BCG -Boosting Demand for Carbon Dioxide Removal -此为英文文档

ScalingCDR:DemandDriversforDurable

CarbonRemoval

June2024

ByKaranMistry,AmySims,ThomasBaker,PaulinaPoncedeLeon,AlexDewar,HabibAzarabadi

Contents

0

3Disclaimerand

Acknowledgements

04

ExecutiveSummary

06

ObjectivesandScope

07

CurrentTrajectoryofCDRDemandisFarBelowWhatisNeeded

11

PotentialImpactofCDRDemandDrivers

1.DemandDriverEstimates2.DirectDrivers

•CarbonPricingMechanismsEmissionstradingschemesBordercarbonadjustments

•RegulatoryRequirementsandIndustryStandards

AviationShipping

Powergeneration

•GovernmentProcurementofDurableCDR

3.IndirectDrivers

•FinancialIncentives

•CO2AccountingEnablers

24

AddressingtheRemainingResidualEmissions

26

ActionstoTakeNow

DisclaimerandAcknowledgement

BCGdoesnotprovidefairnessopinionsorvaluationsof

markettransactions,andthesematerialsshouldnotbe

reliedonorconstruedassuch.Further,thefinancial

evaluations,projectedmarketandfinancialinformation,andconclusionscontainedinthesematerialsarebased

uponstandardvaluationmethodologies,arenotdefinitiveforecasts,andarenotguaranteedbyBCG.BCGhasusedpublicand/orconfidentialdataandassumptionsfrom

BCG’sownprimaryresearch(i.e.,survey,interviews).BCGhasnotindependentlyverifiedthedataandassumptionsusedintheseanalysesbeyondthisprimaryresearch.

Changesintheunderlyingdataoroperatingassumptionswillclearlyimpacttheanalysesandconclusions.BCGwillnotbeliableforanyloss,damage,cost,orexpense

incurredorarisingbyreasonofanypersonorentityusingorrelyingoninformationinthisdocument.Additionally,itisworthnotingthatwhileBCGitselfisapurchaserof

CarbonDioxideRemoval(CDR),theauthorsofthisreporthavenotbeeninvolvedinBCG’sprocurementdecisions.

TheBreakthroughEnergyFoundation,Quadrature

ClimateFoundation,andClimateWorksFoundationhavecommissionedthisreportandprovidedinputonthe

contents.Whilerepresentativesfromtheseorganizationswereinterviewedaspartoftheresearchforthisstudy,

thefindingsfromthisreportrepresenttheviewsofthe

authors,backedbybothprimaryandsecondaryresearch.

Theauthorswouldliketoacknowledgethefollowing

industryexpertsforsharingtheirperspectivesontheCDRmarket:JackAndreason,BreakthroughEnergy;Anna

Stratton,ClimateWorksFoundation;FrancesWang,

QuadratureClimateFoundation;GianaAmador,CarbonRemovalAlliance;JonnyLu,LithosCarbon;ErinBurns,Carbon180;Na'imMerchantandTimothyBushman,

CarbonRemovalCanada;JaneFlegal,Stripe;Rory

Jacobson,DepartmentofEnergy;MeganKemp,South

Pole;VikrumAiyer,AlexaDennett,andChristianTheuer,

HeirloomCarbon;PeterFreudensteinandCarolineOtt,

Climeworks;EveTamme,ClimatePrinciples;EliMitchell-

Larson,CarbonGapandOxfordNetZero;JohnLarsen,

RhodiumGroup.Inadditiontotheexpertsmentionedhere,theauthorsappreciatethecontributionsofthoseindustryexpertswhochosenottobenamed.

TheauthorswouldalsoliketothankOluseye“Bayo”Owolabi,TimFigures,KatherinePhillips,EliSwab,andDaniel

Sandovalfortheirinvaluablecontributionstothisarticle.

