Na’im Merchant of Carbon Removal Canada joins Tom Heintzman, Vice Chair, Energy and Climate Finance, to discuss how the carbon removal sector has evolved in the context of changing political dynamics in the U.S. and Canada, the latest national polling results revealing to what extent Canadians support carbon removal initiatives, and the sector’s outlook over the medium term.
Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I'm your host, Tom Heintzman. Please join me as we explore today's most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.
Pull Quote (Na'im Merchant): ”And so the key to maintaining long-term support is framing. It's talking about the economic benefits that ultimately evokes the most support for carbon removal, right? 67% of Canadians believe that carbon removal can create jobs and grow the economy. And that's important because it speaks directly to their primary concerns.”
Tom Heintzman: Welcome to our multi-part series on carbon dioxide removal and the carbon markets. Throughout this series, we will examine key issues impacting the compliance and voluntary markets and how our participants are navigating this landscape in response to evolving policies. On today's episode, we'll explore how the carbon removal sector has evolved in the context of changing political dynamics in the US and Canada, the latest national polling results revealing to what extent Canadians support carbon removal initiatives, and the sector's outlook over the medium term. Please welcome my guest, Na’im Merchant, Executive Director at Carbon Removal Canada, which is an independent policy initiative focused on the rapid and responsible scale up of carbon removal solutions. Prior to joining Carbon Removal Canada, Na’im founded CarbonCurve, a consulting practice focused on equitably scaling up the carbon removal processes in Canada. He is also an advisor to Terraset and the Carbon Removal Standards Initiative. Welcome Na’im and thank you for joining us on the show.
Na'im Merchant: It's great to be here, Tom. Thanks for having me out.
Tom Heintzman: Na’im, let's start with a little context for our listeners because many may not have heard of Carbon Removal Canada. Can you begin by providing an overview of your organization, why carbon removal is needed today, and who you collaborate with to deliver on your mission?
Na'im Merchant: Yeah, absolutely. So Carbon Removal Canada is an independent nonprofit that I founded a few years ago alongside a number of other environmental nonprofit leaders, including Michael Bernstein – who's now our board chair – and it was focused on creating the policy environment needed to responsibly scale up this new suite of climate technologies. So spending a number of years working in the United States and kind of seeing what can be accomplished in terms of building this new carbon removal industry through kind of smart policy support. I realized there's this huge potential in Canada for the carbon removal sector if we could do some of the similar things that they were doing in the States. So I moved back to Canada and helped get this thing off the ground and the idea was that if we can be an honest broker of information to government and help advise governments on how to design policies that can really be impactful in scaling up this critical sector, that it could drive a lot of economic benefit for the country and help us reach our climate goals as well. So we got this organization started with the support of a number of philanthropic funders over the years and we've seen a really, really encouraging level of support from the federal government and provincial governments for supporting this new suite of technologies.
Tom Heintzman: Na’im, let’s just for reference sake, if we could just double click on what the suite of technologies are, sometimes the terms get intermingled. Carbon removal or CDR, which you work on, and carbon capture and sequestration or CCUS. Can you just distinguish these different types of carbon markets? And maybe just give a couple examples of the technologies that your companies deal with.
Na'im Merchant: So you're absolutely right. Carbon capture and carbon removal sound really similar, so they do get mixed up sometimes. They're both important. We need them both. But they're ultimately solving different problems. They're different solutions for different problems. So carbon capture is where you are preventing emissions from being released into the atmosphere. At best, you get something that is carbon neutral as a result. So you can attach a scrubber to a facility that would prevent CO2 from entering the atmosphere.
Tom Heintzman: Like a cement plant or a steel plant, etc. Anything that's burning and emitting got it.
