Financial viability of carbon removal
In short
Carbon removal will not pay until buyers are allowed to count it
Robert Höglund of Milkywire said the EU is moving to count and buy removals, while the voluntary standard many companies follow still keeps them out of near-term targets.
Carbon removal can already be the cheapest way to deal with some emissions, Robert Höglund said, but that counts for little if buyers are not allowed to use it. When the rules keep removal out of a company's near-term targets, "nothing can make it financially viable because it's not allowed." Robert, who heads climate at Milkywire and co-founded the data platform CDR.fyi, named two levers for making removal pay, price and permission. The second may matter more, and the EU is starting to pull it.
On price, removal costs a few hundred dollars a tonne, with methods such as biochar cheaper. At that level it beats only a few alternatives. One is electric fuels for aviation. Another is the last few percent of a fossil-free power system, where a grid could keep a little backup gas, run it rarely and offset it. The cheaper removal gets, the larger the share of emissions for which it makes financial sense.
Permission is moving in two directions. The European Commission's new ETS proposal treats removal as mitigation and would bring it into the EU ETS, and the European Parliament's rapporteur is positive. The Science Based Targets initiative still treats removal as something to do later. Under SBTi 2.0, Robert said, sustainable aviation fuel certificates look set to count towards near-term targets and removal will not. People get hung up on the accounting, seeing fuel as decarbonising aviation and removal as something outside it. Robert's position is that removal is mitigation and should be usable now.
Voluntary buyers built the industry. Stripe started buying in 2020, Milkywire followed with money from corporate partners such as Klarna, Spotify and Salesforce, and Microsoft became the biggest buyer. Without companies willing to pay years ahead of delivery for nascent technologies, Robert said, today's start-up ecosystem would not exist. Voluntary buying continues, but as a trickle.
most methods have at least an Excel way of getting to $100, but then everything is way more expensive in reality.
Volume has to come from compliance, and permission alone will not create it, because removal costs more than ETS allowances. So the Commission proposes that the EU procure 250 million tonnes of removals up to 2040 and inject them into the ETS. How it would pay has not been specified. A few extra allowances would raise far too little, Robert said, but ETS revenue now returned to member states is one option, and since the volume is spread over years, funding should be possible.
The long-run case does turn on price. About 60% of emissions can be cut at no extra cost, mostly through electrification. Removal competes in the remaining 40%, in industry, aviation and shipping. Fully allowed at $150 a tonne, Robert said, it might pass five gigatonnes a year. Cooling the planet is another scale. Each tenth of a degree takes about 222 billion tonnes removed, and for anyone to want to do that, removal has to become very cheap.
How cheap is uncertain. Gudfinnur, the moderator and co-founder of the direct air capture company Brineworks, expected direct air capture to fall below $200 a tonne within about two years, now that a utility-scale solar park can be built for $25 per megawatt-hour. Gudfinnur saw a clear path below $100 and a floor near $50. Robert was warier of paper estimates, noting that "most methods have at least an Excel way of getting to $100, but then everything is way more expensive in reality." Asked to bet on one method reaching $10 or $20 a tonne, Robert chose ocean alkalinity enhancement, while conceding that people hate it and that it is hard to measure.
Every one of those prices assumes removal is allowed to count. When an investor asked how the ETS would fare as populist right-wing governments take power, Robert called the worry rational. The scheme is only now starting to bite on steel, heavy industry, aviation and shipping. It is holding, and with the EU and UK the only large regions with credible net-zero plans, it has to. Robert still counted policy uncertainty as the biggest fear.
Robert Höglund gave this Expert Session at The Drop 2026 on 16 September, moderated by Gudfinnur Sveinsson of Brineworks.