BOSTONCONSULTINGGROUP3

ExecutiveSummary

T

hereisbroadconsensusthatdurablecarbondioxide

removal(CDR)willplayacrucialroleinglobaldecar-

bonization.AccordingtotheIntergovernmentalPanelonClimateChange(IPCC),theuseofCDRtocounterbal-

ancehard-to-abateresidualemissionsisunavoidableifnetzeroCO2istobeachieved.ThisreportfocusesspecificallyondurableCDR,whichplaysaroleinallIPCC1.5and2.0degree-alignedscenarios.1TheroleofdurableCDRin

limitingtemperaturerisecouldbegreaterthananticipated,giventhatglobally,theworldisnotontracktomeetdecar-bonizationcommitments.

Thisreport,anindependentstudybytheBostonConsultingGroup(BCG),isintendedtoassessthedemandpotentialforCDRinthelightofbothvoluntaryandregulatorydrivers,

through2050.Thereportleveragesinsightsfromextensiveinterviewswithpolicyandregulatoryexperts,aswellas

primaryandsecondaryresearchandmodeling.Theresultsrepresentanoptimisticyetrealisticviewofhowfuturemar-ketsmayevolvebasedontoday’sinformation.Belowisa

summaryofourkeyfindings:

toachievenetzerogivencurrentemissions

1Multi-gigaton-scaledurableCDRwillbeneeded

trends;however,itisunlikelytomaterialize

withoutnewpolicydemanddrivers.

•Between6and10gigatonsperannum(Gtpa)of

residualCO2emissionsarelikelytoremainunabat-edgloballyin2050,2suggestingthatsubstantial

durableCDRisneededtoachievenetzeroCO2.

Giventhatmanycarbonreductiontechnologiesarestillnascent,andthereisuncertaintyaroundhowtheywill

developandscale,thereisnoconsensusontheexpect-edvolumeofresidualemissionsinnetzeroscenarios.

EstimatesfromtheIPCCandtheInternationalEnergy

Agency(IEA)forresidualCO2emissionsatthetimeof

netzerorangefrom~2to~8Gtpa,excludingCO2emis-

sionsfromland-useactivities.3Weestimatethatin2050,between~6and~10GtpainCO2emissionswilllikely

remainunabatedbecausetheyareeitherimpossibleoroverlyexpensivetoreduce.4

•VoluntaryCDRdemandisgrowingrapidlybutwillfallshortofdeliveringtheultimatescaleneeded.

Lastyear,BCGestimatedthatthevoluntarymarket

wouldgrowsignificantly,driving~60to~750megatons

perannum(Mtpa)indurableCDRdemandby2040,

dependingonhowmuchCDRcostsdecline.5Unlike

otherclimatetechnologies,CDRcouldprimarilybe

consideredapublicgood.Asaresult,therearebarrierstoscalingCDRdemandthatareunlikelytobeovercomewithoutgovernmentalpolicydemanddrivers.

toincorporatedurableCDRcouldleadto~0.5to

2Theexpansionofexistingandproposedpolicies

2.5GtpaofCO2indurableCDRdemandin2050,

coveringupto~30%ofglobalresidualemissions.

•Governmentscouldusearangeofexistingand

proposedpolicydriverstodirectlyorindirectly

drivedurableCDRdemand.Directdemanddrivers

includeintegratingdurableCDRpathwaysintocarbon

pricingmechanisms,regulatoryrequirementstodecar-

bonize,anddirectgovernmentprocurementofCDR.In-directdriversincludeenablingpoliciessuchasfinancialincentivestoreducepricesandCO2accountingenablerssuchasrequirementsthatmustbemetforacompanytoclaimitis“netzero.”

•IntegratingdurableCDRpathwaysintocarbon

pricingmechanismscoulddrivethelargestshareofpotentialdemand(upto~1.25Gtpa).Existingandproposedcarbonpricingmechanismsareasignificant

potentialdemanddriverbecauseofthescaleofexist-

ingandproposedschemes.Emissionstradingschemescoverindustriesgenerating~26Gtinemissionsgloballyby2050.6IfallregionswithexistingandproposedETSsimplementedbordercarbonadjustments(BCAs),theywouldcoveranadditional~4Gtpa7.

