Untitled

Why The Government Of Canada’s New Direct Air Capture Protocol Is A Climate Game-Changer

By Phil De Luna, Contributor.
A detailed exploration of Canada's direct air capture (DAC) protocol and its implications for carbon removal and climate change.

Introduction

  • Canada has achieved a historic milestone with the introduction of the world’s first government-backed Direct Air Capture (DAC) offset protocol.

  • This development is significant as it:

    • Legitimizes the DAC industry

    • Sets a global precedent for carbon removal regulation

    • Positions Canada as a leader in climate innovation

  • The urgency arises from accelerating climate change and looming net-zero targets, which the new framework aims to address by:

    • Unlocking massive investments

    • Driving global adoption of DAC technology.

1. Monetizing Carbon Removal Through the Carbon Credit Market

  • The current business model for DAC involves selling carbon credits within voluntary markets.

  • Companies aiming for net-zero emissions purchase these DAC credits to offset their emissions.

  • This market dynamic has led to significant investments from corporate entities, including major airlines and technology companies, looking to mitigate their environmental footprint.

  • Key statistics:

    • Over 1.6 million tonnes of DAC carbon credits have been purchased to date

    • Average price of credits sits at $470 per tonne.

  • The Canadian DAC protocol enhances this market by:

    • Ensuring that DAC credits meet strict standards related to permanence, quantifiability, and transparency.

    • Aligning with the International Standard Organization's greenhouse gas standard for emissions verification, ensuring measurable and lasting reductions in atmospheric CO₂.

2. Raising the Bar for Carbon Offset Integrity

  • Unlike some other offset programs (e.g., forestry credits susceptible to wildfires), the Canadian DAC protocol:

    • Requires CO₂ to be permanently stored in underground geological formations for a minimum of 100 years.

    • Mandates continuous monitoring to prevent potential reversals, establishing high durability and accountability standards within the carbon market.

  • The protocol prohibits the use of captured CO₂ for enhanced oil recovery, which is important for:

    • Ensuring DAC functions as a genuine climate solution

    • Preventing it from being used as a rationale for continued fossil fuel production.

  • By instituting stringent storage and verification processes, Canada aims to enhance the credibility of DAC credits, thereby boosting investor confidence and participation.

3. The First Step Towards a Compliance Carbon Market

  • Canada’s DAC protocol facilitates a movement towards compliance carbon markets—places where carbon credits are required by law rather than optional.

  • Notable examples of existing compliance markets include:

    • The EU Emissions Trading System

    • California’s Cap-and-Trade Program.

  • The introduction of DAC into compliance markets could lead to:

    • A substantial increase in demand for DAC credits

    • Opportunities for major emitters (such as power plants and factories) to buy DAC offsets to meet government-mandated reduction targets.

  • This shift is likely to drive significant investments in DAC infrastructure, contributing to cost reductions over time and reshaping the economics of carbon removal.

4. Direct Air Capture is Essential to Hitting Net-Zero Targets

  • As of 2024, global temperatures have surpassed the critical threshold of 1.5 degrees Celsius.

  • Merely reducing emissions is insufficient; there is a pressing need for active carbon removal from the atmosphere.

  • DAC technology is especially vital due to its ability to:

    • Eliminate legacy emissions

    • Address challenging sectors such as aviation.

  • The Intergovernmental Panel on Climate Change (IPCC) underscores the importance of Carbon Dioxide Removal technologies in achieving net-zero goals.

  • However, DAC technology currently faces challenges:

    • It remains expensive, with costs estimated between $400 to $1,000 per ton of CO₂ removed.

    • There’s a noticeable absence of supportive policy frameworks and high costs associated with the technology today.

  • Canada’s new protocol is designed to provide the necessary structure to transition DAC from a conceptual phase into a scalable climate solution.

  • Major advantages of DAC include its flexibility:

    • DAC can be deployed in various locations, contingent on suitable energy sources and geological storage, unlike nature-based solutions reliant on specific land conditions.

5. The Roadblocks and Opportunities Ahead

  • Despite the promising advancements, DAC technology continues to be costly, necessitating:

    • Policy support such as tax incentives

    • Public-private partnerships

    • Ongoing investments in research and development.

  • An expansion of renewable energy sources is critical, as DAC facilities depend substantially on energy inputs, requiring clean energy to ensure that the overall climate benefits are realized.

  • Possible investments in low-carbon energy infrastructure (e.g., geothermal or nuclear power) could enhance DAC’s viability in the long term.

  • The success of Canada’s protocol hinges on robust industry and public feedback to ensure effectiveness and practicality.

  • If executed effectively, this framework has the potential to serve as a global model, propelling DAC's contribution to the battle against climate change.

  • With the introduction of this draft protocol, Canada is making a substantial commitment to establishing DAC as a crucial element of the net-zero strategy, creating pathways for:

    • New investments

    • International adoption

    • Integration of DAC into compliance markets.

  • The forthcoming years are pivotal for determining the scalability of DAC to meet its projected potential.

  • Canada's leadership in setting rigorous regulations and high-integrity credits may inspire similar moves by other governments, which could set a new global standard for DAC's engagement in climate change challenges.

Disclaimer

  • The author, Phil De Luna, works for Deep Sky, a Canadian carbon removals project developer.