New Framework for Carbon Removal Portfolio Management
Researchers from Cambridge University have developed a groundbreaking method to assess whether carbon removal portfolios can effectively limit global warming over centuries, according to reports published in the journal Joule. The approach distinguishes between buying credits to offset risk versus claiming net-negative emissions and provides portfolio managers with tools to evaluate long-term climate stabilization potential.
Balancing Nature-Based and Technological Solutions
The study challenges the notion that only permanent tech-based “geological storage” can effectively tackle climate change, with researchers suggesting that nature-based carbon removal projects can become effective climate solutions when balanced within diversified portfolios. Sources indicate that projects such as planting new forests or restoring existing ones can work alongside technological approaches through the transition to net zero emissions.
“Our risk management approach offers one of the first reliable measures for portfolio managers targeting long-term temperature stabilization,” said lead author Dr. Conor Hickey in the research findings. “It shows that nature-based carbon storage such as tree planting has a bigger role to play than critics assume when used as part of a diversified carbon removal portfolio.”
Buffer Requirements for Risk Management
The report states that carbon removal portfolios containing nature-based solutions require significant buffers to manage long-term risks. Researchers call for approximately two tons of stored carbon for every ton offset in most cases, while high-risk portfolios relying heavily on nature-based offsetting might need extreme buffers of nine tons removed for every ton emitted.
Analysts suggest that some existing programs, such as California’s forest carbon offsets program, may be severely underfunded for risks beyond the next few decades. The authors caution against using high-risk portfolios given the costs and uncertainties involved, particularly as companies like Microsoft and Meta collectively spend billions on carbon removal to offset their growing carbon footprints.
Addressing Storage Permanence Challenges
Current market incentives favor cheaper biological projects that pull carbon dioxide from the atmosphere, such as forestry that locks carbon in trees or biochar that traps carbon in soil. However, the report states these methods carry higher risks of carbon re-release through land use changes or wildfires, making them temporary solutions that may not lock away carbon long enough to stem rising global temperatures.
Professor Myles Allen, a co-author on the paper, emphasized that “Durable net zero means geological net zero. To stabilize climate in line with Paris Agreement goals, anyone still relying on offsets must plan to shift entirely to carbon dioxide removal with geological storage by the middle of the century.”
Practical Implementation and Market Applications
The research team’s new “risk management framework” accurately calculates additional CO₂ removal needed to maintain temperature stability over centuries for various storage portfolios. According to the analysis, removing more carbon now can effectively cover storage risk for centuries when proper buffers are implemented.
“Portfolios can combine expensive permanent solutions like DAC with lower-cost nature-based options like planting trees — matching society’s willingness to pay while still contributing to temperature stabilization goals,” Hickey stated. The approach enables strategic carbon storage choices based on current availability while targeting long-term temperature stabilization, providing buyer flexibility while valuing lower-risk storage options.
The findings come amid growing concerns about climate progress, following recent reports of record CO₂ levels and as organizations navigate transitions similar to corporate restructuring seen in other sectors. By 2050, the UK aims to achieve net zero with geological storage expected to play a major role, coinciding with incoming UK and EU guidance requiring projects to meet minimum 200-year permanence requirements.
The complete study is available through Cell Press Joule and contributes to ongoing scientific advancements similar to those in technology development and scientific discovery across other fields.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
