Carbon removal

The carbon removal market is the key to meeting net-zero commitments, once science-based targets for reducing emissions have been met. The Zurich Insurance Group (Zurich) recognizes the need for urgent action to help accelerate carbon removal market growth and aims to inspire other companies to take similar action by supporting emerging solutions and being transparent about our approach.

A carbon removal certificate is an independently verified document that confirms that 1 metric ton of CO2-equivalent (CO2e) has been removed from the atmosphere and stored for the long-term using a verified removal method. The certificate is issued to the supplier and purchased by a buyer who wants to remove their residual emissions in a credible way. The certificate must be retired, ideally as close to the purchasing time frame as possible, to ensure a unique and credible carbon removal claim.

Carbon removal certification schemes are still under development by various organizations and so certificates are not widely available. However, Zurich has so far sourced carbon removal certificates issued by Puro.earth which certifies companies operating carbon net-negative processes or products based on the Puro Standard. Removal is independently verified by a third party and CO2 Removal Certificates (CORCs) are issued through the Puro Registry. Our engagement with Puro.earth enables us to learn more quickly about emerging best practices. This is important in terms of calculation methodologies, auditing, understanding claims of permanence and ongoing project monitoring in an emerging industry that currently lacks globally consistent quality-assurance frameworks. Where removal solutions do not fall under the Puro.earth certification standard, we require projects to demonstrate strong scientific credentials such as a documented life cycle analysis.

We have also sourced carbon removal certificates issued by Plan Vivo. Plan Vivo is a certification body that certifies projects against the Plan Vivo Carbon Standard (PV Climate) which is a tried and tested framework, developed with over 25 years of experience, for community and smallholder land-use and forestry projects. Certified PV Climate projects can issue Plan Vivo Certificates (PVCs). Each PVC represents one metric ton of CO2e emission removal alongside other non-carbon benefits (climate adaptation, biodiversity protection, water provision, etc.).

Where removal solutions do not fall under an independent certification standard, we require projects to demonstrate strong scientific credentials such as a documented life cycle analysis.

We are adopting this approach to eliminate at least the same amount of CO2e as we produce by 2030 onwards.

Besides agreements for the supply of carbon-removal certificates from established projects, Zurich also has agreements in place with some early stage but highly promising carbon-removal suppliers. The majority of our agreements are pre-purchase agreements whereby Zurich agrees to purchase, and even pay in advance, to secure carbon removal certificates that have not yet been produced.

Our pre-purchase agreements provide advance funding to projects so that they can get up and running or scale up. We manage risks by carrying out extensive due diligence and monitoring the progress our suppliers make against pre-agreed milestones.

Through our pre-purchasing agreements, we aim to ramp up our supply of carbon-removal certificates to eliminate the same amount of CO2e as we produce 2030 onwards.

Anja-Lea Fischer

Head of Operational Sustainability

No time to wait

We are getting active in carbon removal markets now so that by 2030 and onwards we are ready to eliminate at least the same amount of CO2e that we produce.

We believe by accelerating our net-zero targets for our operational emissions from 2050 to 2030, we are underlining the urgency to achieve significant emissions cuts and the need to scale up investments in removal solutions now.

The Intergovernmental Panel on Climate Change (IPCC) has made it clear that achieving net-zero means reducing emissions as much as possible, as well as balancing out any that remain by removing an equivalent amount.

The report¹ finds that limiting global warming to 1.5°C would require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050. This means that any remaining emissions would need to be balanced by removing CO2 from the air.

¹ https://www.ipcc.ch/2018/10/08/summary-for-policymakers-of-ipcc-special-report-on-global-warming-of-1-5c-approved-by-governments/

The urgency of the situation means we need to be proactive and help scale up the carbon removal industry, which is still in its infancy.

Alison Martin

CEO EMEA and Bank Distribution

Solutions we support

Zurich initially focused on nature-based solutions, such as biochar and biomass burial, in its first steps towards net-zero. Since then, we have signed our first pre-purchase agreement with the tech-based removal company, Climeworks, leveraging direct air capture. We have also started to support an agroforestry project, bringing reforestation into our carbon removal portfolio. Having a diversified portfolio of removal supply enables risk mitigation for Zurich, while helping develop the varied market solutions needed for a net-zero future. Both nature and technology-based solutions play important roles in decarbonizing our planet.

Nature-based solutions

Agroforestry

Agroforestry is the intentional planting of trees and shrubs around or among crops or pasture in order to create more diverse, productive, healthy, and sustainable approaches to farming. Planting trees and shrubs on previously cleared land sequesters carbon and is an important tool to increase the resilience of communities with a high exposure to the physical impacts of climate change. Resilience is increased since planting of trees and shrubs helps to reduce soil erosion, improve soil structure and fertility create wildlife habitatand increase biodiversity.

