Investments aligned with this Strategic Goal aim to mitigate climate change through the use of new technologies that capture and sequester carbon from the atmosphere. The amount of carbon dioxide captured and sequestered from the atmosphere by biological means on the planet’s land and in its oceans is many orders of magnitude greater than current non-biological methods. In the future, keeping global temperature rise to 1.5° Celsius will also require enormous expansion of technology-based solutions to capture and sequester carbon. However, for the world to keep the global temperature rise to 1.5° Celsius, the world will also have to look beyond nature-based solutions to carbon capture and sequestration and to explore technology-based solutions

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Note: Investors focused on investing in nature-based solutions, such as capturing CO2 through plants and trees, are referred to the IRIS+ Sustainable Forestry and forthcoming Sustainable Agriculture themes. See the theme on IRIS+. This Strategic Goal only covers technologies for capturing and sequestering carbon, not nature-based solutions.

Investments aligned with this Strategic Goal aim to address global climate change caused by human activity. The impacts of climate change—on human health, the survival of natural ecosystems, the increase in severity and incidence of extreme weather, and climate-induced mass migrations—are staggering and ever-growing (1). As indicated by the seminal 2019 IPCC report, avoiding the worst impacts of climate change by keeping global temperature rise to 1.5° Celsius will require not only drastic cuts to emissions within the next twelve years but also removing carbon dioxide from the atmosphere.

Technologies that remove carbon dioxide from the atmosphere and that sequester carbon are controversial, as they may raise “moral hazard”: if belief or hope prevails that a technological “fix” to the climate crisis is forthcoming, could this dampen ambition and action to mitigate emissions in the first place (2)? Still, a growing number of scientists concur that such technologies will be needed to keep global temperature rise to well below two degrees Celsius.

Given the scale of emissions by multinational corporations, net-zero or carbon-neutrality pledges may not go far enough. As a result, carbon capture and sequestration (CCS) are key levers. Microsoft made an industry-leading climate commitment in January 2020 to become not only carbon-neutral but carbon-negative, committing to remove all emissions the company has produced since its founding (3). It plans to do so through a combination of CCS (in various forms) and geoengineering (such as direct air capture, which will pull carbon dioxide directly from the atmosphere) (4). Intuit has since replicated this carbon-negative pledge.

Continuing increases in greenhouse gas (GHG) emissions have led investors to look for opportunities to capture and sequester carbon in new ways. As a scientist from Columbia University’s Center for Global Energy Policy shared, as recently as 2016, investments in this category were regarded as investing in “pixie dust and unicorns” (5). Views have since evolved alongside the growing consensus among climate experts that even if emissions were to halt tomorrow, the worst impacts may already be “locked in” by current emissions in the atmosphere.

Investments aiming to mitigate climate change through carbon capture and sequestration can:

  • finance the development of technologies to capture and store carbon emissions;
  • support research and development to capture carbon dioxide at scale;
  • support national and international policies that encourage the widespread adoption of carbon capture and sequestration technologies and products; and
  • finance the development of technologies to capture and use carbon as a by-product.

What is the scale of the problem?

Climate change is perhaps the largest existential threat of the twenty-first century and beyond. At current emissions levels, negative emissions technologies and approaches will be necessary to stave off the worst impacts of global climate change. As per a report by McKinsey, a 1.5-degree pathway would require, by 2050, that the amount of CO2 captured each year multiply more than 125 times from 2016 levels (6).

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

As with any climate change mitigation Strategic Goal, since climate change is inherently a global challenge, the ultimate target stakeholders are the global population and the planet itself. That said, the following are some stakeholders who are particularly helped through investments in this Strategic Goal.

The Planet: According to NOAA and NASA, 2019 was the Earth’s second-hottest year on record (7). Technologies that remove CO2 from the atmosphere will help combat rising global temperatures, helping to avoid the worst effects of climate change on the planet, including biodiversity loss and extreme weather patterns.

Individuals: All of the world’s population will be, in one way or another, negatively affected by climate change and rising temperatures—whether by extreme weather events, drought, land loss, or adverse health effects. Technologies that extract CO2 from the atmosphere can slow the warming of the planet, reducing negative impacts on the global population.

