For the world to hit net zero, carbon removal is going to be essential—there’s simply no way to reverse humanity’s impact on the climate without extracting carbon from the air. The world currently has the capacity to extract hundreds of thousands of tons of carbon from the air each year. That needs to increase 14,000 times, to 10 billion tons annually, by 2050 if targets are to be met.
That kind of scaling feels impossible. But Michelle You, cofounder of carbon-accounting firm Supercritical, disagrees. “Solar power started out at tiny megawatt capacity—now it’s whatever percentage of the grid,” she says. In the next five years, solar will become the largest source of energy in the world, and it’s already the cheapest form of electricity ever produced. Just a couple of decades ago, it was laughably uncompetitive.
Carbon removal is at the beginning of a similarly amazing journey, You believes. “You have to invest and encourage the technologies to get to scale, and then amazing things can happen,” she says. Ahead of speaking at WIRED Impact in London on November 21, You sat down with WIRED to talk about how we can speed up this journey, and the part that Supercritical is playing. This interview has been edited for length and clarity.
WIRED: Carbon offsetting feels as though it’s been around for a while—where exactly is the industry at?
Michelle You: So, about 95 percent of the market is made up of conventional “emissions-avoidance” offsets—where you pay other people to stop emitting CO2, for example, by preventing a forest from being cut down or by switching a project from coal to renewables.
These are problematic. If you pay someone to stop emitting a ton of carbon, you don’t get to net zero—the ton you emit is still out there. In order to net it out, you still need to remove the equivalent amount. Avoidance offsets are also very prone to fraud. They work by estimating a hypothetical future scenario, one in which the tree you protected, for example, is cut down. This whole setup incentivizes people to inflate the emissions of that hypothetical future scenario. This lack of quality is one of the big reasons that has prevented the carbon market from scaling.
The only type of offset that truly counts toward net zero is permanent carbon removal. And so at Supercritical, what we do is source and vet carbon-removal suppliers on our platform to help companies get to net zero using only these types of offsets. We want to make sure that every ton of carbon offsetting we sell is a real ton removed for a defined time period.
If only 5 percent of offsets actually remove carbon, how do we scale up that side of the market?
The main challenge is that carbon removal is still at a very early stage and expensive. The average removal offset is, let’s say, $200 a ton. Whereas the average emissions-avoidance offset is about $5 dollars a ton.
So we have an urgent scaling and pricing challenge with carbon removal. But there’s a lack of supply because there isn’t guaranteed demand, and there isn’t guaranteed demand because the pricing and the supply are uncertain. So we really need buyers to commit today, to help the supply side build capacity. As they do, the cost curve comes down, and more industries will come into play. If we don’t have buyers today, then we won’t have that gigatons of scale capacity in 2050.
What we’re trying to do is very similar to renewable power purchase agreements, where, for example, Google promises to buy renewable energy from a power provider, and that electricity provider can then take that guaranteed revenue to finance building renewable capacity. That’s very much how carbon removal needs to scale.
You mention Google here. What sort of companies are the potential early buyers of carbon removal?
At Supercritical, we’re happy to work with any industry. But in heavier, dirtier industries—steel manufacturing, for example—the price per ton of carbon removal is incredibly high. For them, it’s better to find ways internally to reduce emissions—switch suppliers, change your processes.
Really, it’s asset-light businesses—software companies, financial institutions, consultancies, law firms—that have the most propensity to buy right now, both because the price of removals is high and the biggest impact these businesses can have on their overall emissions is through buying carbon removal.
If you look at an average tech company, a Tide or a Stripe or a Shopify, what they need to do to reduce their emissions is largely just limit business emissions and then offset their supply chain—the Google ads, Facebook ads, Amazon AWS. The best use of their budget is in buying offsets and helping get the supply side of carbon removal to scale.
How do you work out a business’s carbon footprint?
In a previous job, I was tasked with getting my company to net zero. I spoke with a lot of consultants, and they were asking us for such a long tail of data. Things like wastewater usage, the amount of recycling we were producing—stuff that doesn’t really matter.
So we’ve really honed our carbon-accounting software. We have a few simple data inputs that we require, knowing what the 80/20 is around measurement, and it’s based on what we know tech emits. We look at headcount, and we give a survey to the company around their work-from-home setup, commuting, their cloud emissions, their hardware registry, business travel. And then finally, we suck in their accounting data, and we have emissions factors for spend. A machine learning algorithm goes through their entire accounting spreadsheet to determine: This is food and drink, these are Ubers. And then we convert these into emissions based on the spend.
For other emissions sources, we estimate based on industry averages. We’ve made it really simple. Within less than a day, our customers can return the data we need.
What are the typical challenges for organizations looking to decarbonize?
The biggest we hear are: How do I set aside budget? This is our first time buying carbon removal—what does good look like? If I can’t afford to offset 100 percent with removals, what do I start with?
Also—prices fluctuate so rapidly because the market is so nascent and supply-constrained. So customers often ask: How do I set aside a reasonable budget for the next five years when I don’t know what the price is going to be? We have pricing insights to support with that, and we also help customers negotiate contracts with suppliers to lock in a stable price over time.
When people talk about net zero and offsetting, the conversation often turns to greenwashing. How big a problem is it?
I think that the tide has turned a bit in that. In our area at least, I think it’s a bit of a distraction. Net zero is pretty clear. There’s not that much greenwashing you can do around it, because either you have a plan to reduce those emissions or you don’t.
Now, when we speak with corporates, they’re terrified of greenwashing. But it means they don’t want to say or do anything because they don’t want to be accused of it. That’s definitely holding us back.
In the consumer realm, there’s still a lot of greenwashing. But that’s starting to be dealt with with regulations around carbon neutrality and green claims and EU labeling.
It’s telling that we’ve haven’t mentioned policy up until now. What’s the role of governments in carbon removal?
Ultimately, claims made around net zero and the quality of offsets have to be regulated for this all to be effective. Unfortunately there’s just been really slow progress on that. There are a bunch of voluntary guidelines people sign up to. There’s something called ICVCM that’s trying to create core carbon principles to identify quality.
But these are moving very slowly; ICVCM started when Supercritical started in 2021 and they still haven’t published their guidance around quality. That’s just so slow.
The proliferation of guidance and quality and certifications also causes confusion in the market. If we could just trust regulation to be more definitive around quality and guidance, that would help this scale enormously. Unfortunately, I think government and policy has really failed us in this realm.
2050 isn’t that far away, and we’re still a long way from getting the scale of carbon removal that we need. Can we be optimistic that we’re going to get there?
I think that’s a really good question. My personal journey through this was, I had my son in 2018 and the month after he was born, the IPCC report about getting to net zero emissions by 2050, in order to stay below 1.5 degrees of warming, came out. I remember reading it, you know, at three in the morning because I was never sleeping.
And I remember thinking: That’s not very long. You’re going to be 32 years old, I’m so scared. But ultimately, my solution to that was just to do what I can do, as a human being, to help with this. At the end of the day, it doesn’t help to give up; you just have to believe that we can find a solution.
I do believe in the power of human ingenuity and the scaling that we can achieve if we put our mind to it. I previously started a completely different company in 2007, exiting in 2016. I know how fast technology can scale. I know how quickly things can change. I believe that that kind of capability will help us in this crisis.
Join Michelle You and our world-class speaker lineup at WIRED Impact on November 21, at Magazine London, as we examine the opportunities for organizations to innovate and tackle humankind’s most pressing challenges. Get tickets now: events.wired.co.uk/impact