Carbon Removal Canada - CDR Policymaker Interview

Today’s interview is with Tim Bushman, Director of Policy and Research, Carbon Removal Canada

What is Carbon Removal Canada?

For those unfamiliar, what is Carbon Removal Canada, and how does it uniquely contribute to the carbon removal ecosystem?

Carbon Removal Canada is an independent non-profit accelerating the scale-up of innovative carbon removal technologies by advocating for policy that enables responsible deployment, producing evidence-based research and analysis, and connecting the right information to the right people. In short: Our organisation seeks to build the policy and regulatory conditions that will be needed to support the carbon removal industry in Canada.

Strategies

Carbon Removal Canada emphasizes the need for rapid and responsible scaling of carbon removal solutions. What strategies are being implemented to ensure both speed and responsibility in this scaling process?

While the speed of deploying carbon removal technologies and other climate solutions is important to help address climate change, it cannot come at the expense of scientific integrity and social license to operate. Quality before scale matters for project development. This is especially true for carbon removal given that we are building a new global industry that is still in a nascent stage, so we need to try and get this right from the start. To accomplish this, society will need to continue to push the boundaries of scientific and technological advancements, design the requisite supportive policy and regulatory frameworks, and build a broad coalition of political champions and stakeholders through education and awareness to promote public trust in the industry, among other factors.

There are multiple strategies to promote the rapid and responsible scaling of the carbon removal industry. To promote speed: We need to construct innovative financing models to get early-stage projects built given that many of these technologies may be unknown to traditional financing bodies and/or carry too much perceived project execution risk. The voluntary carbon market has been the major conduit to direct climate finance toward carbon removal projects to date, which has been driven by corporate leaders like Microsoft. Other private sector-led actions such as the formation of advance market commitments like Frontier have also created critical funding opportunities for carbon removal companies. Government-driven actions such as enacting investment and production tax credits, launching procurement programs, and beginning the process of integrating a suite of carbon removal technologies into compliance carbon markets are also creating new opportunities for industry to access funding support and get projects built. These are the types of funding support vehicles that we work on and advocate for at Carbon Removal Canada.

To promote responsibility: We must ensure that the industry has robust protocols or methodologies in place to ensure that developers follow a common set of rules for their specific project type within both voluntary and compliance carbon markets. For example, in Canada the federal and provincial governments have been developing protocols for certain carbon removal technologies to help establish rules and guardrails for project developers. There must also be specific requirements for measurement, monitoring, reporting, and verification (MMRV) within protocols to ensure that a project is actually delivering on its claims of removing CO2 from the atmosphere on a net life cycle basis. Other efforts to promote responsibility include (but are not limited to) direct involvement of local and Indigenous communities across the full project life cycle to include equity positions, full transparency in project outcomes that are validated by independent third-party auditors, general education and awareness campaigns for the public and other stakeholder groups, and continuous and collaborative research efforts involving the public sector, private industry, academia, and the philanthropic communities.

Stakeholders

The organization advocates for inclusive policies and innovations. How does Carbon Removal Canada engage with Indigenous communities and other stakeholders to ensure inclusivity in carbon removal initiatives?

We see ourselves as conveners of different stakeholder groups to promote inclusivity in the carbon removal industry. While we are not project developers ourselves, we can encourage inclusive and responsible project development activities by creating space for Indigenous leaders and other stakeholders to interact directly with developers through events or publishing resources on our website. For example, we held a workshop last year on centering Indigenous leadership and community involvement in the carbon removal industry, and also published a related report on our website.

CDR Dashboard Tool

With the launch of the new CDR dashboard tool, what insights have emerged about Canada's carbon removal landscape, and how might this tool influence policy and investment decisions?

We are aiming to publish the CDR dashboard tool this summer and are excited about its launch. The purpose of the tool is to provide critical market insights and project-level data about the carbon removal industry in Canada. Among the biggest insights that have emerged about Canada’s carbon removal landscape is the quiet proliferation of companies and projects taking place across the country. We are now tracking nearly 100 carbon removal companies and value chain partners in Canada across the full suite of technologies.

While this growing pipeline of homegrown Canadian companies is encouraging, we now need to create the policy and regulatory conditions for those companies to remain in Canada and get projects built. Although the project pipeline is still emerging, there are more than two dozen carbon removal projects in Canada that are either operational, planned, or have concluded. We hope the dashboard will provide transparency around this growing industry and demonstrate that Canada is open for business and ready to provide support for this critical net-zero industry.

Working With the Canadian Government

Carbon Removal Canada has highlighted the importance of government procurement in scaling carbon removal. What recommendations have been made to the Canadian government to enhance procurement strategies?

Across all the different policy levers available to support the industry, government procurement of carbon removal services is perhaps the most timely and significant option given constraints currently facing carbon markets. It can help create a sustained demand signal beyond what the voluntary carbon market can offer while laying the groundwork for carbon removal integration into compliance carbon markets and other regulatory schemes in the future.

However, national governments alone are unlikely to scale the carbon removal industry to the necessary level for material climate impact. Additional funding that national governments can crowd in will need to come from the private or other public sector entities.

