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SEB invites companies to buy certificates for biogenic CO2 removal

Maximilian Brodin

SEB has been mandated from the Norwegian project developer Inherit Carbon Solutions to enter the market and invite companies to buy carbon removal certificates from four planned Nordic projects for the capture and storage of biogenic carbon dioxide.

The projects are developed in collaboration with several biomethane producers in Sweden, Norway, and Denmark. They aim to capture and permanently store carbon dioxide that arises during biogas production from, among other things, fish, food, and agricultural waste, explains Kaja Voss, Co-founder of Inherit Carbon Solutions.

“It is challenging for producers to invest in technology when they don’t know how much they will be paid for the finished product. We will therefore offer forward contracts where companies undertake to buy at a fixed price a specific quantity of carbon dioxide removal certificates at a specific time. This is one way to make the future cash flow visible,” says Maximilian Brodin, head of Commodities at SEB.

Remove carbon dioxide from the atmosphere

So, what does the business logic look like?

Basically, it relates to a growing awareness that it will not be possible to reach the goals of the Paris Agreement solely by reducing carbon dioxide emissions. It will also be necessary to remove carbon dioxide from the atmosphere, a fact that has been established by the UN Intergovernmental Panel on Climate Change IPCC, among others.

Very few companies will be able to reduce their emissions by 100% and in order to comply with net zero emissions by 2050, to which a growing number of companies have committed, they will need to neutralise the remaining emissions.

Market for carbon removals

Here, a market is emerging where companies, which do not have the possibility to reduce all their emissions down to zero, sign agreements with producers that have the technology and capacity to remove carbon dioxide from the atmosphere. This type of agreement is called a carbon dioxide removal certificate.

For two years now, a team consisting of FICC Markets and Sustainable Banking within SEB has been working on the solutions required to promote the development of this global market for carbon dioxide removal certificates. The goal is to be able to offer SEB’s customers solutions to meet their ambitious net zero targets and succeed in the climate transition.

Biogenic carbon dioxide

The type of certificate that SEB will now offer is based on BECCS, Bio Energy Carbon Capture and Storage technology. So, it relates to carbon dioxide from biological material which is part of the carbon’s natural cycle. When biomass burns or decomposes, the amount of carbon dioxide in the atmosphere does not increase. By capturing and storing this type of carbon dioxide, the amount of carbon dioxide in the atmosphere is reduced. This results in negative carbon dioxide emissions.

The portfolio of four projects which SEB will offer, in collaboration with the Norwegian project developer Inherit Carbon Solutions, has the capacity to remove 70,000 tonnes of carbon dioxide per year. The first production is expected to be able to start by the second quarter of 2025.

In this initial phase, SEB will approach some 400 major companies in Northern Europe which are assessed as having an interest in buying carbon removals in order to achieve their climate targets.

Imbalance between supply and demand

Globally, more than 2,500 companies today have undertaken to meet net zero targets according to the Science Based Targets initiative. Based on the commitments made by these companies, the demand for carbon removals is judged to greatly exceed the supply. According to calculations by the Boston Consulting Group, the supply of carbon removals, which stores carbon dioxide for several thousand years, is estimated to amount to over 30 million tonnes by 2030 while demand can reach 200 million tonnes.

“This substantial imbalance means that prices will rise as we approach the deadline for corporate net-zero commitments. It is therefore important to be on board from the start as an early buyer. It will be very expensive to get there too late. Early buyer commitments is the most effective way to stimulate investments in additional required supply” says Maximilian Brodin.