.png)
When it comes to carbon management, the #UK has often been leading the way and features frequently in my posts. The UK's Department for Energy Security and Net Zero (#DESNZ) has now taken another step with the release of the Greenhouse Gas Removals (#GGR) Business Model.
Here’s what you need to know about the GGR Business Model:
🎯 Ambitious Targets: The UK’s plans to deploy at least 5 MtCO2/year of engineered removals by 2030, potentially scaling to 23 MtCO2/year by 2035 and 75-81 MtCO2/year by 2050.
📜 Innovative Contract Structure: The model introduces a Contract for Difference (#CfD) structure: for 15 years, the UK government would de facto cover the difference between carbon credit prices and production costs (plus a markup) providing revenue support for negative emissions and attract private investments.
💷 Pricing Dynamics: Central to the CfDs are the concepts of 'Strike Price' and 'Reference Price'. The Strike Price covers the comprehensive cost of generating negative emissions, while the Reference Price is tied to the market value of GGR credits.
📊 Integration with UK Emission Trading System (#UKETS): A significant step is the potential inclusion of engineered GGRs in the UK ETS, which covers around 25% of UK’s emissions and generates £6b/year. This will likely not happen before the late 2020s and a consultation on how this could work will be launched mid this year.
📏 Setting Standards: The UK government plans on developing its own GGR standards. These standards will ensure the integrity of carbon crediting and align with broader national policies on carbon management.
👏 The UK's strategy marks a crucial step forward for scaling carbon dioxide removals (#CDR) to achieve their net-zero targets. I am particularly excited for the public consultations planned for 2024 and see if they will continue to lead on GGR/CDR.
💬 What are your thoughts? What is your read of this proposal?