Companies: Corporations around the world are setting net-zero and even carbon-negative pledges. Given the scale of emissions by large corporations, reaching ambitious carbon-negative goals will require CCS technologies. Microsoft, for example, has announced plans to go carbon-negative through a mix of CCS (of various forms) and geoengineering (such as direct air capture, which will pull carbon dioxide directly out of the atmosphere) (8).

Entrepreneurs: Successfully tackling the climate crisis will require research and innovation, including technological innovation. As Former U.S. Secretary of Energy Ernest Moniz stated, “simply put, we can’t beat climate change with only the technology that we have today” (9). Given the controversies and concerns surrounding CCS in terms of moral hazard, compounded by the already challenging funding path for new ventures in clean technology, promising enterprises that could mitigate climate change through CCS innovations risk failing from lack of funding. Investments in this Strategic Goal, particularly patient capital, can prove instrumental for entrepreneurs to add their technological innovations in carbon capture and sequestration to the puzzle of solutions to climate change.

What are the geographic attributes of those who are affected?

While the geographic attributes of the impact target are ultimately universal, the immediate use and adoption of carbon capture and sequestration technologies will directly benefit the world’s largest-emitting countries, such as the United States, China, and India. Island nations whose land is expected to become uninhabitable over the next few decades, such as Kiribati and Fiji, also benefit from decelerating temperature rise.

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Organizations can consider contribution at two levels—enterprise and investor. At the enterprise level, contribution is “the extent to which the enterprise contributed to an outcome by considering what would have otherwise happened in absence of their activities (i.e., a counterfactual scenario).” To learn more about methods for assessing counterfactuals, see the Impact Management Project.

At the investor level, investments aligned with this Strategic Goal can support carbon capture and sequestration technologies as follows.

Signal that Impact Matters: By investing in technologies to capture and sequester carbon, investors signal that removing carbon from the atmosphere is essential to mitigate the impacts of climate change and keep the temperature rise below 1.5 degrees Celsius. Technologies and solutions can capture carbon either at the point it is generated or remove carbon directly from the atmosphere and store it underground or use it as an input for products. For further information on this point, reference The Pros and Cons of Carbon Capture as well as the evidence map in this Strategic Goal. Investors can also send such a signal by moving capital away from companies whose revenues and profits primarily depend on products that are responsible for driving deforestation. For more information on this point, please see the Strategic Goal “Mitigating Climate Change through Sustainable Agriculture” in this theme.

Engage Actively: Investors can use their rights to proactively engage management teams in carbon-intensive sectors such as oil & gas, metal & mining, and automotive, thereby improving these businesses’ environmental and social performance. They can influence such companies to explicitly commit a portion of their future capital expenditure towards technologies that remove carbon from the atmosphere and that will put these companies on paths to meet their long-term GHG reduction targets. Investors can also take a board seat and offer technical and management support to companies at an early stage of developing CCS technologies and solutions.

Grow New or Undersupplied Markets: Currently, more than 200,000 megawatts of coal-fired generation capacity are under construction globally, and only 20 coal plants are retrofitted with CCS technology. To achieve net-zero emissions, more than 1,700 coal plants will require retrofit with CCS technology through an estimated investment of USD 2.5 trillion by 2050, as per Morgan Stanley (10). Investors with higher risk appetites can provide the necessary patient capital to propel innovation and implementation of such technologies to minimize and potentially mitigate the severe impacts of climate change.

Provide Flexible Capital: Carbon sequestration technologies usually require an upfront capital expenditure and have a long gestation period from incubation to commercial scale. Many early-stage companies developing such technologies will offer higher risks and therefore may need some flexibility from investors, for example by providing catalytic capital.