Na'im Merchant: Exactly, that's right. And whereas carbon removal is about removing CO2 from the atmosphere, so already emitted CO2 from the atmosphere – and there's an entire suite of technologies that are involved in carbon removal – we focused on methods of carbon removal that are permanent. So that means they demonstrate an ability to remove CO2 from the atmosphere and store it away for millennia. Permanent removal of CO2. So that results ultimately in negative emissions. So it's not just carbon neutral, but it's carbon negative. And that's the key difference between CCS and carbon dioxide removal. And we are not an industry association. We're an independent nonprofit. But we engage with industrial actors and companies that are working in the space pretty often. And so we try to create a supportive ecosystem for carbon removal and shape policies for carbon removal technologies that range from direct air capture, which is like using kind of these giant fans to strip CO2 out of the air directly. So direct air capture is an example of that. As well as carbon mineralization. So there are minerals, geologic formations, that naturally sequester CO2 in the atmosphere and there's companies working on speeding that process up very significantly. There are marine carbon removal methods that leverage our water systems and oceans to remove CO2 from the atmosphere. And then there are really interesting kind of biomass or land-based methods where waste biomass is used to lock up CO2 before it's re-released into the atmosphere, resulting in negative emissions. So things like bioenergy with carbon capture and storage or biochar would fall into that category. So those are the kind of range of technologies that we advocate for that result in negative emissions and permanently store the CO2 away.
Tom Heintzman: That's fantastic. Thanks. That's super helpful to give those examples. So now digging further into carbon removals, I'm curious how the sector has evolved over the last year, especially considering election results in the US and Canada. And in particular, yesterday I had a conversation with a large buyer and they were indicating that there seems to be a move afoot for technology companies in this space to be moving from the US to Canada. Maybe you could just give us a bit of a sense of the evolution over the last year or so in the carbon removal space.
Na'im Merchant: Absolutely. Yeah, over the last year, we've seen a pretty significant scene change in the carbon removal space. And I think the sentiment that you picked up is what we are seeing as well. I think we talk to companies every week or every other week, companies based in the US that are interested in moving their operations to Canada or accelerating the movement of their operations to Canada and building projects like direct air capture facilities, biomass-based projects, carbon mineralization projects. There's just so much that's happening. And there was so much that had gotten underway in the United States with these policy supports that were put in place by the Biden administration. And as we've seen those policy supports essentially be pulled back as a result of the broader kind of changes being made at the Department of Energy and the policy changes as it relates to climate more broadly, carbon removal is being impacted by that. And I think a lot of companies are looking at the policy landscape in Canada and seeing a high degree of stability. They're seeing a high level of support, especially for things like direct air capture and the biomass-based methods I talked about earlier. And a receptiveness amongst policymakers and other key decision makers about the interest in locating carbon removal projects here in Canada. Since kind of moving back to Canada and starting this organization, I've just been really blown away by the degree of pragmatism from policymakers across the political spectrum and stakeholders that we meet with: Indigenous nations, community leaders, corporates, other industrial actors that want to implement this suite of technologies and take a realistic look at it. And I think that companies are sensing that as well. So they're seeing the policy stability, they're seeing a high degree of buy-in amongst the key stakeholders that really matter in building out this industry and are encouraged by it and want to move their operations to Canada and increasingly to Alberta where we see an even more favorable policy environment for a lot of these methods.
Tom Heintzman: Na’im, I want to dig into this sentiment and the acceptance of carbon removal Canada in a minute. But just before I do, you mentioned both federally and at the Alberta level, policy support for carbon capture and carbon sequestration and CDR carbon removal in Canada. Can you give our listeners just a few examples of what that policy support looks like to make it a little bit more tangible for them?
Na'im Merchant: So there are two kind of major policy supports that I think we should be really proud of here in Canada that are really driving interest in building out this sector. One has been the carbon capture utilization and storage investment tax credit, worth 60% of the CAPEX of a new direct air capture facility. Direct air capture is a pretty capital intensive process. That investment tax credit for capital expenditures is going to be really, really important for project developers in that space. That same investment tax credit supports other methods like bioenergy with carbon capture and storage at a rate of 50%, which is also very attractive to setting up biomass-based methods. So what we've seen through the creation of that investment tax credit is this draw from the United States and from around the world, frankly, to Canada for direct air capture and biomass-based carbon removal methods. And what we'd love to see is the interpretation of that investment tax credit to be expanded beyond just direct air capture but also to include some of the other methods that I talked about because from what we're seeing, it can really attract new players into our ecosystem. And we might as well do it across the entire spectrum of permanent carbon removal methods, not just DAC or biomass energy, carbon capture and storage or BECCS. The second major policy signal that has been really impactful, despite the fact that it's actually not a very big dollar amount, is the government's own commitment to buy carbon dioxide removal credits from Canadian suppliers. So this is something we were really excited about and we advocated for in the previous budget, which was to have the federal government, in its effort to reduce the emissions from our national safety and security fleet, to not just look at buying low carbon fuels, but also to buy carbon dioxide removal credits from Canadian companies. And this is a $10 million commitment to buy carbon removal from Canadian companies to essentially reduce the emissions intensity of our aircraft, of the Coast Guard, of key sectors that are involved in our national security fleet. So it's an exciting space to be, but it's an important demand signal to the market. The last point I'll raise as well, that's kind of a policy that's been kind of in development, is the creation of a protocol for direct air capture that would essentially enable its use in Canada's different industrial compliance markets. And that's interesting in creating potential new revenue streams for direct air capture in the future.
