buyer clubs like the Symbiosis Coalition, we should be pushing them further to integrate into compliance systems on a multinational level - like with the EU ETS and their Greenhouse Gas Removal framework. 

Collaboration deepens the market, with the benefit for big tech that they can have a tick in regulators' good books for once. 

We won't reach gigatonne volumes in a voluntary system, so let's skip this chapter and move to the next. 

Another bug-bear is the fetish with durable CDR. CDR.fyi is a great resource, and we love the team there, but it tracks a small portion of today’s market . Excessive focus on durable purchases provides a skewed view of who is removing carbon from the atmosphere. (Nature-based is key—learn more here.)

Including nature-based solutions in the data is even more important in today’s political context. The Trump shadow is causing greenhushing, or greensliding; with companies going quiet or publicly stating a backward slide in the climate commitments. That’s positioning, not reality.

On the ground we see forward purchases for carbon removal in hyperscaling mode, and the majority of these deals are for nature-based removals not captured in the CDR.fyi data. 

To maintain momentum on our primary goal–reducing absolute PPM concentration–we need to show real market growth data to those with the capital to continue funding it. 

We’re strong proponents of practical over optimal. 

But MRV is not a trap. 

Venture funding shouldn’t be used as the metric of review for where money is being placed. Venture finance will only fund the MRV players, not the nature-infrastructure developers or innovative finance solutions. 

Instead, let’s track procurement volumes and net financing deployed across the capital stack. 

For this market to work, we must blitz-scale while blocking systemic risk from re-entering the nature-based market. Protecting the quality of nature-based credits absolutely requires monitoring and reporting technology. There are challenges in monitoring and reporting that we shouldn’t shy away from, and the tech is being built now to solve them.

If MRV is tomorrow’s problem, this is good news. Multi-year purchase contracts can be signed with MRV requirements mandated. The lag time between financing and credit issuance means MRV solution builders have a clear scope and timeline, along with a funding pot that can be used for financing. 

We need to scale and to ensure quality. Those two needs are not mutually exclusive, but mutually reinforcing. 

We think optimising for permanence is unhelpful. 

We also believe that future prices of carbon removal credits should be driven by calculated risk of reversal. 

We’re building a metric internally at Treeconomy to be able to quantify and track the risk of reversal on a per-project basis. It is a vital component to enable nature-based carbon removal and engineered carbon removal to be transacted together in a single market. 

One unit - 1 tonne of CO₂e removed from the atmosphere - transacted in a liquid market, with pricing based on an assessed risk of reversal. These could be bucketed by durability with different indices and prices based on how long that 1t CO₂e remains out of the atmosphere. 

A policy of enforced repurchase in the event of a loss is key to making this market work. The cost of replacement would be factored into the original price; cheaper credits would have a higher risk of reversal but would carry a greater likelihood of the buyer having to purchase again. A lower-risk credit may be more expensive upfront but much less costly over time. 

Financial additionality is not appropriate for the CDR market. 

The concept of additionality is vital, but the financial test for additionality is lazy and holds back potential impact. 

Financial additionality was a test used in voluntary carbon market 1.0, the Clean Development Mechanism. Carbon credits were issued to subsidise the development of renewable energy, so financial additionality was necessary and effective (does this project achieve the financial return necessary for investors to invest without this carbon credit subsidy? If no, issue credits 👏). 

We don’t have 30 years to wait for a large and rapid scale-out of carbon dioxide removal. This is a finance problem. We can’t rely on philanthropy–it hasn’t worked for the last two decades, and much has been removed with the hobbling of USAID–so we must design a system that suits the capital markets. 

We need to demonstrate a risk-adjusted return. This means we need sources of CDR that are profitable; the more profitable, the better. More profit = more money! More money = more CDR!!

Climate change is an economic disaster, so a service that actively mitigates this damage should be valued highly. Being a provider of CDR should pay handsomely, however the existing broken system that relies on financial additionality doesn’t enable profitability. 

Even better, we have the technology to test and prove true additionality. Once again, digital MRV is an enabler. To Verra’s great credit, their new VM0047 methodology for nature-based carbon removal projects has a much better framework for testing additionality using dynamic performance benchmarking. 

van Osdol & Gambil wrote a great piece, and we agreed with a lot of it. We disagree with some of it and think it's important to have this discourse now. 

The most important thing is to remind ourselves that the goal is to reduce PPM and review our actions accordingly. We are going to need loads of carbon dioxide removal, sadly. 1.5°C is gone, and we need to hold the line at 2°C. 

The amazing thing is that we have big companies putting money to work. We should celebrate this and then get back to work on making this 1,000X bigger. 

We can put humanity’s greatest tools to work–satellites, drones, cloud computing, AI, capital markets–to solve humanity's greatest problem. 

LFG.