The prospect of carbon dioxide (CO2) removal brands will emerge as markets become more regulated and decarbonisation accelerates, according to McKinsey.
Senior Partner Mark Patel said the sector could grow into a $1.2 trillion industry by 2050 and it is seeing “material acceleration” as the regulatory framework takes shape in Europe and US, together with public incentives to promote technological development. CDR capacity will be in the range of 0.8-2.9 gigatonnes (GT) of CO2 per year by 2030.
“We should expect this to continue, and as it happens, it will evolve as an industrial sector in its own right,” he said, speaking on a podcast.
“We will expect the supply chains for carbon removal to mirror the efficiency and the efficacy of the supply chains that we see for things like energy and materials, food, agriculture.
“You will plan your inventory for carbon removals. You will buy based on a price that is set by market mechanisms and which you will decide if it’s worth buying and storing more of it. And for that reason, we should expect that there will be opportunities for anyone who’s applying capital into establishing that.
“There will be brands for carbon removal. Are we going to brand a tonne of CO2? I think we will. At some point supply will be materially constrained relative to demand – and that should be the opportunity for an outsized return, just as it would be in any other sector. At this point we have many investors who are educating themselves, and to some extent, there is uncertainty there.”
One major drawback today is costs are well over $1,000 per tonne of CO2 which isn’t economical.
“A more reasonable number for anyone in the carbon removal space is around $100 per tonne, $150 per tonne. This figure is our long-term goal,” added Patel.
He said the biggest potential for scaling CO2 removal lies in the ocean, which is “our biggest carbon sink”.
Another solution that’s a bit more in the hybrid space between nature and technology is enhanced rock weathering (ERW), he added.
“The principle of ERW is when you spread rocks on soil, the rocks – generally in the form of dust or very small rocks – weather naturally and, in so doing, have the effect of storing carbon, which then naturally gets washed out through the soil.”
He said the application of spreading rocks or rock dust onto soil for fertilising purposes is centuries old, but most people didn’t naturally attribute it to large-volume removal of CO2..
