The carbon removal industry has grown steadily in recent years, powered in large part by purchases from major tech companies at premium prices. However, it continues to struggle with one of the most fundamental elements of a strong market: measuring and validating the value of its offerings.
That challenge started in the early days of nature-based offset schemes, often touted by oil and gas giants, but has persisted with higher-tech CDR companies selling removal services to Silicon Valley power players for whom carbon removal is a key element of decarbonization targets. (It’s a reality most recently illustrated by critiques of Running Tide, the ocean-based CDR startup with customers like Microsoft, that faced steep criticism over the validity of its approach and ultimately shut down.)
The industry is starting to emphasize monitoring, reporting, and verification (MRV)— including via the Frontier Fund’s standard offtake agreement, a handful of independent registries and protocols such as Isometric, and the the Carbon Removal Standards Initiative, an independent nonprofit organization working on creating independent standards for each carbon removal pathway.
Despite those efforts, however, MRV has remained decentralized and relatively uncoordinated, and industry advocates say it is holding CDR back from scale. In a memo released today, the Carbon Removal Alliance, a coalition of CDR companies, outlined specific actions the federal government should take to help the industry overcome a “significant gap” created by “uncoordinated, unclear, and ineffective” MRV.
The Biden Administration has already started to provide “an important backbone of support” via initiatives like the Carbon Negative Shot, and funding for national labs to work on MRV, the memo said. But it’s not enough.
“These government efforts, while welcome, fall far short of the significant challenges around carbon removal MRV,” it added.
Future administrations, if guided by the Alliance’s new policy map, will have their work cut out for them. The organization makes 12 recommendations that span at least seven federal agencies and include everything from additional funding for research to Congressional approval to create oversight bodies.
And the government’s role in MRV isn’t just about building trust in the market, the memo added. It’s also about the essential goal of getting costs down. By some estimates, the average cost of carbon removal (across pathways) is around $488 at present. The most expensive pathway remains direct air capture, at an average of $715 per ton.
According to CRA’s member companies, MRV currently makes up between 30% and 50% of that price.
The organization’s policy memo lays out specific actions the federal government should take in five areas of MRV, thereby expanding the potential market for carbon removal and bringing the technology down the price curve. These include the following:
Developing a roadmap to both identify where the most pressing scientific gaps remain, and to inform best practices. This roadmap would be the responsibility of the National Academy of Sciences, and should cover technical elements that can improve the quality of third-party standards.
Issuing guidance on minimum viable quantification standards that will underscore all future federal policies on carbon removal. This effort should be led by the White House Office of Science and Technology Policy, and the standards should become more stringent over time as science advances.
Establishing a standard data reporting package for publicly-funded projects that focuses on the minimum core data set required to evaluate projects. This effort too should be led by OSTP, and should specify pathway-specific reporting requirements. These wouldn’t apply directly to the private sector, but could be adapted for that use.
Publishing a biennial trends report, compiled by DOE. This report would outline trends that illustrate the progress and current state of the field, as well as the challenges and outstanding opportunities.
Sanctioning the creation of two new bodies focused on MRV for the sector. Congress should authorize an interagency governmental body, led by OSTP, to align MRV efforts across the federal government. Among other things, that body would be tasked with developing a government strategy on carbon removal MRV, to be updated every five years. Separately, Congress should sanction the creation of a private sector-led self-regulatory organization for MRV providers and registries, to create a code of ethics, licensing policies, and conflict of interest policies for CDR purchases.
The Carbon Removal Alliance’s memo doesn’t outline specific timeframes for these and other recommendations, but noted that their implementation is an “essential step for the continued growth of the carbon removal market.”
And while the industry is still in early stages — globally averaging two gigatons of removal a year, primarily from methods like planting trees — it’s expected to start growing rapidly, including in the United States, in the next few years.
As demand grows, CRA explained, the MRV gap becomes more of a barrier to the massive growth needed to meet global 2050 goals.
