The world’s climate goals can’t be reached solely through reducing emissions. To avoid the worst effects of climate change, billions of tons of carbon dioxide will need to be removed from the atmosphere, according to the Intergovernmental Panel on Climate Change at the United Nations. There are two key mechanisms for carbon removal: nature and technology.
In addition to reducing our emissions, McKinsey is investing in carbon removal as part of our net-zero commitment. Our approach is both nature-based—through avenues like reforestation and restoring coastal wetlands—and technology-based—including through our founding membership with Frontier, an advance market commitment to buy an initial $1+ billion of permanent carbon removal between 2022 and 2030.
Tech-based removals, while progressing, are still nascent and expensive, requiring significant growth to achieve the gigaton-scale market required to reach net zero. Recent research by McKinsey finds that the gap between current estimated investment and what would be needed by 2030 is between $400 billion and $1.6 trillion.
Early buyers play a critical role in unlocking this required scale through long-term offtake agreements, which allow carbon removal companies to access funding they need to develop, refine, commercialize, and operate these nascent technologies.
Our purchases
We have signed long-term purchase agreements with two direct air capture companies, 1PointFive and Climeworks, to permanently remove a total of 75,000 tons of carbon, equivalent to the emissions from roughly 253,000 economy-class passenger one-way trips from New York to London. We will use these high-quality carbon credits to remove emissions we cannot yet eliminate.
“Permanent carbon removals are a crucial element of our firm’s—and the world’s—path to net zero. A carbon removal industry capable of delivering gigaton-scale removals at net-zero levels could be worth up to $1.2 trillion by 2050. This industry would require input, support, and collaboration from a range of players—including investors, suppliers, buyers, traders, and other intermediaries,” says Tracy Francis, senior partner, chief marketing officer, and leader of global social responsibility. “That’s why, we’re excited to partner with 1PointFive and Climeworks today to invest long-term in important climate solutions.”
1PointFive will supply 45,000 tons of carbon removal credits from STRATOS, the world’s first industrial-scale direct air capture facility, currently under construction in Texas. STRATOS is designed to capture up to 500,000 tonnes of CO2 per year and is expected to be commercially operational in mid-2025.
“McKinsey & Company’s purchase of carbon removal credits is another important signal of the vital role that direct air capture will play in furthering net-zero goals,” says Michael Avery, president and general manager, 1PointFive. “Our agreement builds momentum for high-integrity solutions that address emissions in a durable and transparent manner while supporting demand that is needed to scale direct air capture to help the climate.”
Our agreement builds momentum for high-integrity solutions that address emissions in a durable and transparent manner
Climeworks will supply 30,000 tons of carbon removal credits from its large-scale direct air capture and storage facilities.
Jan Huckfeldt, chief commercial officer at Climeworks, says: “Given the importance of carbon removal to achieve net-zero commitments, high-quality carbon removal services will become a routine consideration for businesses across sectors. But to meet global demand and drive down the cost curve of the whole industry, investments need to increase exponentially. Forward-thinking companies like McKinsey embrace this reality. By signing long-term agreements, they not only help scale the carbon removal industry, they also secure their own share of the supply early in this future trillion-dollar market.”
Given the importance of carbon removal to achieve net-zero commitments, high-quality carbon removal services will become a routine consideration for businesses across sectors
To learn more, explore McKinsey’s recent buyer’s perspective, which discusses the importance of clear quality criteria, due diligence and portfolio diversification. For more information about McKinsey’s own net-zero journey, visit our McKinsey Environmental Sustainability page.