TD Bank, a Canadian financial institution, has entered into a 10-year carbon removal agreement with Climeworks, a Swiss-based carbon capture company, following an increasing trend among corporations to invest in technologies geared towards removing carbon dioxide from the atmosphere.

Through the carbon removal agreement, the financial institution will buy carbon removal credits that result from the process of capturing CO2 using Climeworks' direct air capture (DAC) technology. Details regarding the total cost of the deal, as well as the quantity of CO2 that is expected to be removed under the agreement, were not provided by either of the two parties.

The carbon removal agreement is based on Climeworks' DAC technology that directly removes CO2 from the ambient air. The carbon dioxide collected is eventually stored underground using geological storage techniques.

Carbon removal credits, on the other hand, serve as compensation for the CO2 that still lingers even after implementing other mitigation actions.

Climeworks has several commercially operational DAC plants and has entered into carbon removal purchase contracts with firms in different sectors such as financial services, technology, and consumer products. Climeworks claims that its customers' carbon removal purchasing commitment is an essential factor supporting the creation of carbon removal infrastructure.

Increased interest in carbon removal has been observed because of the net-zero commitments taken up by governments and private sector organizations. Research suggests that carbon removal can be one approach to tackle residual emissions from difficult sectors.

Even though the interest has increased, carbon removal still faces certain hurdles, including high operating expenses, energy consumption, and fewer deployment capabilities than regular carbon offset programs.

In addition, financial institutions have stepped up their climate commitments. Some banks have made emissions reduction commitments, established sustainable financing initiatives, and made investments tied to carbon markets.

The TD Bank-Climeworks partnership further builds on a growing trend of long-term carbon removal purchase agreements made by various companies to procure carbon removal credits.