Opinion | Advance Market Commitments Worked for Vaccines. They Could Work for Carbon Removal, Too.
Through “advance market commitments,” we can incentivize the development of transformative carbon removal approaches.
To avoid the worst effects of climate change, most climate models agree that it won’t be enough to just reduce emissions. We’ll also need to permanently remove huge amounts of CO2 already in the atmosphere — five to ten billion tons per year by 2050, roughly the equivalent of the United States’ annual emissions.
We are not at all on track to do this. To date, less than 10 thousand tons of CO2 have been permanently removed from the atmosphere — one million times short of the scale needed.
While we have some ways to capture carbon, such as planting trees or soil carbon sequestration, these solutions present a number of challenges. They’re not permanent (forests can easily burn or be cut down), and they’re hard to manage and measure. Even if you believe these are solvable problems, we’ll still run out of arable land long before we’d be able to plant enough trees to meet the need.
In short, we need a gigaton-scale portfolio of permanent carbon removal solutions, and those solutions don’t yet exist. The technology that exists is nascent at best. A growing number of innovative new carbon removal approaches are being tried — from using giant fans to pull CO2 out of the air, to growing kelp in the open ocean and then sinking it, to turning agricultural waste into bio-oil and putting it back underground. But it’s early days, and it’s not yet clear which approaches will be viable, let alone scale quickly.
A key reason permanent carbon removal is behind is that there has been legitimate uncertainty about whether anyone will pay for it. New technologies are typically expensive at first and get cheaper as they scale. Today, carbon removal solutions face a chicken-and-egg problem. As early technologies, they’re more expensive, so they don’t attract a critical mass of customers. But without wider adoption, they can’t scale production to become cheaper.
The uncertainty is particularly large for carbon removal because potential purchasers do not currently have a direct motivation to buy it. Governments and companies might consider carbon removal to fulfill their net-zero emissions pledges, but there are cheaper options that satisfy commitments as they are written today. So even though permanent carbon removal is critical to meeting climate goals, current guidelines do not explicitly reward it.
Carbon removal is thus in urgent need of a bold assist — and an “advance market commitment” could be the solution. This approach, in which money is provided to guarantee a market for a product, is modeled after a program successfully piloted a decade ago that incentivized the development of vaccines for poor countries at a time when pharmaceutical companies weren’t sure that countries could pay for a large volume of vaccines if they were developed.
In the pilot AMC for vaccines, governments and philanthropists pledged to spend $1.5 billion to subsidize the purchase of pneumococcal-vaccine doses if pharmaceutical companies could produce it at low cost. Hundreds of millions of vaccine doses were purchased and distributed throughout the world, accelerating the vaccine rollout by five years and saving an estimated 700,000 lives.
An AMC for carbon removal of $1 billion or more could similarly provide a critical demand signal to scientists, founders and investors, giving them the confidence needed to begin building now.
Here’s how it could work. Companies and governments with net-zero pledges could fund the AMC by formalizing and pooling their financial commitments to buy carbon removal over a specified period of time — essentially turning ambiguous net-zero commitments into net-zero contracts to buy carbon removal. The AMC, run by technical experts acting on behalf of contributors, would buy carbon removal from high potential companies. When tons of CO2 get removed, the AMC would pay suppliers and issue credits back to buyers.
A large AMC for carbon removal would be transformative. Large contracts to purchase frontier carbon removal send a much stronger market signal to entrepreneurs and investors than fragmented companies making net-zero commitments, where innovators face substantial uncertainty about how the commitments will be met and whether the companies will choose to invest any resources in permanent carbon removal as opposed to other strategies.
An AMC has the further advantage that the demand signal can be sent now, without needing to pick a winning technology. A diverse set of technologies can be developed, while incentivizing inventors to meet rigorous standards that ensure they deliver real, permanent carbon removal.
The AMC would thus ensure that funders are helping to create new carbon-removal supply rather than competing over what exists today.
Unlike the vaccine AMC, which constituted the majority of the market for pneumococcal vaccines in poor countries, a $1 billion AMC for carbon removal won’t be big enough on its own to get carbon removal to the scale and cost needed in 2050. At, say, $100 per ton, 10 billion tons of carbon removal annually implies the need for $1 trillion of customer demand — every year.
Sustaining a market of this magnitude will undoubtedly require policy to regulate emissions. But policy takes time and tends to respond to emerging technologies rather than kickstart them. An AMC for carbon removal would help the field make progress while critical policy work happens in parallel. Furthermore, this early assist increases the likelihood that large amounts of permanent carbon removal will even be available at a reasonable price.
This would be a dramatic intervention: $1 billion is roughly thirty times what has been spent on permanent carbon removal purchases to date. A loud demand signal in the form of an advance market commitment has the potential to give the industry the confidence it needs to begin building now, and to do so with urgency.