US States and Carbon Dioxide Removal: Leadership Opportunities and Key Principles for Policymakers
Introduction
The Need for CDR
Carbon dioxide removal (CDR), the removal of CO2 from the atmosphere, is necessary, in addition to reducing greenhouse gas emissions as quickly as possible, to meet climate targets. CDR can be done in various ways, and the US federal government has already begun supporting the young CDR industry by funding research, development, and deployment, instituting tax credits for some approaches, and launching pilot procurement programs. But state action is needed in addition to federal support, and state policymakers will play an important role in scaling the CDR industry in a safe and community-supported manner. Leading states also stand to gain because, when done well, CDR offers economic development, good jobs, and environmental benefits for local communities. This article is intended for states who want to lead on CDR and to establish a strong foundation on which to advance and benefit from CDR deployment.
The Opportunities for States
CDR is an enormous economic opportunity for states. In addition to contributing to climate goals, state policymakers have a chance to create local jobs and to unlock a portion of the emerging CDR market, estimated to reach between $20 billion and $135 billion by 2040. CDR companies are choosing where to locate headquarters and build projects, federal agencies are allocating funding, and private companies and philanthropies are deciding where to invest. If states act now, they can position themselves to receive these investments.
Deploying CDR can also provide ecosystem or human health co-benefits. Some CDR approaches simultaneously remove CO2 from the atmosphere and improve soil; others reduce the risk of wildfires. These are just two possible co-benefits, and, when done well, CDR could have an immense positive impact on the climate and nearby communities.
The State Advantage
States can emphasize CDR approaches best suited to their unique geography, natural resources, infrastructure, and industrial base. RMI has identified a wide variety of CDR approaches, some of which are better suited to different contexts such as areas with abundant forests, clean energy, agricultural byproducts, or coastline. States are well positioned to create place-specific strategies for CDR deployment, that best leverage the state’s characteristics to its advantage.
States can craft policies best suited to their policy landscape, history, and constituents. Various policy options exist to enable CDR, including incorporating CDR into emissions compliance mechanisms such as cap-and-trade systems, providing regulatory clarity for permitting, funding research and development, and others. US states have already started to craft diverse CDR policy, much of which builds on pre-existing climate or industrial policy. In this way, states have already begun leading by building upon what they are good at. California, often a leader in climate policy, has incorporated direct air capture credits into its low carbon fuel standard; Colorado, with the input of many stakeholder groups, has begun creating a carbon management roadmap, and six states, motivated by the need for CO2 transport networks across the United States, have signed an MOU to develop a regional action plan. Whether states have climate targets or other governance structures in place, or simply want to support CDR deployment for economic development purposes, policymakers can learn from past experiences with policy creation, discussions with constituents, and other states’ efforts to leverage existing policy when creating CDR legislation that works for their state.
States have considerable regulatory authority and can move quickly. States play a central role in the permitting and infrastructure development that is critical to CDR and the clean energy transition generally. In some cases, states are the primary regulating authority for siting infrastructure for CDR. In other instances, states may implement existing permitting processes faster, or may develop new permitting processes for innovative technologies sooner, than the federal government.
CDR State Policy Principles
To benefit from CDR, state policymakers should design systems that adhere to several foundational principles, including defining approach-neutral, performance-based CDR in policy, setting targets for emissions reductions and removals, creating a clear and enabling regulatory environment, and ensuring safe and community-supported deployment.
Define Approach-Neutral, Performance-Based CDR in Policy
1. Be inclusive of diverse CDR approaches: Policymakers should use an approach-neutral definition of CDR to be inclusive of a variety of removal and storage methods. Direct air capture, while likely the most well-known CDR approach, is not the only one. CDR is a rapidly changing field, and approach-neutral definitions can evolve with the field, ensuring future-proof policy that does not become obsolete as new approaches develop and scale.
2. Define CDR as net-negative, additional, and verified: Policymakers should define CDR using performance-based criteria. These criteria should also be fit-for-purpose, meaning that specific requirements could vary between different systems, (e.g., ton-based crediting and accounting, pay for practice with jurisdictional accounting, etc.). Multiple organizations have published criteria for CDR that state policymakers should consider including in policy, but at a minimum, CDR should be net-negative, additional, and verified.
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- Net-negative: The entire life cycle of the removal results in net removal of CO2 out of the atmosphere. Carbon accounting can determine how much total CO2 is removed and should consider energy use, transportation, and other steps in a project’s life cycle.
