The financial services sector can significantly impact net zero transition through capital allocation, stakeholder involvement and client engagement. Through its deal with Climeworks, UBS is also demonstrating its role as a catalyst for emissions reductions and removals.
UBS to buy carbon removal credits from Climeworks over 10 years. Guaranteed demand over time is key to catalysing financing and growth of new technologies.
The deal signals increasing consensus on the importance of carbon removal for net zero.
Rapid growth in investment in carbon removal is likely as the technology needs to be scaled to achieve global net zero by 2050, and net negative emissions thereafter.
In its most recent report, the IPCC estimates that by mid-century, 3-12 billion tons of CO2 will need to be removed from the air every year in order to limit global warming to 1.5°C.
The Energy Transitions Committee has said this could require investment of $15 trillion (£11.4 trillion) in carbon dioxide removals (CDRs) over the next three decades. This will need to come in the form of support for the development of the technology, long-term visibility of appetite for the carbon removal solution and access to a growing client base.
UBS is providing part of this through a 10-year agreement with Climeworks to provide carbon dioxide removal credits through direct air capture (DAC) of CO2. In addition to Climeworks, UBS is also partnering with neustark, building relationships with two innovative Swiss companies to help address its unavoidable carbon emissions.
Long term agreements provide market assurance
Long-term commitments such as the one from UBS are key to scale the carbon removal industry because they provide planning security to both sides.
As a demonstrable step on its scale-up roadmap to gigaton capacity, Climeworks recently announced the ground-breaking of its next direct air capture and storage facility, called Mammoth. Climeworks says that its development of Mammoth is capitalising on the dynamic, long-term market demand for high-quality, permanent CO2 removal which continued to grow over the past months.
Carbon removal deals are on the rise
Following earlier purchases from Stripe, Klarna, Square Inc., LGT and Verdane, UBS is the latest and largest financial services company to commit to Climeworks’ carbon removal solution.
“We are delighted to enter this long-term agreement with UBS. In the past months, the number of multi-year carbon removal agreements has increased rapidly. Such long-term commitments are central to our growth planning and enable us to scale up.”, says Christoph Gebald, co-founder and co-CEO of Climeworks.
Financial services can provide funds, credibility and client access
“Switzerland has a long tradition of promoting innovation and we are delighted to be supporting these pioneering solutions from two Swiss companies, Sustainability continues to be at the top of our clients’ agendas and, in order to be a credible partner, it is important that we demonstrate our continued commitment when it comes to the sustainability of our own business activities.”, says Sabine Keller-Busse, President UBS Switzerland.
Suni Harford, UBS Group Executive Board lead for Sustainability and Impact and President Asset Management, says: “Innovative technologies play an increasingly important role in the transition to a low-carbon economy. By collaborating with neustark and Climeworks, 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.”
UBS is a founding member of the Net-Zero Banking Alliance (NZBA) and the Glasgow Financial Alliance for Net Zero (GFANZ).