Climate, ESG, sustainability, resilience – these themes dominate the culture from boardrooms to academia and even confront us through our televisions and social media platforms. The most consistent thread of all these concepts is the emphasis to mitigate, remove, and reverse atmospheric emissions of carbon dioxide, methane, and other gases. While this seems like an insurmountable challenge, it may already be within our grasp.

The capture and storage of carbon dioxide and other greenhouse gases presents at least two major questions: (1) How do we best remove carbon dioxide and (2) What do we do with it once it’s captured?

There is no shortage of proposals, ranging from individualistic and free market to the fiscal and regulatory pressure of the federal government. While some elements from each point in the spectrum may ultimately have merit, the most efficient may start with the use of private and voluntary carbon offset purchases. In fact, it provides a satisfactory solution to both problems by promoting the removal of carbon and making use of it.

This unique solution differs from carbon taxes that simply discourage emissions, and helps generate sustainable private funding without the inefficiency or cronyism of government subsidies. Through all of this, a new market is formed and fostered, and in the end, private citizens and the corporate world can end up neutralizing their footprints while jumpstarting an industry that removes carbon year-round.


The basics

The solution starts with the purchase of voluntary carbon offsets. These are vetted certificate programs that allow individuals or organizations to pay for carbon removal, either to offset their operations and ongoing impact or to account for legacy emissions in the past and neutralize their historic footprint. This is done by offsetting emissions generated by one person or location with carbon removed elsewhere. Once paying for the certificate –usually equal to a given volume or tonnage of carbon dioxide– the purchaser receives verification that the amount paid for has been or will be neutralized, by whichever mechanism they designated.

On the other end, the purchase funds are allocated to projects that do the carbon capture, removal, sequestration, or offsetting. These can range from tree planting programs to direct air capture deployments and even renewable energy projects that produce “carbon-free” energy.

So far, this seems like only a small-scale solution. Yes, it allows single people or entities to purchase carbon offsets, but they could choose to only purchase a small quantity of offsets, or too few entities may decide to make such a commitment. And how can this be effective when China and others are emitting at record levels?

There is reason to be optimistic, as many organizations are announcing and committing to ESG stewardship goals or other corporate environmental pledges, and the general thrust of social policy and preference is toward stewardship and responsible use of resources. As more emphasis is placed on these steps, more use of carbon offsets is likely. But the story does not end with small footprints being offset; over time, more carbon can and will be removed than offsets pay for. Yet, we still must answer the question of what to do with the carbon dioxide and other waste and byproducts.


The value

All finite resources have economic value, and carbon dioxide is no exception. Lining up supply and demand takes a little bit of innovation and a lot of market activity. There are already uses for carbon dioxide and other greenhouse gases, which can help make carbon removal initiatives economically viable, industrially scaleable, and market-ready.

Six of the top solutions include:

  1. Converting captured carbon into carbon-neutral synthetic fuels
  2. Using CO2 to strengthen building materials and industrial inputs
  3. Selling CO2 as carbonation for sodas
  4. Utilizing carbon dioxide for animal feeds and plant food
  5. Pumping CO2 into the earth for Enhanced Oil Recovery
  6. Capturing methane to use as renewable natural gas

As a seventh and honorable mention, direct air captured or otherwise collected carbon dioxide can be injected deep into the earth and permanently stored forever. While not a market solution, it is a solution for what to do with carbon dioxide and most effectively eliminates it from the climate equation. Far more valuable solutions exist, and markets are already forming:



The nutshell

So far, we know that carbon offsets can help fund the removal of carbon dioxide. We know that it does this by allocating resources to projects doing the work of developing carbon removal technologies, undertaking conservation efforts, deploying zero-carbon energy projects, and more. In turn, many of these projects can convert that carbon dioxide into a value-added marketable product or sell it as a raw input to another business that can. Here, a cycle begins forming, where a new circular carbon economy rises, both repurposing the emissions from before while also building up a sector dedicated to removing carbon dioxide altogether. The use of carbon offsets simply helps to jumpstart the enterprises making it all possible.