Trees planted using agroforestry techniques can also produce a renewable source of wood, fruits, nuts, and other products. Agroforestry practices are especially valuable techniques in Sub-Saharan Africa where there is a high volume of smallholder farmers who have a low level of resilience to the physical impact of climate change.

Biochar

Biochar is a charcoal-like substance made by burning organic material from agricultural or forestry waste (or biomass) with a limited supply of oxygen and at relatively low temperatures (5-800 degrees C).

This process, called pyrolysis, means the organic matter does not combust. Instead, it transforms the CO2e that a plant absorbs during photosynthesis into a very stable form of carbon that can’t easily escape into the atmosphere. This avoids the carbon captured by the plant being emitted when the plant decays.

Organic waste used to make biochar includes woodchips, grass, crop residues, leaf litter, dead plants, trees or manure. That means biochar’s chemical composition varies depending on the material used to make it, as well as the methods used to heat it. However, on average, about 70 percent of its composition is carbon.

Biochar can remain in soil for centuries and even thousands of years, making it an ideal technology for scalable carbon removal.

In addition to sequestering the carbon inside organic material, preventing it from turning to carbon dioxide, biochar has multiple environmental and social benefits.

In certain types of soil, burying biochar can improve water retention, moderate the acidity of the soil, reduce nutrient leaching and lower the need for irrigation and fertilizer, decreasing the environmental impact of agriculture and farming practices and helping this critical industry to become more sustainable.

Besides enriching soils and potentially enhancing crop yields, other main commercial uses include city landscaping, drainage water systems and in landfills as a filter.

Biomass burial

Carbon dioxide in the air, which plants convert into carbohydrates by photosynthesis, is returned to the atmosphere when plants die and decay. What if we could sequester the carbon locked up in trees in such a way that it doesn’t get released back into the atmosphere when the tree is no longer alive?

That’s the premise behind the biomass burial solution. In this approach trees are planted in order to capture carbon. Once grown, the tree above ground is harvested and the collected biomass buried underground in a sealed cavity. The aim is to permanently store the carbon captured within the biomass. As the roots of the tree are left in the ground, the tree will re-grow and in time, be harvested again, allowing the burial process to be repeated to capture and permanently store carbon for hundreds of years.

Technology-based solutions

Zurich has evaluated several technology-based solutions and direct air capture (DAC) is a key part of its strategy for achieving net-zero.

DAC plants use machinery that captures carbon dioxide directly from the air. The captured carbon can then be stored in a variety of different ways. Our chosen solution from Climeworks, mixes the captured carbon dioxide with water and pumps it underground. There, it reacts with the rock and turns into stone and is permanently removed from the atmosphere.

DAC is still a fledgling and costly technology. There are currently 18 direct air capture plants operating worldwide, capturing 10,000 metric tons of CO2 per year, and a new capture plant capable of capturing one million metric tons of CO2 per year is in advanced development in the United States. In 2020, global CO2e emissions totaled 31.5 billion metric tons.¹ Developers hope to drive down prices by scaling up as more companies and consumers look for new solutions to achieve net-zero. Pre-investment in DAC solutions, at these early stages of development, helps to send the right signal to investors of our confidence in the viability of the technology.

Global CO2 emissions from energy combustion and industrial processes rebounded in 2021 to reach their highest ever annual level.² A 6% increase from 2020 pushed emissions to 36.3 gigatonnes (Gt).

¹ https://www.iea.org/reports/direct-air-capture
² https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2

Supporting carbon removal solutions

Zurich’s approach to net-zero is to identify some of the most promising suppliers of carbon removal and provide capital to enable them to scale up. The goal is to support these companies to develop now so they can help take Zurich over the line to net-zero in the coming years, though there is an element of risk involved in supporting such early-stage projects.

In our view, a range of carbon-removal solutions will be needed for the world to achieve net-zero. No single solution can solve the challenge alone. Solutions leveraging nature or cutting-edge technology, or hybrid solutions will all be required.

Our projects and partners

Australia

Biomass Burial

On degraded, low rainfall and previously cleared farmland in Western Australia, InterEarth plants native trees that deal well with the arid environment, allows them to grow, harvests them and then buries them underground in a sealed cavity. The aim is to permanently store the carbon captured within the biomass.

The company is proceeding with a formal pilot designed to prove that this method works as a method of carbon removal.

Zurich has paid a pre-payment against future carbon removal certificates that InterEarth aims to produce. These will partially fund the pilot and scale-up of the business. There is an element of risk as the pilot has not been completed. However, we have carried out our own due diligence to verify as best we can that the business and underlying carbon removal method has good prospects of succeeding.

