In just a few years, carbon removal has gone from a niche interest to an activity that many big companies feel compelled to invest in.
It’s easy to see why. The Intergovernmental Panel on Climate Change (IPCC) has said that gigatons of removals will be needed to contain global warming. And key standard-setters, including the Science Based Targets initiative (SBTi), have focused on removals above other types of carbon credits.
Yet purchasing removals is a daunting task. There are multiple technology options, each with its own pros and cons. Prices vary by an order of magnitude.
To help companies get started, we talked to two very different businesses — TikTok and the Japanese conglomerate Sumitomo — that are in the process of building removal portfolios. Here are three lessons for any company considering a carbon removal strategy.
Know all your priorities
Most companies plan to use removals to offset future emissions. But what else is important beyond that? It’s essential to go into the market with a clear vision.
In 2023, TikTok set a goal of going carbon neutral in its operations by 2030. The company figured it could reduce Scope 1 and 2 by 90 percent, and settled on using removals to offset what was left. In addition to a focus on high-quality credits, the company had a less-common goal when selecting credits: It wanted to have creators on its platform visit the projects and spread the word about the work.
“I would hope that we could work with some of our partners to almost demystify some of these conversations,” said Ian Gill, TikTok’s global head of sustainability. “Because it’s very easy to hear about these topics and not necessarily get why are they beneficial.” In practice, that meant creating a global portfolio so that influencers from around the world could get involved.
At Sumitomo, the decision was being made in the context of the GX-ETS, an emissions trading scheme being phased in by the Japanese government. Sumitomo wanted to buy credits both to offset its own emissions and to sell on to other companies in the trading scheme, said Micah Macfarlane, chief supply officer at Carbon Direct, a carbon management firm that worked with Sumitomo. To satisfy government rules on use of credits, Sumitomo wanted to focus on projects that are guaranteed to lock carbon away for at least 1,000 years.
Get help selecting credits
Strategy helps narrow the focus, but buyers are still left with an intimidatingly long menu of options. “Companies are typically overwhelmed by the sheer amount of technologies that exist in CDR,” said Adrian Siegrist, chief commercial officer at Climeworks, a carbon removal developer and broker that helped TikTok build its portfolio.
Only a handful of companies have the in-house expertise to sort through the options. For those that lack such a team, partners such as Climeworks and Carbon Direct can step in. Both emphasized the need to do a tough review of the market. Macfarlane says Carbon Direct rejects more than 90 percent of the projects it reviews, leaving the company with 1.6 million tons of credits to offer buyers in 2025.
At TikTok, Gill and team chose a roughly equal mix of direct air capture (DAC), biochar and reforestation. (In addition to advising on removal portfolios, Climeworks is a DAC developer.) They will buy 5,100 tons this year and continue buying annually as they approach the company’s 2030 target. Gill would not disclose how much the company expected to buy in 2030 or the budget allocated, and the company has not published emissions data.
Sumitomo, partly with an eye on a future market for removals, is making a much bigger bet by targeting 500,000 tons this year. The focus on durability means the company’s portfolio will include direct air capture, capture of CO2 from biomass-powered electricity generation and biomass burial, said Macfarlane. The budget for Sumitomo’s carbon removal work is not public, but high durability credits of these types typically cost between $150 and $1,000 per ton.
Think long term
It’s tempting to treat removals as spot purchases, dipping in and out of the market to offset a given year’s emissions. But with high-quality removals in short supply and project developers working to uncertain timetables, longer-term partnerships are critical for now.
“I want somebody who’s going to come on the journey and help me achieve my objective and my goal,” said Gill. The good news is that there are plenty of options. TikTok started with an RFP — leading to conversations with more than a dozen organizations — before settling on Climeworks. “There’s more people than I thought in this space,” Gill said, “which makes it a difficult choice, but means you have a choice and you can take your time.”
With industrial heavyweights such as Sumitomo getting involved, those choices are likely to grow. The company’s plans show just how big an impact the Japanese government’s climate legislation could have on the removals market. Fewer than 10 organizations have individually purchased a cumulative six figures of removals credits and only three — Microsoft, Google and Frontier (which represents multiple buyers) — have exceeded the half-million-ton mark, according to data from CDR.fyi, which tracks the carbon dioxide removal market.