The full picture

The ultimate innovative way to ensure climate equilibrium is to create an entirely new industry solely focused on reversing the factors contributing to climate change. While other solutions like building and maintaining more resilient infrastructure are critical and necessary, they only improve our ability to withstand current and future disasters. What will be needed is a sector pulling CO2 straight out of the atmosphere, planting and conserving forests, capturing source emissions, generating carbon-free power, and improving existing systems to streamline their energy demands. Is it possible to simply deploy thousands of direct air capture batteries to pull atmospheric CO2 every hour of every day, year in and year out?

It is possible to jumpstart such a future and its accompanying carbon market. Beginning with carbon offset purchases, these voluntary certificate purchases allow anyone from individuals to deep-pocketed corporations to allocate funds to projects that reduce carbon emissions. They can pay to neutralize their own footprint by reducing emissions elsewhere so that on balance it was like they never emitted. Notable organizations like Google have even been able to claim they are carbon neutral since their founding due to carbon offsets.

The obvious benefit is that it means specific, measurable emissions reductions. But the secondary benefit is that it seeds funds for the innovators soon to give rise to a new industry. The spender receives the certificate essentially stating that by paying this amount of money, they have addressed this quantity of carbon emissions. On the other side of this transaction, funds flow to pilot programs, tech start-ups, conservation groups, and innovators in the carbon capture space. It essentially forms a private subsidy system, whereby individuals and corporations can crowdfund and kickstart technology and businesses focused on climate solutions. This not only helps fund the operation of these initiatives, but brings more attention to them, and ultimately helps them expand.

Many offset beneficiaries are underfunded start-ups with functional climate technology but also viable business models. The carbon offsets can help overcome scalability hurdles or help facilitate expansion into new asset purchases or projects. For those with models like reselling carbon outlined above, they will ultimately become self-sustaining, stand-alone businesses forming an entirely new industry. This carbon market, climate sector, or sequestration industry will no longer be reliant on carbon offsets but can sell its captured carbon or otherwise dispose of it based solely on the economics of its technology and market demand.

This solution relies on large corporate and private buy-in to make carbon offset purchases, as well as reputable certifying organizations to identify proven and viable projects to receive the funds from those purchases. With enough action, these private subsidies will give birth to an industry that will mitigate and reverse the atmospheric carbon dioxide and other emittents believed to agitate anthropogenic climate change.

What is more, individuals, corporations, and everyone in between would not need to change their habits substantially, as anything they emit would ultimately be offset by the industry working around the clock to pull carbon dioxide out of the atmosphere and decrease new emissions at the source. Reaching that level of the climate solutions industry would require substantial innovation and funding, but if and when it arrives, it will change the dynamic of every action across the globe.

A secondary way to jumpstart this is already underway and is laser-focused on the market aspect. The Circular Economy Campaign, Earthshot Prize, and XPRIZE aim to incentivize and reward innovators bringing revolutionary carbon solutions to the market. With an emphasis on capitalizing on the value of carbon, these campaigns and the technology they will produce will kick off the unceasing carbon removal industry. With economic viability, carbon offsets and public policies may become irrelevant or redundant, as entrepreneurs and innovators have financial incentive to remove carbon dioxide, methane, and more from the atmosphere, increase conservation efforts, and deploy new energy solutions.

Carbon offsets are not necessary to realize the coming circular economy and carbon market, but they can be instrumental in helping kickstart some of the technologies that will form its foundation. The purchase of a carbon offset does make a positive impact – it provides funds to facilitate a real and measurable volume of carbon dioxide removal. This same purchase may also help elevate and sustain entrepreneurs, companies, and innovators who are bringing carbon dioxide removal technology to a new level and putting in place market solutions to sell that carbon, beginning a chain reaction of ever more removal of source and atmospheric emissions.


Written by Benjamin Dierker, Director of Public Policy


The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.