Further payments will be made as the business meets certain milestones. This balances risk for Zurich, while also supporting the development of the company.

By acting early, we have also agreed an option to purchase additional carbon removal certificates at a set price. If the production scales, we will have secured a good volume of carbon removal certificates at what we anticipate to be a very competitive price.

This company’s business model is solely to produce and sell carbon-removal certificates.

Toronto, Canada

GECA Environnment

GECA Environnement is a Canadian consulting firm which specialises in biochar and its production.

The firm provides technical and market consulting services to the biochar industry on the development of their project, their growth and their business, including in the carbon market. GECA supports carbon project development, certification, marketing and sale of carbon removal certificates.

Our contracts for biochar-based carbon removal certificates are made with this company which exclusively represents Oregon Biochar Solutions and Bio Restorative Ideas.

We appreciate the role that GECA play in supporting the development of the biochar industry and the services that supports biochar producers to sell their carbon removal certificates. We anticipate that increased demand for carbon removal certificates will continue to reduce the cost of biochar-based products and help scale this carbon negative process.

Helsinki, Finland

Carbon removal standard and marketplace

man looking at a mobile phone while standing in a field

Puro.earth is a Finnish company, majority owned by Nasdaq, which provides the Puro carbon removal standard and a B2B marketplace to match companies that lock away carbon dioxide in environmentally sound processes for the long term with companies that have pledged to get to net-zero.

Puro.earth sells independently verified CO2 removal certificates (CORCs) from methods such as biochar, construction materials and geologically stored carbon which capture and store CO2 for at least 50 years (and up to 1000 years) and have industrial scaling potential.

The carbon removal is measured taking into consideration cradle-to-gate emissions and only the extra carbon absorbed in the process or product is turned into CORCs. CORCs are issued transparently in the Puro Registry where the public can also view which corporations have used CORCs to fulfill climate claims.

With its focus on measurable carbon removal, Puro.earth has brought a clear methodology and audit-based approval process to a sector which generally lacks a clear market standard and certification framework.

The carbon removal certificate suppliers selected by Zurich were all sourced via Puro.earth’s marketplace. We appreciate the transparency and trust that the Puro Standard certification framework brings to an otherwise unregulated market which lacks clear market standards. We anticipate in the future that other approaches and standards for carbon removal may develop over time and aim to monitor closely this quickly developing market.

Puro.earth’s business model is to charge a small fee to sellers of CORCs that are sold or re-sold via their platform.

We have a contract with Puro.earth to access their marketplace and to be introduced to carbon removal certificate suppliers.

Puro.earth estimates that a fully functioning carbon removal industry could in the aggregate remove more than 10 gigatons of CO2 per year.

Oregon, USA

Forest waste to biochar

Another part of the jigsaw can be found in Oregon, USA.

Oregon Biochar Solutions produces high-quality biochar, mainly sourced from forestry waste, including fire hazard biomass and forest fire burnt wood.

Removing forest waste material reduces the risk of future fires and puts waste material to productive use. The company also donates some of its revenues to the local fire department.

The company is already producing biochar, most of which is sold to farms, and has the capacity to scale up to produce more than 3,000 metric tons per year. It plans to use the revenue derived from the sale of carbon removal certificates to pass cost savings on to local farmers and entrepreneurs looking to integrate clean products into their supply chain. Biochar carbon removal certificates therefore increase the accessibility of biochar for buyers who have not been using it until now because of its price.

By supplying more biochar to this market, Oregon Biochar Solutions enables more farmers to benefit from the added value of biochar sequestration in soils. This usage results in better and healthier soils, water savings, and reduced fertilizer usage. These effects benefit the local community and help maintain biodiversity.

Oregon Biochar will also use the revenue derived from carbon removal certificates to invest in equipment to meet a backlog of orders. Further down the road, the company hopes to operate more biochar production facilities across the USA.

Through its purchase of carbon removals from Oregon Biochar Solutions, Zurich enables more farmers to use biochar and supports the implementation of sustainable agriculture practices. Additionally, Zurich contributes to the management of forests in an area prone to fires.

Puerto Rico

Bamboo to Biochar

In the southwest of Puerto Rico, not far from the small town of Hormigueros, a startup called Bio Restorative Ideas plans to convert bamboo to biochar on the site of a former sugar cane factory.

Bamboo is a rapidly growing grass and when fallen and broken, particularly along waterways and roadways, causes blockages, flooding and erosion.

Bio Restorative Ideas hopes to transform about 7,000 metric tons of this waste and invasive bamboo into 3,000 metric tons of high-quality biochar while creating about 15-20 local jobs.

