Carbon Removal Industry Warns SBTi Draft Rules Jeopardise Net-Zero Goals

A coalition of 55 companies and stakeholders in the permanent carbon dioxide removal (CDR) sector has issued a stark warning that current draft rules from the Science Based Targets initiative (SBTi) could make achieving true net-zero emissions “insolvable” for many companies. The industry’s open letter, coordinated by the Nordic Carbon Removal Association, calls for critical revisions to the SBTi’s draft Corporate Net-Zero Standard Version 2.0.

The letter was released during a crucial second public consultation period, closing on 12 December, which will shape the world’s leading framework for private-sector climate action. Key concerns raised include restrictive rules on carbon accounting, double counting, and additionality that threaten to stifle investment. According to a leading media outlet covering the issue, the coordinated pushback marks a pivotal moment in defining the role of technological carbon removal in global climate strategy.

Core Accounting Rules Threaten Investment
The central dispute centres on specific technical guidance in the SBTi draft, particularly within Annex E, which governs the use of carbon credits. The CDR sector’s primary concern is that the proposed language creates significant uncertainty and risk over whether investments in permanent carbon removal—where CO₂ is durably stored for centuries or longer—can be counted towards a company’s net-zero balance sheet for neutralising residual emissions.

A major point of contention is the treatment of projects that benefit from public funding or policy support. Many early-stage, capital-intensive CDR projects rely on a mix of public and private finance and are often already counted within a host country’s national climate targets. The draft rules, as currently interpreted by industry stakeholders, could enforce a strict separation between corporate and national carbon accounting.

Industry representatives argue that this “dual-counting” approach, which they consider essential for scaling the sector, is not adequately recognised. They warn that if corporate buyers cannot claim the climate benefit of their investments, the financial incentive to fund these costly projects will disappear, effectively stalling their development.

The Scaling Dilemma for an Emerging Industry
Industry signatories emphasise that the permanent carbon removal sector is still in a nascent, high-cost phase. Very few projects have reached Final Investment Decision, and most depend on forward-looking commitments from corporate buyers to secure essential financing. The letter argues that the SBTi draft does not sufficiently reflect this market reality and risks inadvertently choking off the early demand needed to commercialise and scale these technologies.

The sector advocates for an accounting model that recognises shared climate benefits, allowing both the investing company and the host country to count the removal towards their respective targets. This approach, they note, is already accepted practice for emissions reduction projects. They argue that corporate investment does not undermine national climate ambition, but instead accelerates it by bringing additional removal capacity online more rapidly than public funding alone could achieve. Without supportive rules, companies may be left without viable tools to offset their most difficult-to-abate emissions.

Implications for Global Climate Ambition
The outcome of this debate carries significant implications for global climate efforts. The SBTi standard guides the net-zero strategies of thousands of major companies worldwide. If the final version restricts the use of high-quality, permanent removals, many firms could find their pathways to net-zero effectively blocked.

Conversely, clear and supportive guidance from SBTi could unlock substantial private capital and accelerate innovation in the carbon removal sector, providing a critical tool for meeting global temperature targets. While SBTi has stated that the revised draft is intended to improve clarity and transparency, the CDR community cautions that these broader improvements will be undermined if specific guidance on removals remains restrictive.

The final decision will therefore signal how mainstream climate governance frameworks view the necessity of engineered carbon removal in the second half of the century.