- Additional: A removal is additional if the carbon removed by a project or activity is over and above what would have happened in its absence. For example, if natural rock weathering or plant growth processes already would have taken place, then a project cannot take credit for these impacts.
- Verified: Removals must be verified by an entity without a conflict of interest to ensure that the promised climate outcomes are delivered. For example, registries and independent verifiers exist for carbon markets or, in some cases, governments are responsible for verifying that activities are occurring in pay for practice schemes.
3. Account for durability: CDR approaches differ in how long they are likely to store carbon, depending on the inherent characteristics of the storage method and the risks of reversal due to external factors. To ensure that CDR delivers promised benefits, policy must account for these varying characteristics and risks. For example, when CDR is being used to make a compensation claim, such as claiming the CDR neutralizes CO2 emissions that result from burning fossil fuels, it is critical to ensure that the impacts of the CDR on the atmosphere are equivalent to the emissions one is claiming to compensate, including over very long time scales. Many policy options exist for addressing these differences, and state policies should be flexible enough to incorporate new technologies and new science.
Set Targets for Emissions Reductions and Removals
4. Set targets for removals that protect emissions reductions efforts: Currently, just 24 US states and the District of Columbia have greenhouse gas (GHG) emissions reduction targets; some set partial decarbonization goals while others set net zero goals. These net zero goals imply the use of CDR but, generally, do not plan for how much, and which approaches, will be used to achieve net zero emissions. To ensure that CDR does not deter emissions reduction efforts and that it is available at the necessary scale in time, states need to explicitly state how much CDR will be needed to reach their climate goals. If they have not already done so, states should set decarbonization goals and net negative emissions targets in a way that plans for incorporating removals and protects emissions reductions efforts, including setting minimum decarbonization requirements. Ultimately, states will need to implement fiscal and regulatory mechanisms to meet these targets as well.
5. Base removal targets on carbon budgets: Carbon budgets refer to the amount of carbon that can be emitted while staying below a specific warming level (e.g., within 1.5°C) [1]. Removals targets should be based on global historical carbon emissions, a state’s historical emissions, and estimates of a state’s ongoing emissions, including those that are expensive or technologically infeasible to abate. Estimating historical and ongoing emissions is contentious but vital to understanding how much CDR will be needed and, critically, to avoid the moral hazard of using removals where reductions are possible. Targets for reductions and removals should be revised periodically as technology advances and enables new ways to reduce emissions.
6. Set frequent, intermediate goals: Removals targets should be a series of frequent, intermediate targets (about every 5 years after 2030) rather than a single target far in the future. These targets should be based on both top-down assessments of what level of CDR is needed (globally and at the state level), in addition to highly ambitious decarbonization strategies, as well as bottom-up assessments of what level of CDR deployment is possible. Intermediate targets allow states to evaluate progress early on, reassess ongoing emissions estimates, and adjust targets as needed. Further, the CDR industry will take time to scale, and early, intermediate targets can help ensure states support industry growth as early as possible.
Create a Clear and Enabling Regulatory Environment
7. Create roadmaps to plan for CDR scaling: CDR is a new industry, and to deploy the numerous CDR approaches available and reach removals targets, a robust regulatory, innovation, and economic environment needs to be built from the ground up. To build this environment, states should undertake road mapping to guide the development of regulations, assess infrastructure readiness and needs, map public support, determine best resource use, and evaluate environmental justice considerations. States should regularly update these roadmaps to track progress towards removals targets and inform future regulations and programs.
8. Provide clarity on permitting and regulations: Most CDR technologies are novel and the lack of clear regulatory and permitting frameworks is a commonly cited barrier to CDR deployment. Portions of permitting pathways will occur at both the federal and state levels depending on existing legal frameworks, so one of the most important roles that a state can play in the implementation of CDR is clarifying permitting pathways. State agencies that oversee project implementation should clarify and seek to streamline permitting processes and regulations to enable CDR deployment in their state. Rulemaking is often a time-consuming and expensive process, and states can prioritize which approaches to focus on first using tools like RMI’s State CDR Atlas and the Roads to Removal study from Lawrence Livermore National Lab.