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

All of the world’s population stands to benefit from investments in technologies that capture and sequester carbon, as extracting carbon from the atmosphere will help lessen the effects of climate change, a problem that affects the entire global population.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

The amount of change that target stakeholders can experience through investments aligned with this Strategic Goal can be monumental and multi-generational. In order to meet the goals of the Paris Agreement and keep global temperature rise to below 1.5 degrees Celsius, scientists agree that some amount of carbon must be extracted from the atmosphere. Therefore, advancements in technologies that capture carbon will be paramount to achieving the goals of the Paris Agreement, benefiting all of humanity and the planet.

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

The following are impact risk factors for investments aligned with this Strategic Goal.

  • Execution Risk: Though present technical solutions or approaches to capture carbon seem promising, they are nascent and require high upfront capital to develop. Investees working to develop such technologies may not see immediate positive results, risking loss in investor confidence and capital that abruptly stalls critical initiatives. To mitigate this risk, investors can support these companies with patient capital and management tools and techniques that allow investees to overcome the challenges of bringing technologies from the lab to commercial scale.
  • Stakeholder Participation Risk: A surge in the adoption of carbon capture and sequestration technologies could deter high-emitting companies from making greater efforts to systematically reduce emissions. In some cases, such technologies could even incentivize business-as-usual. Investors can mitigate this risk by investing in programs that create mass awareness of CCS solutions and engage high-emitting companies to invest and adopt carbon-capture technologies without losing focus on their efforts to systematically reduce their overall carbon footprints.
  • Unexpected Impact Risk: Free-trade agreements and policies that internalize externalities can accelerate or slow down the pace of the adoption of carbon capture and sequestration practices. Investors should hedge their investments against the adverse impacts of such unexpected trade regulations and climate-related policies. Simultaneously, investors can advocate for policies that support carbon sequestration, work with governments to frame strong incentives for such investments, and form public–private partnerships to further accelerate the adoption of such policies.

What are likely consequences of these impact risk factors?

If these risk factors were to materialize, investors would fail to reduce GHG emissions through carbon capture and sequestration, thereby failing to mitigate the risks of climate change.

Illustrative Investment

In 2019, the CCS-focused, Bill Gates-backed firm Carbon Engineering closed a USD 68 million funding round from investors including BHP, Chevron, and First Round Capital. Carbon Engineering is one of three start-ups that are operating “direct air capture” facilities in the Swiss Alps to pull carbon from the atmosphere (14). The overarching concept of Carbon Engineering’s technology is that of “giant fans pulling air across a contact surface that binds with the CO2 molecules.” Subsequently, the contact material undergoes a heating process, which unbinds the CO2 molecules, at which point they can be collected and removed from the atmosphere (11). To date, Carbon Engineering has fully demonstrated their Direct Air Capture technology and is now commercializing the technology. Work has also begun to build industrial-scale Direct Air Capture facilities that will each capture one million tons of CO2 per year, equivalent to 40 million trees.

In 2018, CarbonCure Technologies Inc., a company turning concrete into a climate solution, closed a strategic round of investment led by Breakthrough Energy Ventures. This strategic investment allowed CarbonCure to scale their impact by expanding into international markets and commercializing new value-added solutions for the concrete industry that improve its sustainability and production efficiencies (12). CarbonCure’s overarching mission is to incorporate CO2 into concrete, the best prospect for near-term and widespread use of CO2 capture. Through this investment, CO2 gas is turned into a solid concrete aggregate, which can be done with only minimal external energy. This is one reason why CO2 use in concrete has the largest short-term CCM potential. CO2 can also be used to cure concrete. To date, 83,042 metric tons of CO2 emissions have been saved with CarbonCure, or 38,735 metric tons in the past 365 days from this writing.

