California’s carbon removal opportunity

SB 308 (Becker) would establish a world-first framework to deliver carbon dioxide removal at scale. In this blog post we highlight the key elements of the bill, how it could facilitate hundreds of millions of dollars in new federal clean energy investments and enable the state’s climate goals.

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Carbon dioxide removal (CDR) refers to the process of removing CO2 from the atmosphere. This is something that is done naturally by trees and soils, but the required scale of CDR identified by scientists calls for the major deployment of engineered solutions, such as direct air capture.

California has recognized the need for CDR in its recent climate policies. AB 1279 (Muratsuchi) established a statewide target of 85% emissions reductions by 2045, setting up the remaining 15% of mitigation (or 65 million tons per year) to come from CDR. The California Air Resources Board (CARB) identified a need for 75 Mt of engineered CDR as part of its 2022 Scoping Plan.

The current problem is that there is effectively no CDR occurring in California today and there are multiple barriers to getting to the above scales, such as the high cost of the new technologies, complex carbon accounting, a lack of infrastructure in the form of CO2 pipelines and storage sites, an undeveloped permitting regime as well as a need for credible strategies for community engagement.

SB 308 (Becker) would address many of these obstacles and establish a foundation to deploy CDR in California. It could also provide a model for other states and countries, a majority of which also have significant midcentury CDR needs and no policies or path to get there.

A technology neutral, targets-based approach

California maintains a detailed carbon accounting framework and programs to achieve the state’s 40% by 2030 and 85% by 2045 emissions reduction targets. However, it does not maintain the same approach for CDR and the newly established 15% by 2045 target. SB 308 would create this first-of-its-kind framework to work in parallel to the state’s emissions reductions policies and programs.

The key elements of the bill include:

• Directs CARB to establish a CDR framework: As the state’s climate regulator, CARB is tasked with developing and adopting regulations to ensure the state achieves annual CDR equivalent to at least all remaining greenhouse gas emissions in 2045 (i.e., net-zero).

• Clear separation of reductions vs. removals: The bill provides a clear specification that only processes that result in a removal of CO2 from the atmosphere, and not the avoidance or reduction of greenhouse gas emissions, can be approved by CARB as CDR.  

• Interim targets for near-term deployment: Similar to how the emissions reductions portfolio maintains interim targets, the bill establishes an annual interim target of at least 1% of greenhouse gas emissions in 2030, or roughly 2.5 Mt. This interim target is viewed as providing an important market signal for CDR investors and is a key aspect of the bill.

• Technology neutral approach: There are multiple emerging CDR options, and the bill provides a path for both natural and engineered solutions to be eligible for approval provided they can meet the same high standards for financial responsibility and longevity as established in SB 905 (Caballero), a previous key carbon capture/carbon removal bill.

• Sustainability and safety guardrails: The bill establishes some important guardrails to ensure that only credible and high-quality CDR is delivered, including that a CDR process cannot be used for enhanced oil recovery and that only waste biomass (as opposed to purpose-grown biomass) is an eligible feedstock for biomass carbon removal projects.

• Robust community engagement: The bill identifies a number of strategies to ensure approved CDR projects are aligned with local community goals, including by requiring developers to demonstrate a plan for how the project would provide meaningful benefits. This aligns with the focus on community benefits from clean energy projects at the federal level.

While SB 308 is still moving through the Legislature, the above elements represent the core of the bill and are expected to be maintained should the bill move through the remaining legislative stages.

SB 308 as a catalyst for federal funding

As a landmark new policy SB 308 could help drive significant federal funding to California to help kickstart CDR technology and broader industry deployment, including a potential $500 million+ grant for a Regional Direct Air Capture (DAC) Hub.

As background, the Infrastructure Investment and Jobs Act (2021) appropriated $3.5 billion to the Department of Energy for four Regional DAC Hubs. $1.2 billion of this funding has already been awarded, including two $500 million+ awards to Hubs in Louisiana and Texas. $2.3 billion in funding remains to support two final Hubs ($500 million+ each) as well as a smaller-scale grantmaking.

California is in competition with multiple other states, notably Wyoming and North Dakota, to be identified as one of the final two Hubs. SB 308 would clearly affirm the state’s strong commitment to CDR and provide a case for federal funding to deliver the state’s ambitious CDR targets.

For more information, see our previous blog post: Call to Action on a California Direct Air Capture Hub.

Conclusion

CDR has been identified as essential to achieve global climate goals. Although it is far less significant than emissions reductions, which will provide the vast majority of climate mitigation, it still has a crucial role to play. As CDR technologies are relatively nascent it is important to begin creating CDR capacity today in order to reach the required scales in only two decades.

SB 308 would provide a key foundation to begin to scale these technologies in California and help align the state’s climate ambition with real-world implementation. Key to this is an interim target, which provides a clear market signal to investors on a potential offtake. The clear approach to accounting and guardrails can ensure projects meet the highest environmental standards. And a technology neutral approach can ensure emerging solutions are not involuntarily cut out while requiring projects to meet the same high standards for financial responsibility and longevity.

For more information, please contact Sam Uden (sam@csgcalifornia.com).