The U.S. Department of Energy (DOE) released a Notice of Intent for a new initiative designed to catalyze voluntary purchases of high-quality carbon dioxide removal credits. DOE is seeking organizations to join and provide feedback on the Voluntary Carbon Dioxide Removal Purchasing Challenge (“Challenge”) and its structure to ensure the most benefit to participating carbon dioxide removal credit buyers and suppliers. Please send your input to VoluntaryCDRChallenge@hq.doe.gov by May 15, 2024, and refer to the below for more context on the Challenge.

Background

Scientific analyses increasingly show that carbon removal – or approaches for capturing and storing carbon dioxide directly from the atmosphere – is essential for delivering on the Paris Agreement climate goals.[1],[2] The United States has significant opportunities to scale a range of carbon removal solutions across many geographies.[3] However, carbon removal has only been deployed commercially at a small scale to date, and the current carbon removal costs[4] are significantly higher than analyses project they will be once deployed at scale.[5] Measuring, reporting, and verifying carbon removal outcomes is also in its infancy for most carbon removal solutions, complicating efforts to scale the field for the greatest climate impact.

To address these barriers and make carbon removal available at the scale and cost required to deliver on the world’s climate goals, at COP26 in 2021 DOE launched the Carbon Negative Shot, an all-hands-on-deck call for innovation in carbon dioxide removal.[6] The Carbon Negative Shot aims to accelerate innovation across a broad portfolio of carbon dioxide removal solutions to drive cost reductions, improve measurement, reporting, and verification tools and protocols, and deliver community, workforce, and environmental benefits as it scales. DOE is applying all of the capabilities in its toolkit to the Carbon Negative Shot: funding frontier science[7] and commercial scale demonstrations[8], piloting small-scale prototypes,[9] supporting the development of measurement, reporting, and verification tools and protocols,[10] engaging with communities around project development,[11] and pioneering the world’s first government-funded purchases of carbon removal credits.[12]

Even with this multifaceted approach to scaling carbon removal, DOE recognizes that achieving the Carbon Negative Shot requires more. Others have estimated that billions of dollars of additional funding are needed to pursue all of the promising innovation opportunities,5,[13] making it imperative that DOE works with public, private, and civil society organizations to marshal the capital needed for carbon removal innovation to flourish. One of the primary sources of funding for carbon removal innovation today is the voluntary carbon market, where carbon removal buyers and suppliers transact credits representing removals with a measurable climate impact.

A small number of companies and collectives have already made or pledged billions of dollars in carbon removal purchases, which has enormously benefited this critical industry. At the same time, these commitments are only the first step towards more organizations integrating carbon removal into their climate strategies. Carbon removal purchases can fit within organizations’ existing climate commitments, as well as offer a high integrity tactic to go above and beyond mitigation of value chain emissions. As thousands of corporations have issued net-zero targets for 2030 and beyond,[14] carbon removal will serve as a crucial backstop and balancing mechanism for mitigating residual emissions.

This is a decisive and opportune moment for the carbon removal field. As policies emphasizing carbon removal gain momentum worldwide, organizations will benefit by building it into their plans voluntarily. Technological improvements have rendered carbon removal projects more widely available and verifiable now than ever before. However, analysts expect future supply limitations will make it difficult for those who do not begin now to identify and purchase from high-quality carbon removal projects later[15]. In light of the critical moment, DOE recently began a pilot effort to purchase $35 million in carbon removal credits with the Carbon Dioxide Removal Purchase Pilot Prize launched in December 2023.

Our main question is: how do we get more net-zero committed organizations to start buying small and growing amounts of voluntary carbon removal credits? 

Notice of Intent: Voluntary Carbon Dioxide Removal Purchase Challenge 

Enter: DOE’s proposed Voluntary Carbon Dioxide Removal Purchase Challenge

The Challenge is a parallel effort that builds off and amplifies the impact of DOE’s own Carbon Dioxide Removal Purchase Pilot Prize. The Challenge is not planning to issue additional federal funds. Instead, the Challenge will call on organizations purchasing carbon removal credits to make public bigger and bolder purchase commitments like DOE has made with its own $35M carbon removal purchase pilot. DOE will also create a public leaderboard to track voluntary carbon removal purchases, and will provide supporting materials to help buyers make better and larger carbon removal credit purchases, and help more suppliers find customers. This effort aims to address the non-financial barriers holding back carbon removal credit purchases, including lack of transparency into the market and lack of recognition that carbon removal credit purchases are essential and valuable today.  