Opus 12, an Oakland-based start-up, converts waste carbon into materials for plastics and transportation fuels by using metal catalysts and electricity to convert carbon dioxide into organic chemicals. Etosha Cave, Co-Founder and Chief Science Office of Opus 12, shared that as of Fall 2019, the start-up was working to produce its first gallon of fuel within the following year and a half. Through its proprietary process, Opus 12 continuously captures and then recycles carbon. Following multiple early funding rounds, in October 2019, Opus 12 won a USD 1 million federal grant to convert waste CO2 and methane emissions into chemicals in partnership with Industrial Microbes, a California-based company focused on fermentation technology. Beyond climate impact, the Opus 12 team sees an opportunity to use its technology to improve access to energy supplies in rural areas.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 2
The Progressive Routes for Carbon Capture and Sequestration

Nanda, S., Reddy, S.N., Mitra, S.K. and Kozinski, J.A. (2016), The progressive routes for carbon capture and sequestration. Energy Science & Engineering, Volume 4 (2016): 99-122

NESTA: 2
Carbon Removal Standard / Guidance

Greenhouse Gas Protocol. “Carbon Removals and Land Sector Initiatives”. (2020)

NESTA: 2
Techno-Economic Assessment of CO2 Direct Air Capture Plants

Mahdi Fasihi, Olga Efimova, Christian Breyer, 2019. Techno-economic assessment of CO2 direct air capture plants. Journal of Cleaner Production. Volume 224, pages 957-980

NESTA: 2
The Role of Direct Air Capture in Mitigation of Anthropogenic Greenhouse Gas Emissions

Christoph Beuttler, Louise Charles, Jan Wurzbacher. 2019. The Role of Direct Air Capture in Mitigation of Anthropogenic Greenhouse Gas Emissions.

NESTA: 1
Investing in Climate Innovation: The Environmental Case for Direct Air Capture of Carbon Dioxide

Bipartisan Policy Centre. “Investing in Climate Innovation: The Environmental Case for Direct Air Capture of Carbon Dioxide”. (2020)

NESTA: 1
Pollution to Solution: Capture and Sequestration of Carbon Dioxide (Co2) and its Utilization as a Renewable Energy Source for a Sustainable Future

Farahiyah Abdul Rahman, Md Maniruzzaman A.Aziz, R.Saidur, Wan Azelee Wan AbuBakar, M.RHainin, Ramadhansyah Putrajaya, Norhidayah Abdul Hassan. “Pollution to solution: Capture and sequestration of carbon dioxide (CO2) and its utilization as a renewable energy source for a sustainable future”. Renewable and Sustainable Energy Reviews, Volume 71 (2017): 112-126

NESTA: 1
Valuation and Investment Strategies of Carbon Capture and Storage Technology Under Uncertainties in Technology, Policy and Market

Chao Huang, Lifei Chen, Pandi R. Tadikamalla, Mike Gordon. (2020). Valuation and investment strategies of carbon capture and storage technology under uncertainties in technology, policy and market. Journal of the Operational Research Society

NESTA: 1
Outlook of Carbon Capture Technology and Challenges

Tabbi Wilberforce, Ahmad Baroutaji, Bassel Soudan, Abdul Hai Al-Alami, Abdul Ghani Olabi. 2019. Outlook of carbon capture technology and challenges. Science of the Total Enviroment. Volume 657, Pages 56- 72

NESTA: 1
Potential and Costs of Carbon Dioxide Removal by Enhanced Weathering of Rocks

Jessica Strefler, Thorben Amann, Nico Bauer, Elmar Kriegler, and Jens Hartmann. 2018 Potential and costs of carbon dioxide removal by enhanced weathering of rocks. Enviromental Research Letters, Volume 13

NESTA: 1
Negative Emissions -- Part 2: Costs, Potentials and Side Effects

Fuss, Sabine, William F Lamb, Max W Callaghan, Jérôme Hilaire, Felix Creutzig, Thorben Amann, Tim Beringer, et al. “Negative Emissions — Part 2: Costs, Potentials and Side Effects.” Environmental Research Letters. IOP Publishing, May 22, 2018. https://iopscience.iop.org/article/10.1088/1748-9326/aabf9f.

NESTA: 1
The Technological and Economic Prospects for CO2 Utilization and Removal

Cameron Hepburn, Ella Adlen, John Beddington, Emily A. Carter, Sabine Fuss, Niall Mac Dowell, Jan C. Minx, Pete Smith & Charlotte K. Williams. 2019. The technological and economic prospects for CO2 utilization and removal. Nature 575. Pages 87 – 97

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.