1.Selectexamplesofhigh-durabilitycarbonremovaltechnologiesincludedirectaircapture,bioenergywithcarboncaptureandstorage(BECCS),andenhancedweathering/CO2mineralization.Source:IPCCAR6Report-WGIII:MitigationofClimateChange.

2.BCGResidualEmissionsModel,assumesallabatementactioncostinglessthan$450/t-CO2isachieved.

3.IPCCAR6Report:MitigationofClimateChange,IEA2023WorldEnergyOutlook;landuseemissionsexcludedwhenestimatingdurableCDRneedgiventhattheyarelikelytobecoveredbyland-usechangesthatsequestercarbon.

4.ExcludesresidualCO2emissionsfromland-use,whicharelikelytobecoveredbyland-usechangesthatsequestercarbon.Doesnotincludenon-CO2greenhousegases.Estimatebasedonprojectedeconomicgrowthandabatementcosts.

5.“

TheTimeforCarbonRemovalHasCome

,”BCG,2023.

6.Assumesbusiness-as-usualgrowthinemissionsbeforeconsideringreductions.

7.NotethatBCAscanbeappliedevenintheabsenceofdomesticcarbonprices(aspurepollutionfeesforimporters),butwhenusedinconjunctionwithdomesticschemeslikeETSs,iteffectivelymultipliestheirscopeinternationally.

4SCALINGCDR:DEMANDDRIVERSFORDURABLECDR

•CarbonpricingmechanismswillbemosteffectiveinpromotingreductionsandCDRdemandwhen

durableCDRisprioritizedanditspriceisnotartifi-ciallyloweredthroughsubsidies.ETSsandBCAscanincorporateCDRbyallowingdurableCDRtogenerate

allowancesorreductionsinleviesdirectlyorbycreatingparallelremovaltradingschemes.Theseapproaches

willdrivethegreatestdemandfordurableCDRandthemostCO2reductionswhen:(1)inclusionisrestrictedto

high-qualitydurableCDR;(2)alargernumberofindus-triesorbasketsofgoodsarecovered;and(3)thepriceofdurableCDRdecreasestoanaverageof~$100to~$200pertonofCO2(t/CO2).Additionally,whileadoptingsubsi-diestolowerdurableCDRpricesinthenear-termwouldencourageCDRpurchases,keepingpricesartificiallylowinthelongtermcouldincentivizeemitterstoremove

emissionsratherthanreducingthem.

•OthersignificantdurableCDRdemanddrivers

includeregulatoryrequirementsinindustries

includingaviation(upto~400Mtpaindurable

CDRdemandby2050),marine(upto~200Mtpa)

andpower(upto~200Mtpa).Decarbonizationre-

quirementsintransportationcouldincreasedurable

CDRdemandthroughtheuseofCO2asafeedstockfore-fuelsanddirectpurchasestocounterbalancefossilfuelemissions.Netzeroportfoliostandardsforthepower

industrycoulddrivedemandthroughbioenergywithcar-boncaptureandstorage(BECCS),andadditionalCDR

creditpurchasestoaccountforresidualemissionsfrompeakerplantsandremainingfossilpowergeneration,

evenwhenmostlymitigatedwithcarboncaptureandstorage(CCS).

3

ThescaleofdurableCDRdemandwillvaryre-

gionally,drivenbythematurityofexistingcli-

matepolicies,theambitionofproposedpolicies,andtheabilitytofinancedecarbonization,withthelargestgapslikelytoremaininAsiaPacific.

•EuropeandNorthAmericaarethemostadvancedregionsintheimplementationofclimatepoliciesandthereforealsopresentthegreatestopportuni-tytodrivedemandfordurableCDR.DurableCDR

demandfromacomprehensiveETSanddecarbonizationrequirementforaviationcoulddrive~65%coverageof

residualemissionsinEurope.NorthAmericacouldalsosee~60%coveragefromsmaller,moretargeteddomes-ticcarbonpricingmechanisms,BCAsimposedbytheEUandothers,andregulatoryrequirementsinpowerand

transportation.AsiaPacificwillfacechallengesincover-ingresidualemissionswithdurableCDRduetothescaleofprojectedresiduals,alackofregionalconsistencyin

theadvancementofclimatepolicy,andthehighcostofdecarbonizationanddurableCDR.

