CDR can create economic and ecological co-benefits

There is huge potential in the projected trillion-dollar carbon market.

Nobody ever said that it was going to be easy or cheap. But in addition to the ecological benefit, there are great potential economic benefits in the emerging carbon market. We explore them in this chapter.

The bottom line

Yes, carbon removal will be expensive, but like renewable energy, it can become a thriving market of its own. Importantly, not removing carbon will be far more costly.


Pictures: Unsplash

The cost of doing nothing

Whenever the topic turns to climate restoration and mitigation, one of the first arguments that will come up is that doing something–anything–about climate change is just too expensive. We can’t afford it. “Fixing” the climate will ruin economies and impoverish people.

It’s true that climate restoration will be expensive and like anything else people do, it will not happen without setbacks and cost overruns. But doing nothing will be vastly more expensive and, what’s more, vastly more unjust and inequitable, causing disproportionate harm to those who have contributed the least to the huge mess we are in.

Putting numbers towards the cost of doing nothing is obviously somewhat speculative, and the number one ends up with depends very much on the assumptions made. But let’s look at some of the numbers out there to get a feeling for the amount of money we are talking about.

Here’s an analysis from Deloitte:


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$1.5 trillion in economic losses in the last 50 years plus $14.5 trillion (in today’s dollars) over the next 50 years = $16 trillion lost over 100 years–and that’s in the US alone. By all standards that is a serious amount of money, with most of the damage still ahead of us.

Add to that the economic losses in other parts of the world (in 2020 the US accounted for around 15% of the global GDP) and we are looking at numbers so large, they are incomprehensible (if you must know: about $106 trillion.)

Spending a few trillion on mitigation looks like a bargain compared to these numbers.

Now let’s look at what a company whose business it is to assess risk has to say. Swiss Re is a large reinsurance company–in other words, an insurance company for insurance companies. Here’s their assessment:

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The report mentioned in the quote can be found here.

One last source looks at it yet another way. A study by the University College of London considers the cost per ton of carbon pollution–an interesting way of thinking about it which makes it easy to compare and contrast it with the cost of removing one ton of CO2.


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If the cost of one ton of carbon pollution is “in the hundreds of dollars” then removing a ton at a cost of say $200 (or even more) makes economic sense. The study referenced in the quote can be found here.

The potential co-benefits of CDR

We’ve established that doing nothing - in addition to causing irreparable harm to our planet - will be extremely expensive. So CDR provides a huge benefit in helping to avoid these catastrophic consequences. But there are also co-benefits, both from an ecological as well as an economic perspective.

Benefits of nature-based CDR solutions

Nature-based CDR solutions have significant co-benefits that we can only touch on here plus provide sources for further reading.

Here are some examples:

  • Regenerative Farming - Regenerative farming is an agricultural technique that focuses on the health of the soil. Treating soil organically, with natural products and less human disturbance, is key to avoiding CO2 emissions (e.g. associated with pesticides, herbicide and fertilizer manufacture) and to sequestering CO2. Regenerative farming reduces waste and organically increases soil fertility. (source)

  • Restoring wetlands - Bolsters local water resources, biodiversity, and flood prevention (source)

  • Carbon mineralization in the context of ocean alkalization - counteracts ocean acidification which is a huge problem causing the loss of entire ecosystems such as coral reefs. The effect of alkalization of the ocean as a larger ecosystem needs more research.

  • Planting trees - forestation has immense co-benefits beyond carbon storage such as increased biodiversity, it can improve local soil conditions, and reduce flooding and erosion - to name just a few. In an urban setting, trees enhance air quality and improve the urban heat island effect by reflecting sunlight and providing shade (source). In addition, forests can provide economic benefits to local communities and benefits to the people living around them by having a positive impact on mental health and wellbeing, reducing stress, and encouraging outdoor exercise (source).

A new industry: Carbontech

Is it possible that carbon removal itself, besides being ecologically necessary, could also become its own valuable market? Let’s take a look at the young carbontech industry.

The most basic definition of carbontech is the productive use of carbon dioxide. The idea is simple: if we have to pull CO2 out of the air on a gigaton scale, we could use it to make something useful out of it.

As opposed to sequestration, where carbon dioxide is safely stored away, carbontech is using CO2 as a resource in a circular economy.

In a sense, carbontech is a form of reuse or recycling. Instead of recycling plastic or glass into something new, the CO2 from the air is used to make something new.

As long as the recycling process avoids creating more carbon emissions — by using renewable energy, or excess resources that would otherwise be wasted — it can reduce the CO2 that industry pumps into the atmosphere and lower the demand for fossil fuels used in manufacturing.
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Carbontech is very new, so we have a lot to learn about its potential applications. There are already a growing number of companies making products from captured carbon. Some of these will turn out to be economically sustainable and others won’t, but there’s a lot of potential both for technological breakthroughs and for economic growth. Therefore, presenting carbon removal as simply a massive expenditure is reductive and shortsighted. Not only do we need it, but we can also benefit from it in other ways.

Just how big carbontech will be and when is an open question. Here is what the research company Lux thinks the carbon tech opportunity looks like:

Building materials, the report states will become by far the largest sector for CO2 utilization because they have low technical barriers and huge demand. Fuels also have vast potential but more innovation is needed.

If you would like to dig deeper you can download the executive summary of the report here.

The question of permanence

The main goal of CDR is to remove carbon permanently from the atmosphere which means first and foremost sequestering it. Sequestration, however, is - as discussed previously - expensive. Using CO2 to make products out of it, however, can demonstrate a business case. But CO2 use often comes at the cost of permanence.

While diamonds made from CO2 can be considered stable and permanent, other products might be less so and the question is “just how permanent is carbon storage in thermoplastic materials, fuel (not), concrete or vodka?”

The sequester or reuse discussion is only just beginning. While giga-ton scale sequestration is critical, there is certainly a convincing argument for reuse in products that provide permanence. But even for those who don’t, but address hard-to-abate emissions, like fuel made of captured CO2, the pragmatic argument that it’s better to reuse carbon that to drill up new oil to meet these needs, can’t be dismissed.


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