(2025). Neutralisation Claims in the Era of Article 6University of Oxford Sustainable Finance Programme Working Paper. Oxford: University of Oxford.
Neutralisation of residual emissions is an indispensable component of a net zero aligned future. Fossil based emissions–which constitute the bulk of existing and planned residual emissions–can only be neutralised by permanent carbon dioxide removal (CDR). In this sense, neutralisation should be viewed as a form of waste disposal. Coordination of this atmospheric waste disposal is necessarily a cross-functional activity–with both governments and organisations alike possessing an obligation to ensure it occurs. It is also typically cross-border as permanent CDR involves capturing carbon from the atmosphere that could have been released anywhere on earth and restoring it to the geological carbon cycle in a fixed location. Action taken by organisations towards voluntary climate claims, paired with dynamic support measures from governments, have thus far been catalytic in driving the development of permanent CDR pathways. However, they have proved insufficient to provide the necessary scale. One issue holding back demand-side scaling is the uncertainty emerging from the operationalisation of Article 6 under the Paris Agreement, between corporate and country-based accounting ledgers. A source of uncertainty that arises within this context is the question over whether corresponding adjustments are needed for all types of mitigation outcomes acquired to support neutralisation pathways. Requiring corresponding adjustments for permanent CDR does not reflect its role on the path to and beyond net zero and can cause unintended consequences. Long-term certainty is needed now for corporates since the scaling of the CDR capacity is highly dependent on corporates’ willingness to enter into long term offtake agreements for future deliveries of CDR. To provide confidence in doing so, clarity is needed from governments and standard setters that corresponding adjustments are not needed for organisational neutralisation investments, provided that certain environmental integrity and accounting safeguards are met.