We published a report last year that offered numerous recommendations to the Government of Canada on design considerations for its carbon removal procurement program. At a high level, those recommendations included:

1. Programs should establish a focused mandate to help guide implementation and define successful outcomes. It is essential that interested parties first determine the problem they are trying to solve with carbon removal procurement: is it to make net-zero claims, to support the most promising innovations or to maximise co-benefits? These objectives are possible through targeted procurement, but a focused programmatic mandate is necessary to set realistic expectations and evaluate outcomes over time.
2. Programs should consider planning procurement through a balanced portfolio of credits from carbon removal projects to hedge against a variety of risks and support innovation across the industry. Many buyers of carbon removal tend to purchase credits through a portfolio approach. In practice, that means choosing from multiple carbon removal methods and, within each method, supporting multiple suppliers where possible. A diverse or balanced portfolio approach can reduce overall exposure to project delivery and pricing risks, especially given the possibility of method-specific bottlenecks emerging in the future as the industry scales up. Balanced portfolios can also maximise learning and knowledge creation across the spectrum of carbon removal methods, which could feed into industry advancements, such as developing formal standards and protocols.
3. Programs should define clear roles and responsibilities for all participating entities to promote administrative efficiency and engender cross-cutting knowledge benefits. In general, programs should select a purchasing model that is familiar to administrators and simplifies the procurement process to make it easier for as many individual departments or teams as possible to participate. Programs should then choose specific administrator(s) to streamline program operations and execute funding actions. Ultimately, implementation considerations will need to be tailor-fitted to the unique context of the programs.
4. Programs should create robust eligibility and scientific criteria to help ensure project quality and adherence to established requirements. Program funds should focus on supporting high-quality carbon removal projects based on scientific merit and other performance standards, and should prioritise permanent carbon removal if compensation claims are made for fossil-based CO2 emissions.
5. Programs should define a preferred contracting method that is best suited to the procurement of carbon removal services. Once qualified suppliers are identified through the chosen procurement process, credits from carbon removal projects can be purchased through mechanisms such as pre-purchase commitments and offtake agreements depending on risk tolerance.
6. Projects should ensure adherence to quality standards. Proper industry standards, project-specific protocols, and measurement, monitoring, reporting, and verification (MMRV) plans are foundational to the integrity of the carbon removal industry and the need to promote quality before scale. While standards can establish an overarching governance framework to help define project quality, project-specific protocols must also be in place to respect the nuances of different carbon removal methods. MMRV plans are central to ensuring that a carbon removal activity has occurred and may serve as a de facto transaction receipt for the marketplace. Programs should prioritise suppliers that have robust MMRV plans.
7. Programs should involve local communities across all dimensions of project planning and implementation. Carbon removal projects offer a unique opportunity to not only address climate change but also to generate significant community co-benefits, ranging from job creation to improved public health. At the time of procurement, programs should request suppliers to articulate their anticipated community co-benefits and monitor progress through the requirement of a formal community benefits plan and agreement.
8. Programs should commit to rigorous performance evaluation and reporting. This would entail the need to set clear metrics, establish baselines, and define targets to help ensure accountability and transparency.

Unique Advantages

Considering the global competition in carbon removal technologies, how is Canada positioned to lead in this sector, and what unique advantages does it possess?

To start, Canada has a lot of ‘dumb-luck’ attributes that can position it to be a global leader in carbon removal including its extensive land area (second largest country in the world), longest coastline on Earth, rich natural resource base, considerable geological storage potential, bounty of clean energy, and a skilled workforce. Canada is very fortunate in that regard. Canada also has a host of national and subnational policies and regulations to support the carbon removal industry already in place including a fee on carbon pollution from industry (and associated carbon pricing systems), an investment tax credit that supports direct air capture and bioenergy with carbon capture and storage projects (including a provincial grant program in Alberta that also supports these same project types), government procurement program for carbon removal, and regulatory frameworks for CO2 storage in the subsurface in select provinces.

Within the industrial carbon pricing systems, Canada has a federal compliance system that recognizes direct air capture as a qualifying project type that can generate compliance-grade offsets for emitters to use to meet a portion of their compliance obligations, while Alberta and British Columbia have provincial systems that allow for direct air capture and certain other carbon removal project types to generate offsets for compliance purposes. Notably, the newly elected Carney government has signaled an intention to further support the carbon removal industry, which is exciting and favorable for our industry.

Policy

The organization has been active in policy advocacy, including suggestions for the Canadian Greenhouse Gas Offset Credit Market. What specific changes are being proposed to support carbon removal technologies?

Industrial carbon pricing systems are driving a majority of emission reductions in Canada, some of which allow for the use of offsets as a compliance option if protocols exist for any given project. For the sake of expediency, the Government of Canada should approach the protocol development process for carbon removal projects through an adoption-first exercise whereby it takes offset protocols that have already been developed in the voluntary carbon market and (eventually) through the EU Carbon Removal and Carbon Farming program and either use those outright to define project eligibility or make any necessary refinements to those existing protocols for formal integration. A concerted effort should also be made to harmonize carbon removal project eligibility and quality standards across the different carbon pricing systems in Canada where possible to promote market standardization.

Challenges

What's the biggest challenge facing CDR’s nature-based/ science-based solutions, and what is required to scale and solve them in 2025?

Across all carbon removal project types, the biggest challenge facing the industry is demand creation. Additional non-mandatory demand drivers (those that do not guarantee long-term, sustained demand for carbon removal) to further support the industry could come in the form of strategies such as advance market commitments, government procurement, integration into compliance carbon markets (noting that compliance markets require emitters to manage their emissions in some manner but does not compel them to directly support carbon removal for compliance purposes), and using carbon removal as a compliance option for carbon border adjustment mechanisms.

However, scaling the carbon removal industry to its full potential will likely require evolving the demand signal from voluntary to mandatory support for the industry that provides a large and sustained demand signal through regulatory compulsion. Mandatory demand drivers could come in the form of updated corporate net-zero standards that require the use of carbon removal to help meet corporate climate targets, and novel regulatory schemes such as carbon takeback obligations that require a certain portion of unabated emissions to be compensated for by carbon removal.