•MethodsforincreasingCDRdemandinAsiaPacif-icandgloballycouldincludeexpandingthescopeofexistingandproposeddemanddriversand

creatingnewdurableCDRdemanddrivers.ETSs

andBCAscouldexpandtocoveradditionalindustries

orgoods.Similarly,durableCDRdemandcouldgrow

significantlyifmoregovernmentsweretoimplement

sustainablefuelblendingordecarbonizationrequire-

mentsintransport.Amongnewdemanddrivers,govern-mentprocurementofenhancedrockweathering(ERW)orbiocharonagriculturallandshassignificantpotential:allocatingjust2%oftotalexistingagriculturalsubsidiesintheregionswiththehighestcapacityforERWcould

generate~1GtpaormoreindurableCO2removals.

4

Near-termactionscouldsupportmulti-gigaton-

scaledemandfordurableCDRby2050.

•GovernmentscouldsetcleardurableCDRgoalsandencouragenear-termsupplyanddemand.

ActionsintheneartermcouldincludepursuingdurableCDRtargets,governmentprocurement,researchandde-velopmentfunding,andpoliciestoincentivizevoluntarydemand,suchasfinancialincentives.GovernmentscanalsodefineframeworksfordurableCDRtobeintegratedintocomplianceandvoluntarymarkets.

•Standard-setterscouldencouragenear-termadop-tionofdurableCDRandprovideclarityonhow

tosettargetsfordurableCDRprocurement.Stan-dard-setterscouldencourageprocurementofhigh-qual-itydurableCDRintandemwithmeaningfulemissions

reductionmeasures.Standard-setterscouldalsoprovidemarketclaritybydefiningguidelinesforwhendurable

CDRisneeded(suchasencouragingtheuseofdurableCDRinaccountingforfossilemissions).

•DriveinnovationinCDRsupply.Whilethisreport

definespathwaystoincreasedemandfordurableCDR,itwillbecrucialforsupplytocontinuetogrowandforcoststodecrease.Thiswillrequirepublic-privatecol-

laborationandincreasedinvestmentintechnologyandinfrastructure,includingexpandedR&D,pilotprojectsanddemonstrationplants,toprovetheviabilityand

efficiencyofnewtechnologies.Suppliers,investors,andotherrelevantstakeholdersshouldfocusonbuildingasupportiveecosystemthatincludesfinancialincentives,partnerships,andstreamlinedregulatoryprocessestoaccelerateinnovation.8

8.ThistopicisfurtherdiscussedinBCG’s2023publications,“

ShiftingtheParadigm:SolvingtheDirectAirCarbonCaptureChallenge

,”and“

Scaling

CarbonCaptureTechnologyWon’tBreaktheBank

.”

BOSTONCONSULTINGGROUP5

ObjectivesandScope

T

hisreportaimstodemonstrateacrediblepathwayfor

durableCDRtoreachmulti-gigatonscale.Thisisan

immensescale-upfrom125ktofdurableCDRdeliv-eredin20239to~6to10GtofdurableCDRneededina

2050netzeroCO2world—a50,000to80,000timesin-crease.Specifically,thisreporthasthefollowinggoals:

1.IdentifydurableCDRdemanddriverswiththelargestpotentialforscale.

2.Summarizepolicyimplementationchoicesandimplica-tionsthatcouldshapeCDRdemand.