9. Coordinate and fund agencies: To effectively foster CDR, states will need to fund and build capacity within agencies and facilitate coordination across them. It is likely that different agencies will be responsible for regulating different CDR approaches, and projects may need permits from multiple agencies. Because of this complexity, project developers and states would benefit greatly from having a single agency that is responsible for coordinating CDR implementation. There is not one correct way to structure how these responsibilities are spread across state agencies; however, it is most important that states clearly designate which agencies should handle different regulations and project types and communicate this plan to project developers and the public.
10. Provide financial incentives and other support: States should also look for ways to incentivize CDR through grants, tax credits, and supporting research and pilots. This assistance could include providing cost-share for federal funding applications, allowing early deployments to operate on state land, or planning and developing needed infrastructure. Programs that support research, field experiments, and pilots can be used to generate knowledge on the most efficient and safest methods of doing CDR in a state and to attract companies to locate in states. RMI’s Applied Innovation Roadmap outlines RD&D funding priorities for the many CDR approaches and can be used to guide program priorities. To maximize benefits, state programs and incentives should be predictable and consistent. Ideally, funding opportunities would have rolling application deadlines and represent multi-year commitments to supporting the industry and reducing risk for CDR start-up companies and investors.
Ensure Safe and Community-Supported Deployment
11. Guide and enable two-way, inclusive community engagement: Policymakers should provide guidance and capacity-building for CDR developers to prioritize two-way, ongoing, inclusive community engagement as early as possible in project development. Examples of practices that states should encourage and provide guidance on include consent-based siting, compensating community members for their time, ensuring accessible avenues for discussion, creating engagement plans, utilizing community benefits plans or agreements, and many others. Further, states can support community leadership on CDR through local capacity building, information campaigns, and funding for CDR projects that are led by community-based organizations, local governments, and other local stakeholders.
12. Require risk reduction measures: State CDR policy should prioritize risk reduction as much as possible. Requiring environmental impact assessments that consider cumulative burdens on disadvantaged communities before deployment is one way to do so. Furthermore, states should require companies to disclose project details and risks to host communities as part of two-way engagement and decision making. Through the entirety of a project’s life cycle, the state should subject it to ongoing monitoring.
13. Mandate transparency: States should mandate a minimum level of transparency across the full life cycle of a project through clear standards for data sharing and verification of removals and other project impacts. Mandates should ensure project data be shared in a way that is accessible, informative, and trusted by community members. Verification of data by an entity without conflict of interest and community involvement in the data collection process could help create this trust.
14. Prioritize co-benefits and explore co-ownership: Whenever possible, policymakers should prioritize projects that provide economic, environmental, or other co-benefits to communities and that build upon existing state-level equity and environmental justice commitments. Policymakers can ensure this by allocating funding first to projects that demonstrate quantifiable, verifiable co-benefits that are desired by communities. Policymakers can also implement requirements that a certain portion of these benefits go to disadvantaged communities, similar to the Justice40 Initiative at the federal level. Beyond co-benefits, states should fund projects that explore different ownership models, especially co-ownership with tribes, municipalities, community-based organizations, and other local groups.
Moving Good CDR Forward with Good State Policy
State policymakers have an opportunity to help achieve their climate, economic, and environmental goals through CDR policy. To do CDR well, these policies should define approach-neutral and performance-based CDR in policy, set targets for emissions reductions and removals, create a clear and enabling regulatory environment, and ensure safe and community-supported deployment. While adhering to these principles is vital, the specific laws and regulations policymakers enact will vary based on each state’s particular characteristics, strengths, and stakeholders. For more detailed information on the opportunity to do CDR on a state-by-state basis and how policymakers can take advantage of their unique geographies, see RMI’s State CDR Atlas.
Acknowledgements
Thank you to those at RMI and Third Derivative who reviewed, edited, and supported this piece.
Further, thank you to all external reviewers including those listed below and those who preferred to remain anonymous.
Ruth Driscoll-Lovejoy, Ocean Visions
Andrew Fishbein, Climeworks
Jason Grillo, Airminers
Jason Hochman, DAC Coalition
Sara Nawaz, American University’s Institute for Responsible Carbon Removal
Mike Robinson, PacCLEAN
[1] Although carbon budgets only explicitly quantify estimates of CO2 emissions, other greenhouse gasses influence these budgets and therefore should be considered when creating removals targets. Estimates of carbon budgets from the Intergovernmental Panel on Climate Change include assumptions related to other greenhouse gas emissions. As a result, states with low CO2 emissions should set removals targets that still account for other greenhouse gasses. Global greenhouse gas budgets can be considered here.