The resulting biochar will be used to improve soil health in terms of nutrient availability and drought resilience. Additional applications are also being considered such as an additive to concrete or other building materials, environmental remediation or water and wastewater filtration.

If all goes according to plan, production could start towards the end of 2022.

Zurich is attracted to this project because it will use waste bamboo as a feedstock for the pyrolysis process that would otherwise be burnt, emitting CO2, or fermented, emitting methane. In Puerto Rico, bamboo management is a challenge as the invasive, non-native plant grows and spreads rapidly and often causes blockages in rivers, leading to floods. The bamboo harvesting will support flood resilience in Puerto Rico as fallen bamboo blocks waterways and creates drainage issues, also in emergency response scenarios caused by storms.

The project will help create good quality jobs and support the transition to new economies in an area where industrial activity ceased with the closure of the sugar cane plant more than 20 years ago.

In addition, the use of biochar in agriculture aligns with Zurich’s push for adoption of sustainable agriculture practices and can help to reduce use of fertilizers and water whilst supporting soil quality improvements.

Bio Restorative Ideas is in development phase and has not yet started biochar production. Zurich’s pre-purchases are partly funding its growth and scale up. We have made some up-front payments which will be passed onto the producer to support its development.

If this supplier can find buyers that agree to the future purchase of its carbon removals, its project can be implemented quicker and also begin to expand in other locations.

By getting involved at an early stage, Zurich’s pre-purchases support the development of the biochar carbon removal industry which might not happen without the early adoption of such solutions by a corporate leader. Before making pre-purchases Zurich carries out its own due diligence to verify the operational plans of projects it supports are in place and key criteria are met. In particular, Bio Restorative Ideas has demonstrated exceptional risk analysis, that has, for example, led to the development of a completely mobile solution to relocate the entire facility in the event of a natural disaster.

Switzerland

Direct Air Capture

Climeworks is a Swiss company that empowers people and companies to fight global warming by offering carbon dioxide removal as a service via direct air capture (DAC) technology. At Orca, Climeworks’ DAC facility in Iceland, the CO₂ is permanently removed from the air by capturing and geologically storing it for thousands of years with Climeworks’ storage partner Carbfix.

Climeworks’ DAC facilities run exclusively on clean energy, and their modular CO₂ collectors can be stacked to build machines of any capacity. Founded by engineers Christoph Gebald and Jan Wurzbacher in 2009, Climeworks is on a journey to climate impact at scale. To do so, it strives to inspire 1 billion people to act and remove CO₂ from the air.

Climeworks develops, builds and operates direct air capture (DAC) machines that remove CO₂ from the air. Climeworks’ facilities consist of CO₂ collectors that selectively capture carbon dioxide in a two-step process. First, air is drawn into the collector with a fan. Carbon dioxide is captured on the surface of a highly selective filter material that sits inside the collectors. Second, after the filter material is full with carbon dioxide, the collector is closed and the temperature is increased to around 100 °C - this releases the carbon dioxide. Finally, thehigh-purity, high-concentration carbon dioxide is collected and handed over for permanent storage. For its flagship facility Orca, the world's largest direct air capture and storage plant, Climeworks has joined forces with the Icelandic company Carbfix. Carbfix has a strong scientific backbone and is one of the world's experts in rapid underground mineralization of carbon dioxide.

Located near the Hellisheiði geothermal power plant, which provides the renewable energy needed to run the Climeworks machines, Orca removes up to 4'000 tons of carbon dioxide per year. Carbfix mixes the carbon dioxide that Orca captures with water and pumps it deep underground. Through natural mineralization, the carbon dioxide reacts with the basalt rock and turns into stone within a few years.

We have signed a multi-year pre-purchase agreement with Climeworks to remove a part of our unavoidable CO₂ emissions. Consistent with the approach taken with the other carbon removal projects that we have selected, we have already made some advance payments that provide access to funding to support the growth and scale up of Climeworks’ business and operations.

Georgia, USA

Supporting carbon removal solutions

Wakefield BioChar supplies high-quality biochar derived from waste biomass generated by paper mills during their production processes. In normal circumstances, the biochar is burnt to produce energy, releasing the carbon within the biomass into the atmosphere. The revenue provided by the sale of carbon removal certificates by Wakefield BioChar, provides the financing necessary to sequester permanently the biochar from residual biomass for application to degraded land as part of a remediation project agreed with the local and state authorities and the landowner. In this case, the biochar was mixed with lime and used as an amendment to neutralize pollutants, restore soil health and improve drainage. Native plant species were then planted on the remediated land to restore the biodiversity of the site.

Through its funding of carbon removals via Wakefield Biochar, Zurich supports the growth and development of a minority-owned supplier and supports the restoration of degraded land for the benefit of the planet and the local community.

Uganda