Tom Heintzman: So Na’im now turning to government sentiment – governments will move when the public moves – and I know that your organization has recently conducted some polling and published a set of findings regarding carbon removal initiatives in Canada. Can you talk about how the survey came about and share its key findings?
Na'im Merchant: So we've found that while there's a lot of academic literature on carbon removal, the social dimension and particularly in Canada has been lagging, right? We needed data to communicate what Canadians are seeing, feeling, wondering about as we kind of engage daily with decision makers across the country on this topic. So we partnered with the Carbon Business Council to commission abacus data for Canada's first national public opinion polling on carbon dioxide removal. And we were, in doing that, careful to distinguish between permanent carbon removal from CCUS and nature-based solutions like tree planting. We wanted to be sure that we were getting specific, accurate responses on technology-based permanent carbon removal methods. And ultimately, what we found is that there's really broad support, including across partisan lines. So, amongst many other things, the results showed that 64% of Canadians support carbon removal and 81% of them believe it's important for Canada's long-term success. And it was encouraging to see that that support mostly spans political affiliation. So, 77% of liberal voters, 76% of NDP voters, and 51% of conservative voters support permanent carbon removal. So that was an interesting set of findings. And one more I'll just call out is how that support kind of influenced behavior. So a majority of Canadians indicated that they're more likely to vote for pro-carbon removal political candidates or that they view companies more favorably if they invest in carbon removal.
Tom Heintzman: Interesting. So let's dive a little deeper. Do you have a sense of what factors contributed to the public support for carbon removal initiatives among Canadians and how this compares to support for other climate solutions?
Na'im Merchant: Yeah, I mean, there's a few things to take away here. Support definitely exists for carbon removal, but let's be honest, climate is not top of mind for folks, right? 64% of support for carbon removal is strong and it crosses party lines, but ultimately, as we drill deeper, it reveals that climate issues rank fairly low among Canadian concerns, right? People are primarily worried about and rightfully worried about jobs and economic security. So, we have core supporters, we have passive supporters, and then there's those who agree with the idea of carbon removal when asked, but they're not really thinking about it very much. And so the key to maintaining long-term support is framing. It's talking about the economic benefits that ultimately evokes the most support for carbon removal, right? 67% of Canadians believe that carbon removal can create jobs and grow the economy. And that's important because it speaks directly to their primary concerns. When listed alongside other climate solutions, permanent carbon removal shows lower familiarity or support. So that was another thing that stood out. But that's expected for an industry that's really only emerged in the last decade, right? Renewable energy has 79 % support, or tree planting has 83 % support. This is stuff that people have had years to kind of better understand and these are areas that have had years to build an economic and social case. And at Carbon Removal Canada, our job is to do the same thing for carbon removal and build that support over the long term. So for us, we think that what's really critical is building familiarity through real deployment. So I talk to carbon removal companies every day and they say to me or they ask me: how can we help? What can we do to help with the industry? And I say, just keep doing what you're doing. Like keep building what you're building, put steel on the ground, make these things a reality. Because making carbon removal feel more real to Canadians, is only going to come as more facilities are built and the technology becomes more visible. So we saw, for example, the launch of the Deep Sky facility, direct air capture innovation center in Innisfail, Alberta, at the beginning of November. So building that familiarity and maintaining support is much easier to do when there's physical infrastructure that's being built. Our job is to maintain that support through economic messaging. And that's really a core of the work that we do to help the sector scale rapidly and responsibly.
Tom Heintzman: You mentioned Deep Sky and a number of the Deep Sky representatives, and also the other carbon capture companies that are situated at its Innisfail project, appeared at the recent CIBC Carbon Summit. So that was fascinating and certainly groundbreaking for Canada to have this project lift off, so to speak. So what about policies? Did your poll reveal any policies in particular that Canadians would support? And which ones would be most helpful to businesses as they try to scale up carbon removals?
