Key Takeaways
- • Global carbon removals stand at just 0.125 gigatons annually against 42 gigatons of total annual emissions, creating a critical scaling imperative for institutional investors pursuing net-zero alignment, according to Aaron White, executive director and head of sustainable investing at CIBC Global Asset Management.
- • The UN's Intergovernmental Panel on Climate Change projects carbon removals must grow exponentially by 2050 to achieve viable net-zero scenarios, signaling substantial long-term demand for carbon removal infrastructure and technologies.
- • Private debt has emerged as a critical funding mechanism alongside venture equity, private growth capital, and government/corporate sponsors to scale the carbon removals industry, presenting an alternative investment opportunity for institutional capital.
- • Canada's robust investment tax credit program, combined with increased federal government purchases of CO2 removals and supportive policy environments in the U.S. and EU, is creating favorable conditions for carbon removal infrastructure deployment and risk-adjusted returns.
- • Two distinct removal pathways—point source capture (industrial filtering at emissions source) and direct air capture (atmospheric CO2 removal and permanent storage)—offer differentiated investment exposure across the carbon solutions value chain.
Summary
Institutional investors seeking to achieve net-zero portfolio objectives face a significant infrastructure gap in carbon removal capacity, according to remarks delivered at the Canadian Investment Review's 2025 Alternative Investment Conference. Aaron White, executive director and head of sustainable investing at CIBC Global Asset Management, highlighted the disparity between current global emissions and removal capacity: the planet generates approximately 42 gigatons of carbon emissions annually, yet carbon removals currently total only 0.125 gigatons per year—representing less than 0.3% of annual emissions.
This scaling challenge has critical implications for institutional portfolios. White noted that the UN's Intergovernmental Panel on Climate Change projects carbon removals must expand exponentially by 2050 to support viable net-zero scenarios. This trajectory suggests sustained demand for carbon removal solutions and infrastructure over the coming decades, creating a material investment thesis for alternative asset managers and institutional investors.
The carbon removals industry is currently funded through a diverse capital stack comprising private growth equity, venture capital, government incentives, and corporate sustainability commitments. White emphasized that private debt has become a critical component in driving scale across the sector. This funding structure creates opportunities for institutional investors across multiple asset classes within the carbon solutions space.
White delineated two distinct removal methodologies: point source capture, where industrial facilities (such as steel or cement plants) install filters to sequester carbon dioxide on-site before permanent storage, and direct air capture, where CO2 is extracted directly from the atmosphere and sequestered for extended periods. Both pathways benefit from supportive policy frameworks. Canada's investment tax credit program supports both removal types, while the federal government has committed to expanding its CO2 removal procurement over time. The U.S. and European Union regulatory environments are similarly supportive, according to White, enhancing project economics and investor certainty for carbon removal infrastructure deployment.
This scaling challenge has critical implications for institutional portfolios. White noted that the UN's Intergovernmental Panel on Climate Change projects carbon removals must expand exponentially by 2050 to support viable net-zero scenarios. This trajectory suggests sustained demand for carbon removal solutions and infrastructure over the coming decades, creating a material investment thesis for alternative asset managers and institutional investors.
The carbon removals industry is currently funded through a diverse capital stack comprising private growth equity, venture capital, government incentives, and corporate sustainability commitments. White emphasized that private debt has become a critical component in driving scale across the sector. This funding structure creates opportunities for institutional investors across multiple asset classes within the carbon solutions space.
White delineated two distinct removal methodologies: point source capture, where industrial facilities (such as steel or cement plants) install filters to sequester carbon dioxide on-site before permanent storage, and direct air capture, where CO2 is extracted directly from the atmosphere and sequestered for extended periods. Both pathways benefit from supportive policy frameworks. Canada's investment tax credit program supports both removal types, while the federal government has committed to expanding its CO2 removal procurement over time. The U.S. and European Union regulatory environments are similarly supportive, according to White, enhancing project economics and investor certainty for carbon removal infrastructure deployment.
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