The missing piece in policy for carbon dioxide removal: reverse auctions as an interim solution

Abstract

The expectation that carbon dioxide removal (CDR) will play a crucial role in the climate transition is starting to gain traction in policy. An increasing number of countries are expanding their CDR policies, from specification of objectives (via elimination of regulatory obstacles) to market development. Among the many CDR options, sustainably sourced bioenergy with carbon capture and storage (BECCS) is often cited as having the greatest theoretical potential. Unlocking this potential will necessitate new and robust economic incentives. However, at present, there is a serious gap between actual policy and the required incentive structures, and developing these policies in a responsible way will likely take many years. To get BECCS started sooner than it otherwise might, we argue that an interim policy for allowing BECCS to mature would help identify potential trade-offs or pitfalls, and would help test how firms react to incentives for CDR before rolling our large scale international incentive structures. In this Perspectives article, we provide an insight into the current status of BECCS and CDR policy based on interviews with key policy makers and experts. We also provide a special insight into Sweden’s development of interim policy that takes the form of a reverse auction.