Climeworks branches into carbon removal trading

• It could herald similar pivots by other removal companies to take advantage of additional revenue streams, though some competitors do already exist.

The big picture: Climeworks, which is headquartered in Zurich with a growing U.S. presence, is focused on scaling up direct air capture technologies.

• Company leaders described the new venture as an extension of its main air capture work.
• Constructing direct air capture facilities has given its staff insights into the effectiveness of this and other removal technologies, which gives it an advantage in helping other customers.

Zoom in: As of Wednesday, Climeworks no longer simply offers companies a way to contract for direct air capture solutions at its facilities in Iceland, for example. But it will instead also offer to construct and carry out carbon removal portfolios.

• These may consist of both engineered and nature-based approaches to carbon removal.
• One can think of this service as akin to an investing company offering a mix of index and mutual funds — except instead of a portfolio of stocks and bonds, this involves different ways to remove carbon from the atmosphere.

How it works: Breitling, the luxury watchmaker popular among pilots, is Climeworks Solutions' inaugural customer, having signed a 12-year agreement.

• Climeworks will be responsible for completing the due diligence to make sure that a ton of carbon dioxide the company purchases does represent a ton of CO2 removed.
• The new division is already in conversations with about 50 companies, said Adrian Siegrist, VP of Climeworks Solutions, during a media briefing Tuesday.

Context: Many experts have doubts about how quickly, effectively and cheaply carbon removal technologies, such as direct air capture, can scale up.

• However, climate studies show that carbon removal will be necessary to limit global warming to the Paris targets.
• This is due to the sheer amount of long-lasting CO2 emitted by cars, trucks, power plants, deforestation and other sources to date. Also, global emissions are still increasing.

The intrigue: Climeworks' new division seems like a natural outgrowth of its expertise in direct air capture, as it has seen increasing momentum in that market.

• "Companies are looking to purchase bundles or portfolios of different carbon removal approaches," Siegrist said.
• He said companies face barriers to acting on their own due to the complexity of the space and the need to ensure they are getting what they paid for.

What they're saying: "Up until today, Climeworks offered direct air capture, which is one approach of carbon removal for sale on the market," he said.

• "We will offer holistic carbon removal solutions, including our own direct air capture," Siegrist said. "And on top of that, non-direct air capture carbon removal from other suppliers ... with the stamp of the Climeworks quality bar, pre-vetted with a very, very selective vetting process."

Our thought bubble: The company did not disclose exactly how transparent it will be regarding how it vets removal credits or the bundles it sells, other than committing to rigorous standards.

Yes, but: Siegrist said Climeworks tailors carbon removal solutions to customers' needs and that this would not always involve the purchase of a large amount of direct air capture from Climeworks itself.

• The effectiveness of nature-based solutions, such as enhanced rock weathering and tree planting, can be especially difficult to track. But Siegrist said the company will only pursue projects that are proven to be viable.
• "We really have to make sure quality wins," Siegrist said.