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Nasdaq Targets Boom in Market for Carbon Removal in Coming Years

(Bloomberg) —

The market for removing carbon from the atmosphere to limit global warming will take off within five years as industries rush to cause less pollution and the technology improves, according to a Nasdaq Inc. executive.

At the moment, the amount of carbon removed globally from the atmosphere and put into storage is only around a couple of hundred thousand tons a year, but may reach tens of millions of tons by 2025-2027 and then head into gigatons by 2040, said Fredrik Ekstrom, who heads ESG at Nasdaq European markets.

To capture that business, in March Nasdaq started the world’s first indexes to track the pricing of removing carbon dioxide. Last year it acquired, a marketplace for carbon removal, which offers tradable instruments to clients like Microsoft Corp. and Swedish bank SEB AB. 

“There are many pilot projects ongoing that need funding and scale up,” Ekstrom said in an interview in Brussels this month. “I would say the market will go from small to a more large-scale market by 2025-2027 because that’s where you start to see these really large scale opportunities.”

Companies and countries including Exxon Mobil Corp., UK chemicals firm Ineos Group and Saudi Arabia are investing into projects to capture and bury CO2 emissions. Capturing emissions from industrial plants is also expected to get a push from the European Union’s plans to cut pollution by at least 55% from 1990 levels by 2030.

While the latest forecast from clean-energy research group BloombergNEF sees the amount captured around the world jumping sixfold by 2030, it says that will still fall well short of what the fight against climate change requires. The market for offsetting carbon emissions, for example by planting trees, has already taken off, but has faced plenty of criticism.

Carbon Capture Poised for Rapid Growth That’s Still Not Enough

With, Nasdaq counts more than 100 corporate customers as well as Frontier, an association including Alphabet Inc., Meta Platforms Inc. and Stripe Inc. that has committed $925 million to buy carbon removals until 2030. It also has 55 global suppliers of removals and a pipeline of 200 more looking to issue carbon removal credit, Ekstrom said.

To scale up, the nascent industry still needs technical innovation, project funding support and regulation to provide credibility, he said. Guidelines are set to be issued this year by the Integrity Council for the Voluntary Carbon Market. The EU is also working on a rulebook, having faced controversy over previous rules for green bonds and sustainable investing.

“The absolutely most critical thing to avoid greenwashing is transparency,” Ekstrom said, referring to the debate over whether firms are using markets to obscure soft action on climate change.

© 2022 Bloomberg L.P.


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