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Rothschild announces multi-year carbon removal partnership

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French startup NetZero, which focuses on long-term carbon removal through biochar, has signed a multi-year carbon credit purchase agreement with multinational investment bank Rothschild & Co (EURONEXT:ROTH).

  • NetZero is to provide carbon removal credits to Rothschild to offset its operational emissions by 2030.
  • The startup’s second deal in a matter of months highlights appetite for carbon removal credits.
  • This is driven by credibility demands, but sustainability strategies must match such credibility expectations: questions must be asked about Rothschild’s financed emissions.

Rapidly scaling carbon removal capacity is seen as a critically important part of the mix of solutions needed to tackle climate change. Axel Reinaud, co-founder and chief executive of NetZero, said: “This multi-year procurement partnership with a globally respected client such as Rothschild & Co confirms the validity and relevance of our pioneering model, and sends a strong demand signal for high-quality carbon removal solutions that will help support NetZero’s scaling efforts in the years to come.”

How does NetZero remove CO2?

NetZero intends to deploy large-scale biochar production in tropical areas, which should help the company remove and sequester atmospheric carbon for hundreds of years. Biochar has been recognised by the Intergovernmental Panel on Climate Change as a viable climate solution for atmospheric carbon, with a global removal potential of 1-2 billion tonnes of CO2 per year.

The carbon contained in plant residues, initially captured in the atmosphere through photosynthesis, is extracted using a pyrolysis process. The resulting solid product, called biochar, is a very stable form of carbon with a charcoal-shred appearance, that is mixed with topsoil to ensure long-term carbon storage, thus achieving long-term carbon removal from the atmosphere.

Biochar is also considered by many to have positive agricultural benefits, from decreasing soil acidity, retaining water and nutrients, removing unwanted contaminants, and providing a home for beneficial soil biology to thrive.

That means that NetZero’s model can only deliver co-benefits by leveraging the production and use of biochar in the tropics. By using biochar as an addition to soil, the company said that it “durably reduces the need for fertilisers while improving crop productivity”. It also enables the production and local distribution of renewable electricity from the excess energy of the pyrolysis process, which enhances access to clean energy in rural areas.

NetZero’s biochar credits have been certified by Puro Standard

Net Zero’s biochar process has been approved, and the credits have been certified by the Puro Standard, a reference certification standard for long-term carbon removal.

The Puro certification process is based on a particularly stringent methodology. It audits the entire value chain and life cycle of the project to ensure a net-negative carbon footprint, made possible by biochar’s ability to store atmospheric carbon in the soil for hundreds of years.

The Rothschild deal is not the first for NetZero. In November 2022, the company signed a long-term purchase agreement with Boston Consulting Group, which was the first long-term customer to purchase biochar carbon credits from NetZero as part of its commitment to net-zero climate impact by 2030.

NetZero has also been recognised as one of the world’s most promising carbon removal projects in the XPRIZE competition, the award of the Solar Impulse Foundation’s label.

Rothschild is addressing its emissions profile

Rothschild said its ambition is to continue its efforts to reduce its operational greenhouse gas (GHG) emissions as far as possible, and to effectively remove an equivalent amount of CO2 for all residual, unavoidable operational GHG emissions by 2030 with the help of high-quality long-term carbon removal solutions.

Anne Imbach, group head of sustainability at the company, said: This multi-year partnership with NetZero presents an exciting opportunity to contribute to the development of impactful and scalable carbon removal solutions that bring strong co-benefits to the environment and local communities.”

This credit procurement agreement forms part of the group’s portfolio approach to carbon compensation, and Rothschild has committed to purchasing biochar carbon credits from NetZero every year until 2030.

The company has committed to net zero operations by 2030, something the bank describes as “an ambitious update to our first targets set in 201″9′ From a 2018 baseline, the bank aims to reduce by more than 80%of its absolute Scope 1 and 2 GHG emissions (generated by sources and energy controlled by the bank).

In addition, it intends to reduce Scope 3 GHG emissions per employee by 24%, by continuing to embrace alternative working models, driving efficiencies in resource use and switching to more sustainable transport options where appropriate.

While this is positive there remains little clarity on what, if anything, the company is doing to address financed emissions. Given the outsized impact that financing decisions can have on economic development approaches and therefore climate change and impact real action will soon have to translate into addressing their financing policies if they are to be considered sustainable.

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