The carbon removal industry needs to grow to be the size of the oil and gas industry

By one estimate, even as the world eliminates almost all emissions, we’ll need to be able to capture 10 billion tons of CO2 a year by 2050, and 20 billion tons a year later in the century, using both nature-based solutions like trees and new technology like direct air capture machines. A recent report from Swiss Re, the reinsurance company, points out that accomplishing that would require an industry the size of the current oil and gas industry.

The 20 billion metric ton benchmark “corresponds to today’s emissions generated by human consumption of all oil and gas products in one year,” the authors write. “If it takes a trillion-dollar industry to provide for all the oil and gas that causes 20 billion tonnes of emissions today, it will take the next trillion-dollar industry to remove that same amount from the atmosphere in 2050.”

That’s a massive challenge, because the carbon removal industry is tiny now, removing only around 10,000 metric tons of emissions a year. More startups are entering the field now, attempting to make successful businesses that capture carbon in soil on farm fields, plant trees, and turn captured carbon into products like fuel and vodka. But the industry will have to grow by a factor of a million over a few decades, the report says, at a growth rate of around 60%.

The fastest way to kickstart growth, the report says, would be a price on carbon. “Carbon removal has lacked a business case,” says Mischa Repmann, senior environmental management specialist at Swiss Re. “It’s a waste management problem that we haven’t managed to solve yet, because everybody’s free to dump CO2 in the atmosphere. And we know that future generations will pay the price, but we don’t. And we accept this mismatch of markets.” Some solutions could easily be deployed immediately, such as more reforestation, and that deployment could happen if a carbon fee existed. Policy could also mandate companies to recapture the carbon they’re responsible for emitting. At a gas station, for example, as customers pump gas, the oil company that produced the fuel could have the obligation to take back the same amount of carbon.

Until stronger policy pushes the market forward, companies can also help by supporting nascent technologies like direct air capture, Repmann says. A relatively small percentage of the CO2—around 20%—can be captured by natural areas like forests and wetlands, and as climate change stresses nature, it’s likely to get harder for nature to provide that service. The Amazon rainforest now emits more CO2 than it absorbs. Trees face other challenges, including the risk that they could later be burned in a wildfire or by farmers trying to clear a field. We’ll need technological solutions as well, and without large markets now, solutions like direct air capture are too expensive.

“The only way to bring down these costs is if people start to buy it and are willing to pay the first mover price,” he says. Insurance companies and other businesses with relatively small carbon footprints should take the initiative to pay more for these offsets, he argues. (Insurance companies have an obvious incentive to do as much as possible to tackle climate change; Swiss Re has estimated that the impacts of climate change could cause an 18% loss in global gross domestic product by the middle of the century, partly because of the mounting losses from climate-related disasters that leave insurance companies footing the bill.)

Some critics argue that a focus on carbon removal is a dangerous distraction from the work of cutting emissions now—and when oil companies talk about planting trees while keeping their existing business models, that argument is fair. But both cutting emissions and carbon removal have to happen simultaneously. “The problem is, we can’t wait until 2049 to consider how to do 10 billion tonnes of removals the next year,” Repmann says. “So we have to do both in parallel.”