Credit for Carbon Oxide Sequestration

Carbon dioxide (CO) and other carbon oxides are the primary drivers of anthropogenic climate change. Sequestering these gasesremoving them from the atmosphere and storing them safelyhas become a key strategy for limiting global temperature rise. To encourage investment in sequestration projects, many governments and voluntary markets have introduced carbon sequestration credits, sometimes called carbon offsets or carbon removal credits. This page explains what these credits are, how they work, the main types of projects that generate them, and the challenges that still need to be addressed.

What Is a Carbon Sequestration Credit?

A carbon sequestration credit is a tradable certificate that represents the verified removal or longterm storage of one metric tonne of CO equivalent (tCOe) from the atmosphere. The credit is issued after an independent thirdparty auditor confirms that the project:

• Successfully captures or stores the CO,
• Meets defined additionality criteria (i.e., would not have happened without the credit),
• Is not doublecounted elsewhere, and
• Provides a permanent or at least longduration storage solution.

Credits can be bought and sold on compliance markets (e.g., Californias capandtrade system) or on voluntary platforms (e.g., Verra, Gold Standard). The revenue from credit sales helps cover the high upfront costs of sequestration technologies and gives investors a measurable return.

Why Do We Need Dedicated Sequestration Credits?

Traditional carbon offsets often rely on avoidance projectssuch as renewable energy or forest conservationthat prevent future emissions. While valuable, avoidance does not actually remove CO that is already in the atmosphere. Sequestration credits focus on negative emissions, a requirement identified in most scientific pathways to keep warming below 1.5C. By creating a financial signal specifically for removal, policymakers can:

• Accelerate the deployment of directair capture (DAC), bioenergy with carbon capture and storage (BECCS), and enhanced mineralization projects.
• Provide a clear metric for corporations that have pledged netzero targets and need to balance residual emissions.
• Encourage research and scaleup of emerging technologies that are still costprohibitive without market support.

Main Types of Sequestration Projects

1. DirectAir Capture (DAC)

DAC facilities use chemical sorbents or membranes to pull CO directly from ambient air. The captured gas is then compressed and stored underground in saline aquifers, depleted oil and gas fields, or converted into stable carbonates. DAC is technologyagnostic and can be located anywhere, but it currently costs $100$600 per tCOe, depending on scale and energy source.

2. BioEnergy with Carbon Capture and Storage (BECCS)

Biomasssuch as wood chips, agricultural residues, or dedicated energy cropsis burned to generate electricity or heat. The CO emitted during combustion is captured, purified, and stored underground. Because the biomass absorbs CO while growing, the net effect can be a removal of atmospheric carbon. BECCS also provides renewable energy, but it raises concerns about land use, water demand, and competition with food production.

3. Afforestation, Reforestation, and Forest Management

Planting new trees or improving the health of existing forests creates living carbon sinks. These projects are often cheaper per tonne than engineered solutions, but they carry higher risks of reversal (e.g., fire, disease). Robust monitoring and permanence buffers are essential to qualify for highintegrity credits.

4. Soil Carbon Sequestration

Adopting regenerative agriculture practicesnotill, cover cropping, rotational grazingenhances the organic carbon content of soils. Although verification is challenging, advances in remote sensing and soilsampling protocols are making it possible to issue credits for measurable increases in soil carbon.

5. Mineral Carbonation and Enhanced Weathering

Silicate minerals naturally react with CO to form stable carbonates. By grinding rocks (e.g., basalt) and exposing them to air or water, the reaction rate can be accelerated, providing a permanent storage solution. Current projects are experimental but show promise for lowcost, highvolume removal.

How Credits Are Verified

Verification follows a standardised workflow:

1. Project Design Document (PDD): The project developer outlines the methodology, baseline emissions, monitoring plan, and anticipated credit volume.
2. ThirdParty Validation: An accredited auditor checks the PDD for compliance with a recognized standard (e.g., Verras VCS, Gold Standards SDVCM).
3. Monitoring & Reporting: Data on CO captured, stored, or sequestered are collected regularly (often annually) using sensors, flow meters, satellite imagery, or lab analysis.
4. Verification Audit: An independent verifier assesses the monitoring data, applies the methodology, and confirms the number of tonnes eligible for credits.
5. Issuance: Upon successful verification, the registry issues digital credits, usually as blockchainbased tokens or traditional registry entries.