CDRmethodsrangeacrosslowerdurabilitymethods(suchasafforestation,reforestation)thathave

existedfordecades,andmediumandhighdurabilitymethodsthatareunderdevelopment(suchasdirectaircapture).ThisreportspecificallyexploresthemarketopportunityassociatedwithCDRmethodswithmedium

andhighdurability,whichwerefertothroughoutas

“durableCDR.”Selectexamplesinclude:10

•DirectAirCarbonCaptureandSequestration

(DACCS)useschemicalorphysicalprocessestoseparateCO2fromambientairandstoresthecapturedCO2under-groundorpermanentlyinaproductsuchascement.11

•BiomasswithCarbonRemovalandStorage

(BiCRS)referstoland-basedbiologicalmethodsthatin-volveprocessingbiomassforCO2removalandcanhavevariationsdependingonstoragemethodology.12These

include,amongothers,biochar—thestorageofCO2inastablesolidstatemadefrombiomassthatiscombustedinthepresenceoflimitedoxygen.

•BioenergyCarbonCaptureandStorage(BECCS)referstotheuseofbiomasstoproduceenergycoupledwiththecaptureandstorageofemittedCO2,either

undergroundorpermanentlyinaproduct.

•EnhancedWeathering/CO2Mineralizationusesthenaturalchemicalmineralizationofcarbontocapture

CO2fromtheatmosphere.Thisprocesscanbeaccel-

eratedbytreatingmaterialon-siteatactiveindustrial

mines(suchasultramaficminewaste)orthroughthe

distributionofsilicaterocks(suchasbasalt)overforestsorcropland.Rainwaterdissolvestheminerals,andtheaqueoussolutionreactswithCO2fromtheatmosphere,mineralizingtheCO2andstoringitpermanentlyassolidcarbonateminerals.Oceanremovalssuchasocean

alkalinityenhancementacceleratethenaturalprocessofsequesteringcarbonintheoceanbyincreasingthealkalinityofseawatertoenhanceitscapacitytoabsorbandstoreatmosphericCO2.13

9.CDR.fyi2023YearinReview.

10.OtherformsofdurableCDRmayalsoemergeaspromisingpathwaysinthefuture,whethervariantsoftheaboveexamples(suchasbio-oilstorage,aprocesssimilartobiochar;orbiomasssinking,anovelformofoceanremoval),orothernewtechnologies.

11.IPCCSpecialReport:GlobalWarmingof1.5°C.

12.BiomassCarbonRemovalandStorage(BiCRS)Roadmap;LawrenceLivermoreNationalLab2021.

13.IPCCAR6–WGIII:MitigationofClimateChange.

6THETIMEFORCARBONREMOVALHASCOME

CurrentTrajectoryofCDRDemandisFarBelowWhatisNeeded

hilethereisconsensusthatCDRisneeded,

thereisalackofconsensusonhowmuch

durableCDRwillberequired.Thisisdueto

W

significantvariationinestimatesforresidual,orunabat-

able,CO2emissions,whichrangefrom~2to~8Gtpa(see

Exhibit1

).14Therangereflectsvaryingdecarbonization

scenarioswithdifferencesinhoweffectivelyvarioussectorsdecarbonize,dependingontheimplementationofexistingabatementsolutionsandthedevelopmentandscalingof

newandemergingtechnologies.

14.IPCCAR6–WGIII:MitigationofClimateChange;IEA2023WorldEnergyOutlook;BCGResidualEmissionsModel,basedonglobalmarginalabatementcostestimatesandexcludingresidualCO2emissionsfromlanduse.

BOSTONCONSULTINGGROUP7

Exhibit1-EstimatesforUnabatedResidualEmissionsVaryConsiderably,DependingonScenario

RESIDUALEMISSIONS,EXCLUDINGLAND-USE(GTCO2)1

IEA

Unabatedemissionsin2050(notnecessarilynetzero)atvarious

levelsofpolicyambition

IPCC

Emissionscoveredbyremovalsattimeof

reachingnetzero(notnecessarilyin2050)in

potential“illustrativemitigationpathways”(IMP)

BCGestimate

Emissionseconomicallyunfeasibletoabatein2050(notnecessarilynetzero)basedon

abatementavailableatvariouscostlevels3

%OFTODAY’SEMISSIONS

50

40

30

20

10

~29

~20–25

Valueusedinthisreport

~13

~10–15

“5–16Gt”CO2residualsincludingland-use2

~8–12

~8~8

~6–10

~4~3~3

~2

StatedPolicies(STEPS)

