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How the finance industry helps to scale carbon dioxide removal

UBS recently made one of the longest carbon removal commitments in history by partnering with neustark to remove CO₂ permanently from the air. A great case study to inspire others to tackle just as ambitious net zero efforts.

In order to limit global warming to 1.5°C, greenhouse gas emissions must peak in 2025. On top of drastic emissions reduction measures, the Intergovernmental Panel on Climate Change (IPCC) calls to accelerate carbon removal technologies, as it estimates that between 100 und 1000 gigatons of CO₂ have to be removed in the next century to restore a healthy balance in the atmosphere. To do so, the carbon removal industry has to grow rapidly to roughly reach the size of the current oil and gas industry.

As there is not yet a regulatory framework for carbon removal in place, businesses and organizations have the power to help shape this much-needed industry as well as to inspire both other businesses and policymakers with ambitious removal efforts to take much-needed climate action.

In a pioneering agreement, Swiss bank UBS has recently made one of the longest carbon removal commitments in history by removing CO₂ permanently from the air with neustark. In this article, we showcase UBS’s approach as an example for other businesses aiming to reach net zero.

Net zero and the finance industry

2021 marked a pivotal year in climate pledges by large corporations. The voluntary carbon market hit a record market value of USD 1 billion for the first time ever. The finance and insurance industry has been a main driver in these developments. Banks and asset managers representing 40% of the world’s financial assets have pledged to reach net zero by 2050, agreed to set climate goals in line with the Paris climate agreement, and act upon them.

This means that first and foremost, emissions have to be removed wherever possible. It is crucial to refrain from using fossil energy wherever possible and switching to renewables instead. However, even after cutting down emissions, companies will face residual emissions. At the moment, one of the main challenges the market is confronted with is the limited supply of credible carbon removal credits to remove these residual emissions and really reach net zero.

To address said emissions, UBS has partnered with neustark to remove CO₂ from the air by permanently storing it in recycled concrete.

Taking action on net zero: UBS’s ambitions

As many businesses in the finance industry face the same challenges, ambitious climate roadmaps and best practice examples on how to reach them can function as a blueprint for others. UBS has set one of the most ambitious net zero pledges to contribute to the turnaround.
To give insights to their process and help others retrace it, we asked Harald Egger, Head Group Corporate Services and Chairman UBS India, who is responsible for the sustainability of UBS’s own operations, what UBS’s climate goals are and what the bank does to reach them.

Why is acting on climate change a strategic topic for UBS?

Harald Egger: Commitment to sustainability starts with Purpose. Finance has a powerful influence on the world. At UBS, we reimagine the power of people and capital to create a better world for everyone: a more prosperous economy, fairer society and a healthier environment. And it’s not just important to us as a firm, sustainability is high on our clients’ agendas and we want to help them as we all move to a lower carbon economy. In order for us to be a credible partner for our clients we aspire to lead by example in our own transition journey.

What is UBS’s climate goal?

Long term, UBS has an ambition to reach net zero greenhouse gas emissions across our entire operations by 2050. This includes all scope 1, 2 and 3 emissions. Earlier this year UBS published its Climate Roadmap setting out the key milestones to deliver on our net zero commitments. It covers every aspect of UBS’s business including reducing our own climate impact, supporting the transition of our financing of clients and protecting invested clients’ assets. Our short-term goal is to achieve net zero for scope 1 & 2 emissions by 2025.

How will you achieve net zero for scope 1 & 2 emissions by 2025?

First and foremost by focusing on the buildings we occupy and the energy we consume. The biggest levers we have there is energy efficiency, continuing to secure renewable electricity over the long term and investing capital in our buildings to replace our fossil fuel heating systems with renewable solutions. However, we still think there will be some residual emissions that cannot be fully mitigated. So adopting best practice principles relating to end-state net zero we are looking to permanently remove those emissions through the purchase of high quality, high credibility, technology-based carbon dioxide removal credits such neustark’s.

Which are the most prominent sources of those residual emissions which you cannot avoid?

For our scope 1 & 2 emissions it will likely be certain heating and back-up power generation facilities — either because they cannot be replaced within the timeframe or because there is no feasible alternative on the market currently. Looking beyond scope 1 & 2, there will certainly be supply chain emissions in the medium-term that cannot be fully mitigated, but we are engaging with our key vendors on targeting net zero by 2035.

Can you tell how much of those residual emissions you expect at UBS and what fraction will be removed by neustark?

It is hard to predict exactly as we expect our decarbonization measures to increase their contribution over the coming years. However, we think that the removals we are securing from neustark will represent a significant amount of our residual emissions between 2025 and 2035.

Why did you decide for neustark?
Innovative technologies play an increasingly important role in the transition to a low-carbon economy. By collaborating with neustark, UBS wants both to further reduce our own carbon footprint and, crucially, to support the development of scalable solutions that the world needs to achieve net-zero emissions by 2050. Neustark offers a highly credible solution underpinned by a verification methodology. And finally — most of our residual carbon footprint is linked to our home market Switzerland and it is great to neutralize where we generate most of our scope 1 & 2 footprint.

Lighthouse carbon removal contract

Neustark’s technology has been on the market since 2021, running across Switzerland and with first pilots abroad. With a volume of 29’500 tons of CO₂ and a duration of 13 years, the contract signed by the two parties is one of the most ambitious commitments in the carbon removal market so far.

To reduce global warming to safe levels, gigaton carbon removal needs to become a reality soon. This long-term commitment enables neustark to not only sell carbon dioxide removal based on existing infrastructure, but also to ramp up its capacities. This is crucial to feed the growing demand for carbon dioxide removal and enable other organizations to purchase credible carbon removal to reach net zero and to ultimately help limit global warming.

Commitments followed by bold and sincere actions based on credible carbon removals will be the only way to help reach net zero in time. We are excited to see that the transparence and durability of our carbon removal process convinced UBS, as they can create a real ripple effect with this agreement.

Valentin Gutknecht Co-CEO and Co-Founder at neustark

Media contacts

Elmar Vatter

Elmar Vatter

Project Lead Marketing & Communications

Sophie Dres

Sophie Dres

Chief Marketing Officer

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