Figure 1: How the Challenge Fits into DOE Carbon Removal Programs

 Voluntary Carbon Dioxide Removal Purchase ChallengeCarbon Dioxide Removal Purchase Pilot PrizeCarbon Negative Shot Grant Funding Opportunities
Funding AvailableNone$35M
  • $100M+ in annual funding 
  • ~$4B in Bipartisan Infrastructure Law funding
Key Features
  • A leaderboard for voluntary carbon removal purchases
  • Opportunity for carbon removal credit suppliers to be evaluated by DOE
A prize for up to 25 semifinalists and 10 finalists for permanent carbon removal purchasesGrant funding for science, technology development, early commercial demonstrations, and related analysis
Eligible EntitiesWide range of organizations related to carbon removal purchasingCarbon removal credit suppliers in the U.S.Carbon removal innovators and project developers in the U.S.

 

Carbon Removal Credit Buyers

For carbon removal credit buyers, the Challenge would open a unique opportunity to enter the carbon removal market with a splash. Buyers would be publicly recognized on a Challenge leaderboard and, in conjunction with the DOE’s own carbon removal credit purchase program, get connected to top suppliers and gain access to other resources such as templates for carbon removal credit purchase contracts. To be listed on the DOE leaderboard, buyers would be asked to disclose elements of their purchases required to increase transparency in the field. These criteria are described in detail in the Notice of Intent and include variables such as: quantity of credits purchased, credit purchase and delivery dates, and measurement, reporting and verification protocols used. DOE is not envisioning a floor for joining the Challenge—any quantity or dollar amount of credit purchases would qualify. DOE is also not restricting purchasers to buy only those credits that it selects as part of its carbon removal credit purchase program.

Carbon Removal Credit Suppliers

For carbon removal credit suppliers, the Challenge would provide a valuable opportunity to get connected to interested buyers and put their name on the map of high-quality removals. DOE plans to leverage the capabilities to evaluate carbon removal credits that it has built through its own Carbon Dioxide Removal Purchase Pilot Prize to evaluate a set of “next wave” carbon removal credit suppliers. While these suppliers would not be eligible for funding, they would be listed on DOE’s website and will hopefully enable voluntary carbon removal credit purchasers to select from a wider range of options.  

Join and Provide Feedback on the Challenge

DOE hopes that the Challenge will bring in many partners beyond individual organizations purchasing carbon dioxide removal credits. DOE wants to work with public, private, and civil society groups to ensure that the Challenge is widely adopted, and that purchasers don’t only buy carbon dioxide removal credits, but focus first on direct emissions reductions in their supply chain, and then pursue a portfolio of high-quality voluntary carbon credits on the way to net-zero.

Working together, this public-private initiative has the potential to unlock game-changing capital for high-quality and affordable carbon dioxide removal in time to meet our climate goals.

To that end, we’re thrilled to see Google announced today that it's pledging to match the DOE’s $35M initiative to support carbon removal solutions. We plan to highlight as similar announcements going forward.

We want to hear from you about how this Challenge can be structured to have the greatest impact. Please send questions and feedback to VoluntaryCDRChallenge@hq.doe.gov by May 15, 2024, considering questions such as:

  • How should DOE structure the Challenge to get as many participants as possible, given funding constraints?
  • How is your organization thinking about purchasing carbon dioxide removal credits in terms of the environmental, social, financial, or regulatory considerations?
  • What is stopping your organization from purchasing carbon dioxide removal today?
  • What resources would enable your organization to procure carbon dioxide removal with ease and confidence?
  • What can your organization do to join us in catalyzing more purchases (e.g. philanthropies, non-government organizations, civil society organizations)?

If your organization is ready to join the Challenge and wants to get engaged, please let us know so we can include you in the potential formal launch in the coming months.


 

[1] Global Warming of 1.5°C, IPCC 2018

[2] The Long-Term Strategy of the United States, U.S. Department of State and U.S. Executive Office of the President 2021

[3] Roads to Removal: Options for Carbon Dioxide Removal in the United States, Lawrence Livermore National Laboratory 2023

[4] Price Index, CDR.fyi 2023

[5] Negative Emissions Technologies and Reliable Sequestration, National Academy of Sciences 2019

[6] Carbon Negative Shot, DOE 2024

[7] Energy Earthshots, DOE 2024

[8] Regional Direct Air Capture Hubs, DOE 2024

[9] Funding Notice: Carbon Negative Shot Pilots, DOE 2024; DOE Announces $36 Million To Advance Marine Carbon Dioxide Removal Techniques and Slash Harmful Greenhouse Gas Pollution, DOE 2023

[10] Department of Energy Releases 2023 Technology Commercialization Fund Solicitation on Carbon Dioxide Removal Measurement, Reporting, and Verification, DOE 2022

[11] Responsible Carbon Management Initiative, DOE 2023

[12] Carbon Dioxide Removal Purchase Pilot Prize, DOE 2023

[13] The Applied Innovation Roadmap for CDR, RMI 2023

[14] Target dashboard, Science Based Targets initiative 2024

[15] The Time for Carbon Removal Has Come, Boston Consulting Group 2023