ISO 14060 Draft, SBTi Corporate Net Zero Standard V2, and CDR Demand

For the carbon dioxide removal (CDR) industry, the just-released ISO net zero standard is very good news.

First, companies can reach net zero at any level of CDR and are not limited to the arbitrary “last 10%”. Carbon removals are used for residual emissions, which are determined by a technical and economic feasibility assessment. If emissions can’t be reduced through other means, for example, for a 2040 net-zero target, companies can use carbon removal to reach it.

Second, under ISO, companies must begin buying CDR within five years of setting a target and gradually scale up. ISO says the CDR trajectory must demonstrate a path to full counterbalancing at net zero, and companies should consider portfolios of removal credits, advance offtakes, and supplier integration. In practice, this makes CDR procurement part of the transition plan from the outset, rather than a last-minute clean-up exercise in 2040 or 2050.

In contrast, the new SBTi 2.0 standard limits CDR to something companies need to support in the future; there are no demands to buy until 2035. After that date, SBTi's tentative rules are relatively strong, requiring companies to begin by purchasing CDR for 1% of emissions across all scopes, scaling up to 100% of residual emissions by the net-zero date. But 2035 is nine years from now, and there is a significant risk that the standard will have changed again by then.

ISO provides a way for companies to actually reach net zero if they (a slim group) can afford it . That's not possible in practice with SBTi, as few companies will be able to reach the required emission reductions across all scopes before using CDR.

What's positive for CDR in both standards is that they require durable, high-quality removals for residual emissions. These are defined as at least 100 years for ISO and as “long-lived” for the SBTi (likely centuries).

SBTi has some positive elements on CDR, and it has improved greatly on that topic since the last draft. But ISO is the first major corporate net-zero standard that treats CDR procurement as something companies must start building into their transition, not something they can leave until the end.