Key Standards and Registries

• Verified Carbon Standard (VCS) Offers a specific module for Carbon Dioxide Removal that covers DAC, BECCS, and naturebased removal.
• Gold Standard Provides the SDVCM (Sustainable Development Verified Carbon Standard) module for highintegrity removal projects.
• American Carbon Registry (ACR) Includes protocols for mineral carbonation, soil carbon, and ocean alkalinity enhancement.
• Climate Action Reserve (CAR) Primarily USfocused, with protocols for forest and agricultural sequestration.

Economic and Policy Drivers

Several policy mechanisms stimulate the market for sequestration credits:

• Carbon Pricing Capandtrade programs (e.g., EU ETS, California) allow participants to meet compliance obligations with removal credits, especially where emissions reductions are costlier.
• Tax Incentives Credits such as the U.S. 45Q tax credit provide up to $85 per tonne for stored CO, making projects financially viable.
• Corporate NetZero Commitments Companies like Microsoft and Stripe have pledged to purchase removal credits to cancel residual emissions, creating a large voluntary demand side.
• International Agreements Article 6 of the Paris Agreement aims to recognize internationally transferred mitigation outcomes (ITMOs), which could include verified removal credits.

Challenges and Risks

While the concept is straightforward, the market faces several hurdles:

• Additionality Proof Demonstrating that a project would not have occurred without the credit revenue can be contentious, especially for projects that receive multiple subsidies.
• Permanence Natural sinks can release stored carbon through fire, pests, or landuse change. Technical solutions (geological storage) are more permanent but costly.
• Measurement Accuracy Precise accounting of CO captured versus emissions from energy use is essential. Lifecycle assessments are required to avoid ghost emissions.
• Market Integrity Cases of doublecounting or lowquality credits have eroded trust. Robust registries and transparent metadata are crucial.
• Scale Global mitigation pathways call for billions of tonnes of removal annually. Current deployment is a fraction of that need, requiring massive investment and policy certainty.

Future Outlook

Analysts project the global market for carbon removal credits could reach $30$50billion per year by 2035 if policy frameworks solidify and technology costs decline. Key trends include:

1. Increasing use of digital tokens on blockchain platforms to improve traceability and reduce transaction costs.
2. Integration of soil carbon dashboards that let farmers verify and sell credits directly.
3. Expansion of regional pilot programsfor example, the EUs Carbon Removal Unit regime slated for 2027.
4. Growing collaboration between oil & gas operators and carboncapture firms to repurpose existing storage infrastructure.
5. More stringent quality tiers (e.g., highintegrity vs. lowconfidence) to guide corporate buyers toward credible removal.

How You Can Participate

If you are a business, investor, or individual interested in supporting carbon removal, consider these steps:

• Assess Your Carbon Footprint Identify residual emissions after reduction measures.
• Choose Credible Standards Prefer credits issued under VCS, Gold Standard, or ACR with clear verification reports.
• Prioritise Permanence Favor geological storage or longlived biomass projects over shortterm forest offsets.
• Engage with Registries Use platforms like Verra or Gold Standard to view available credits and their underlying documentation.
• Support Policy Advocacy Back legislation that strengthens carbon pricing, tax credits, and transparent accounting for removal.

Carbon sequestration credits are a powerful tool for turning climate ambition into tangible, financedriven action. By ensuring rigorous verification, encouraging diverse removal pathways, and addressing current market gaps, they can help bridge the gap between todays emissions and the netzero future the world needs.

Sources: IPCC 2021 report, Verra VCS Methodology v3.1, Gold Standard SDVCM, U.S. 45Q Tax Credit, Carbon Removal Market Outlook 2024 BloombergNEF.