AnnouncedPledges (APS)

NetZero

Energy

(NZE)

FocusonGradualShiftingFocusonFocuson

NetNegativestrengtheningPathwaysRenewablesLowDemand

(IMP-Neg)(IMP-GS)(IMP-SP)(IMP-Ren)(IMP-LD)

“Abatement

uptolow

cost”($100)

“Abatement“Abatement“Allfeasible uptomiduptohighabatement”price”($150)price”($250)(upto$400)

~750Mt

Highendforvoluntary

demand

Notnet–zeroNZin’50

NZin’60NZin’75NZin’65NZin’55NZin’50

BuildingsTransportEnergySupply

OnlynetzeroifallresidualscoveredbyCDR

Industry

Sources:IPCCAR6report,IEA2023WorldEnergyOutlook;BCGanalysis.Note:Greyboxesareresidualsnotallocatedtosectors.

1Land-useCO2excludedgivenlikelytobeoffsetbypracticechangesmakingland-useanetCO2sink(thoughnotnecessarilyanetGHGsink).25-16GtisrangereferencedinAR6SummaryforPolicyMakersparagraphC.3.3.

3Costlevelsestimatedin2050.Abatementiscalculatedvs.emissionsinbusiness-as-usualtrajectory.Notethatanypoliciesthatforcenon-economicalabatementwouldshrinkresiduals.

TheprocesstoaccountforneutralizingresidualemissionscouldincorporateavarietyofCDRmethodsrangingin

durability.PolicyoptionsforhowtodeterminewhatshareshouldbeneutralizedusingdurableCDRinclude:

•Takinga“like-for-like”removalapproach,15whichisdefinedbytheUnitedNationsFrameworkConvention

onClimateChange(UNFCCC)as“whenasourceof

emissionsandanemissionssinkcorrespondintermsoftheirwarmingimpact,andintermsofthetimescaleanddurabilityofcarbonstorage.”Asanexample,CO2emit-tedfrompermanentgeologicalstorage(fossilfuel)mustbeneutralizedbyCO2inpermanentgeologicalstorage

(suchasDACCS),asopposedtoCO2innon-permanentbiospherestorage(suchasafforestation).

•Takingadiscountingapproach,16inwhichtargetsaresetonthebasisofthetotalCO2sequesteredweighted

againstthedurabilityorpermanenceofCO2removal.

RemovalsthatgeologicallysequesterCO2foramillenni-umtomillionsofyearsareweightedproportionallymorethanremovalswithashorteraveragesequestration,suchasforestry-basedremovalsthatsequesterCO2fortensto

hundredsofyears.Allremovalmethodscouldbeused,butsignificantlymoreremovalsofashortertimescalewouldbeneededtocoverthesameportionofthetargetaslonger-durationremovals.Thisincentivizestheuseoflonger-durationremovals,butalsoallowsforarangeofdurabilitiestominimizeoverallCDRcosts.

15.UNFCCCRacetoZero.

16.NOAA2023.

8SCALINGCDR:DEMANDDRIVERSFORDURABLECDR

voluntarymarket

1Insufficiencyofcurrentdemanddriversandthe

VoluntarypurchasesandpolicydriversarescalingCDRsignificantly(from600ktpurchasedin2022to

4.5Mtin2023),buttheseexistingdriversareinsuf-

ficienttoachievethescaleofremovalsrequiredto

achieveglobalnetzero.In2023,~4.5MtofdurableCDRwaspurchased(upfrom~600ktin2022),andjust125kt

weredelivered.17Lastyear,BCGdemonstratedapoten-

tialpathwaytoachievebetween80and870megatons

ofdemandfordurableCDRby2040,drivenprimarilyby

purchasesinthevoluntarycarbonmarket.18However,thisisstillsignificantlybelowallcurrentestimatesoftheCDRneededtoreachnetzero,highlightingthenecessityfor

additionaldriverstobridgethegap.Itiscrucialtonotethatunlikesolar,windandmanyotherclimatetechnologies

thatprovideanendgoodorservice,suchasenergy,theprimaryvalueofCDRcouldbeconsideredapublicgood.Thuspolicydemanddriversarelikelytoberequiredeveninthelongerterm.

