Ready to Lead: Reflections on Carbon Removal Day in Canada

My short review of Carbon Removal Day in Ottawa - a gathering of over 150 leaders in the Carbon Dioxide Removal (CDR) industry for a series of panels and discussions as the Canadian CDR industry positions itself for growth.

Summary

• Ready to lead: Lots of countries claim to be world-beating at things when they’re not. But Canada has a genuine opportunity to lead in the development of one of the industries of the future. Carbon Removal Day grasped the scale of the opportunity but also the work that needs to be done to progress from here.

• The role of government: The Treasury Board (TBS) announced an RFI for the first phase of their $10 million CDR procurement program. The announcement was welcome but as encouraging was the robust back-and-forth on the detail of the program which showed promising interplay between government, researchers, and industry.

• Getting buy-in: Limited market demand for CDR credits remains a core issue, with no obvious silver bullet. There also appeared to be limited buyers (or potential buyers) in the room to offer their perspective on what they want to see to stimulate the market.

• Leading who: Many regions, but particularly the US and Europe, have also made moves to accelerate their CDR industries.  Recent destabilization in the US, to put it mildly, has emphasised how beyond the fundamentals of its natural resources, a stable and innovative policy/funding environment will be crucial for Canada’s prospects.

• The importance of timing: keeping this nascent industry in sync will be one of the great challenges at a macro and micro level.  From bridging funding gaps, to ensuring regulation keeps up with industry, to ensuring local communities are engaged early enough. 

On ‘World-Beating’

Whenever someone claims they’re ‘world-beating’ or ‘world-leading’ at something, it’s often a safe bet that they’re not.

For those who are genuinely world-leading, sometimes the work just speaks for itself.  As a British-Canadian, I also find it hard to forget the recent period in British politics where the government’s endless claims of being ‘world-beating’ at things they clearly were not became a meme. 

It was in this context that I sat in the National Arts Centre in Ottawa last week for the second annual Carbon Removal Day organized by Carbon Removal Canada. I heard a series of accomplished professionals, entrepreneurs, researchers, and one minister discuss how Canada could lead the world in carbon dioxide removal.  This time, I believe it.  

We heard how Canada has: 

• Abundant natural and technical fundamentals which support the scaling of various CDR pathways.
• 25% of the companies competing for the $100m Carbon Removal XPRIZE.
• The first marine CDR company to successfully remove 1,000 net tons of carbon dioxide from the atmosphere. 
• Government support in innovative CDR procurement programs and protocols. 

It was also pleasing to see organizations like CICE announce non-dilutive funding to Canadian CDR companies to accelerate their progress.

But more than any of this, the room wasn’t full of hollow cheer-leading and back-slapping. It was a room that balanced optimism and ambition with the thoughtful critique and reflection which marks an industry serious about the scale of the opportunity, its importance, and the work required to take advantage of it. 

Canada is ready to lead in CDR, and I remain more excited than ever to join the mission.

The Role of Government

This combination of achievement with the drive to improve further was shown in the discussion of the federal government’s announcement of a Request for Information (RFI) to support the $3 million pilot phase of  its proposed $10 million procurement of CDR credits.

This program is genuinely innovative and credit must go to the Treasury Board (TBS) and its various contributors for putting the work in to understand what government CDR procurement could look like.

Following the announcement of the RFI, attendees were invited to discuss it at their tables and offer feedback on its structure to the TBS panellists.  With limited time to review its details, attendees had sharp questions, some of which even targetted the premise of the program.

In its presentation, there had been some discussion of the program as ‘catalytic’ for the Canadian CDR industry. But various attendees questioned whether a $10 million program spread over five years and up to 20 companies could really be described as that. That’s not to say it’s not a positive development, but some argued it represented more of a pure fact-finding/procurement exercise for the government, rather than a significant boost to the sector.  It will be interesting to see how it compares to any programs resulting from the Senate bill in California which proposes an $80 million facility for their CDR procurement. 

Given that the suggested requirement for successful applicants in the RFI is to have a CDR project up and running (or ready in 12 months) and the program is open to international companies (required under trade laws), there were also concerns this would privilege larger international firms over domestic suppliers. On a similar note, because the winners of program will be determined on price (assuming they meet other tender criteria), attendees noted that might privilege technologies that were cheaper in the short term but didn't necessarily represent the best long-term bets for CDR. The ‘pending’ approval of mCDR companies in the program given the domestic success of Planetary and CarbonRun also seemed to raise some eyebrows.

There will no doubt be further robust back and forth over the RFI in coming weeks, and that’s a good thing.

Getting Buy-In

The RFI somewhat gives away the limited catalytic potential of the program in Annex C, Question 18 for CDR project developers:

‘What is the minimum quantity that you’d enter into a contract to produce’ 

No seller anywhere is happy about being asked by a potential customer what the least amount they can buy is.  But this line neatly illustrates the ongoing issues with limited CDR market demand.

This was reflected in the room, with frequent mentions of buyer demand as the most urgent problem in the industry with no clear solution.  In particular there was a focus on stimulating a second wave of ‘fast follow’ demand, coming after the first wave of investment from US big tech. More news like Watershed’s 1 megaton RFP would be welcome.

What was interesting was the lack of buyers to hear these statements.  Unless they were avoiding me (it’s possible), they didn’t seem to be well represented and their perspective would have been appreciated. 

Leading who?

If you’re going to claim to be world-leading, then it follows that there’s a comparison being made with others. And although this isn’t just about Canada and the US, that is clearly very top of mind.

While there was some discussion of what cuts in US federal spending would mean for CDR, and the Canadian context, the overall sentiment seemed to be that it’s too soon to tell.  Well, we can tell it’s not good - but it’s too soon to tell how bad.

Among other cuts, the CDR team at the Department of Energy (DOE) is reportedly down to one person.  But as a former Director in that team said: 

“To my knowledge, this was not about terminating people that were doing DAC work, or climate work, or even CDR work. This was just a gross termination of federal employees, career federal employees across the federal government that were on probation.”

But it does create significant uncertainty in the short term for US companies who have relied on those policies and funding, whether it’s the DAC hubs program or the 45Q tax credit.  Not to mention the chilling effect of losing talent from the industry.  Many in the room knew folks who had lost their jobs. 

At the very least, events in the US show the value to investors and project developers of a stable policy and funding enviroment, which hopefully Canada will continue to provide.  Not just in comparison to the US, but also to Europe and other regions who are moving the industry forward.

Alignment and Timing

Some final subtext from all the panels was how important alignment and timing will be in nurturing this nascent industry.  

There’s industry questions like finding enough buyer demand to bridge the gap from the VCM to compliance markets, and enough financing before the opportunity becomes attractive to infrastructure investors. 

But there’s also more tactical ones like finalizing more federal offset protocols and provincial storage regulations fast enough, extending RFI project developer timelines by more than 12 months, or setting the correct timelines for good community engagement (a topic that felt underserved on the day).  

In that respect, events like Carbon Removal Day can only be a good thing to help build relationships and align those whose timelines need to intersect for this all to work.  Particularly if Canada wants to lead the industry.  To succeed, we will need many more Carbon Removal Days, Carbon Removal Weeks and Carbon Removal Hours in Canada, and if they’re anything like this one, I look forward to them all.