A group of carbon market and removal-focused organizations* announced the publication of an open letter to the Net Zero Asset Owners Alliance (NZAOA), calling on the investor group to affirm its support for carbon removal technologies, after disallowing their use in its members’ climate goals.

Founded in 2019, the NZAOA is a UN-convened, member-led initiative of institutional investors committed to transitioning their investment portfolios to net-zero GHG emissions by 2050. The organization has grown to 84 members with over US$11 trillion in assets under management.

Earlier this year, the NZAOA released its updated Target Setting Protocol, which aims to guide alliance members in setting science-based targets on their financed emissions in order to enable alignment with IPCC pathways to keep global warming below 1.5°C. One of the most significant changes under the new rules is the elimination of the ability of alliance members to use carbon removals to achieve their targets.

Carbon removal is emerging as a key tool in the fight to address climate change, although most technologies and solutions to capture and store carbon from the atmosphere remain at fairly early stages. According to the landmark IPCC climate change mitigation study released last year, scenarios that limit warming to 1.5°C include carbon dioxide removal (CDR) methods scaling to billions of tons of removal annually over the coming decades.

Despite acknowledging that the carbon removal market “is important for accelerating decarbonization,” the NZAOA stated that “with carbon removal technologies yet to impact at scale,” it would disallow their use towards members’ climate goals.

The letter addresses the concern that the new rules would risk shifting necessary investment away from investments in carbon removals.

Letter signatory Antti Vihavainen, CEO of Nasdaq-backed carbon crediting platform Puro.earth, said:

“Investors play an important part in influencing companies towards defossilization.  However, without scientifically verified carbon removal simultaneously being built at scale, we lack the ability to mitigate residual emissions or react to a temperature overshoot of the 1.5c target.”

The letter calls for a number of actions from NZAOA in order to affirm its support for carbon removal technologies, including establishing separate science-based interim targets for carbon reduction and carbon removal, reaffirm that the alliance encourages investment before 2030 in durable carbon dioxide removal technologies, and make a distinction between emission reduction or avoidance offsets and verified carbon removal and storage methods.

Signatory Zeke Hausfather, Climate Research Lead at Stripe said:

“Mitigating climate change requires putting emission reductions front and center. But there is no avoiding the need to remove billions of tons of carbon dioxide every year by the middle of the 21st century if we want to meet our most ambitious climate goals. We cannot simply sit back and assume that ways of removing CO2 will appear out of thin air in the decades to come.”

Click here to access the open letter.

*Signatories: Antti Vihavainen, CEO, Puro.earth; Professor Myles Allen, co-author of the Oxford Principles for Net Zero Aligned Carbon Offsetting, Oxford University; Zeke Hausfather, Climate Research Lead, Stripe; Christoph Beuttler, Chief Climate Policy Officer, Climeworks; Philip Moss, Chairman, NextGen CDR Facility and Global Director for Tech Removals, South Pole; Robert Höglund, carbon removal consultant, manager Milkywire Climate Transformation Fund; Ben Rubin, Executive Director, Carbon Business Council

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