2Definingresidualemissions

Governmentsandpolicymakershaveoutlineda

varietyofwaystoestimateresidualemissions.Mostcountriesdonotexplicitlymentionordefineresidualemis-sionsintheirNationallyDeterminedContributions(NDCs),andthosethatdoprovidelittledetailonthedefinitionor

calculationmethodology.19Someofthewayscountries

havedefinedresidualsincludeemissionsthatcannotbe

addressedbycurrentordevelopingtechnologies,20emis-

sionsthatareunlikelytobeaddressedbyfuturetechnolog-icaldevelopments,21andemissionsthatareoverlyexpen-siveorimpossibletoreduce.22

Forthepurposesofthisreport,weproposeone

potentialviewofresidualCO2emissions,basedonaneconomicperspective,byindustryandgeography,which

definesresidualemissionsasemissionsthatareeither

impossibleoroverlyexpensivetoreduce.23Weestimate

residualemissionsbycalculatingemissionsinabusi-

ness-as-usualscenarioandestimatingthepercentageof

emissionsthatareabatableatavarietyofcostpointsandthosethatareunfeasibletoabateatanycost.Whilethereareavarietyofapproachestodeterminingoverallresidu-als,ourestimatesarebroadlyinlinewithestimatesfromarangeoforganizations.

Acrosssectors,residualCO2emissionsareexpectedtobeconcentratedintheindustrial(~40%),energy

supply(~30%)andtransport(~20%)sectors(see

Exhibit2

).TheseresidualscomefromCO2-emitting

activitiesinindustrials(suchashigh-temperatureheat

requirementsforsteelmaking)andtransport(suchaslong-haulflights)thatcannotbefeasiblyoreconomicallyabatedinfull,basedontechnologiesexpectedtobeavailablein

2050.Intheenergysector,aspowergenerationincreasesitsshareofrenewables,thecostsandcomplexityofoper-atingthepowergenerationsystemincreasesignificantly,makingitlikelythatsomelevelofresidualemissionswillremainfromcontinuedfossilgenerationinpeakerplants.Additionally,acrossindustrialsandpower,plantswith

CCScouldabate90%to95%ofemissions,butstillreleaseresidualemissionsof10%orless.

Residualemissionswillbeparticularlyconcentrated(~55%)intheAsiaPacificregion.Thisisduetoacom-binationoflargepopulations,rapideconomicgrowth,andahighconcentrationofindustryandmanufacturing.WhilemoreresidualemissionswillbeinAsiaPacific,theprod-

uctsassociatedwiththoseemissionsareconsumedglob-ally.Therefore,achievingnetzeroinAsiaPacificthroughreductionsandremovalswouldmakeasignificantcontri-butiontoglobalclimategoals.

3Modelingapproachandmethodology

Inthisreport,wehavesizedthelargestpotentialpolicy

demanddriversfordurableCDR.Wehavetakeneffortstoavoiddouble-countingthecombinedimpactoftwointerre-lateddemanddrivers,suchasdemandarisingfrombothanetzeropowerportfoliostandardandanETSinthesamejurisdiction.Furthermore,allestimatesinthisstudyare

basedonasetofcoreassumptions:

•Reductionscomefirst.Weassumedthatdemand

driverswouldlargelyincentivizeeconomicalreductionsbeforetheuseofanyformofCDR.Wealsoassumed

thatcompanieswillactrationally,choosingtoreduce

theiremissionsupuntilthosereductionsbecomemoreexpensivethanCDRorrelevantpenalties.Wedidnot

accountforanypotentialfurtherupside,if,forexample,companieschosetopurchaseCDRevenifitweremoreexpensivethanthelevelizedcostofreductionsrequiringasignificantcapitalinvestment,suchas