Na'im Merchant: Yeah, I'm glad you're asking that question. I mean, we're ultimately a policy nonprofit. We advocate for policies because we think that policies are going to be the most impactful lever alongside different market shaping approaches to scale carbon removal in Canada. And what we saw was kind of broad support among across multiple policy approaches. So we, through this survey, tested a range of policies with respondents and really were surprised to see that all scored remarkably high. 64% supported integrating carbon removal into our industrial framework. So we talked about that earlier in terms of integrating carbon removal into our compliance markets. 63 % supported integrating carbon removal into our overall climate plans and our climate strategies. 60% support for innovation funding, which is really important. This is an emerging industry. There's a lot of great intellectual property to be developed right here in Canada. And innovation funding is key to that. And 59% for government procurement considerations and about half for direct removal credit purchases, so buying carbon removal credit directly from the government with actual suppliers. So the fact that we put, I think it was seven different policies in front of Canadians and saw majority support for each one of them is impressive. I think you will rarely find that level of agreement that these are good policy approaches in almost any sector. So the strong support across these diverse policy options from industrial integration to the procurement to direct purchases, I think gives policymakers a number of different pathways to incentivize businesses to scale carbon removal and allows for tailored approaches that fit different government priorities and different industry needs. So yeah, different policies are going to support growth at different stages, right? Government procurement is essential short term to drive investment and help Canadian companies scale today. Medium term, we want to see integration within existing sectors like mining and forestry, where there are the biggest project opportunities right now. And then long term, we want to be developing international standards with other willing countries to unlock this as a massive export opportunity for Canada. We really see carbon removal as a big export opportunity. And if we can work in collaboration with the EU, with countries in East Asia, with the UK in establishing standards of what qualifies as permanent carbon removal and high quality carbon removal, those then just become markets for carbon removal credit exports in the future. And that's something else that we're really excited about.
Tom Heintzman: Interesting. So Na’im, what's your outlook for the removal sector over the next five years? And what does the sector still need in order to get to or to achieve your vision?
Na'im Merchant: Yeah, that's a good question. Right now Canada has this kind of early first mover advantage in carbon removal. There are other countries that are emerging or even starting to outpace us, but we launched, in September, something called a carbon console. You can find it if you go to our website at carbonremoval.ca. There's a link there to the console. And it's a dashboard of all the projects, all the carbon removal projects that are underway in Canada. And there's about 100,000 tons of carbon removal being done right now, but there's about 12 million tons of carbon removal capacity in the planning or development stages, according to our carbon console, which is an excellent foundation to build on. You we would love to see Canada get to 35 megatons by 2035. That's a lot of carbon removal. And we think there's an opportunity for Canada to become the global supplier of choice. As the world starts to look at what are really high quality ways to address hard to abate emissions across their sectors and remove CO2 from the atmosphere to address emissions from steel, cement, aviation, all of these industries where we're seeing an increase in emissions. Carbon removal is going to be one of the top options that they look at. And so the next five years will determine whether our pipeline of 12 million tons of planned and in-development carbon removal capacity materializes into real projects. Because plans are great, but results are better. And we need focused government attention to move from policy discussions to implementation, right? We need to get shovels in the ground if we want to realize our potential as an energy superpower for clean and conventional energy. And want to have a low carbon economy despite the fact that we want to grow our energy standing in the world. And it's important for carbon removal to play an important role in existing industries like steel, fertilizer, and competing in climate conscious global markets. So I would just say that, you know, for the next five years, we need to double down on our policy support to, to create more demand for carbon removal through our carbon markets and to expand the support of things like the investment tax credit to more carbon removal methods and that will help turn those 12 megatons of carbon removal capacity in the planning stage to the operating stage over the next five or so years. That will really solidify Canada's global standing in this space.
Tom Heintzman: Well, fantastic. Thank you so much, Naim, for taking the time to join the show today. It's been wonderful to talk with you. And thank you to the listeners for tuning in.
Na'im Merchant: Thanks so much, Tom.
Tom Heintzman: Please join us next time as we tackle some of sustainability's biggest questions, providing you different perspectives to help you move forward. I'm your host, Tom Heintzman, and this is The Sustainability Agenda.
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