The Science Based Targets initiative published Version 2.0 of its Corporate Net-Zero Standard last week and, for the first time, it has introduced a clear, dated framework for carbon dioxide removal (CDR).
Under V2.0, CDR becomes a mandatory element of every corporate net-zero target from 2035, not an optional addition. The introduction of the Ongoing Emissions Responsibility (OER) programme, required at every target validation from Q1 2027, brings the CDR agenda even further forward.
Key dates:
The OER programme
The OER programme offers three tiers of voluntary recognition ahead of the 2035 mandate. Companies that do not intend to take part in the OER programme must submit an explanation to the SBTi as part of their target validation process.
All credit types are eligible: avoidance, nature-based, and durable removals. The new tiers introduce reference prices for the first time ($20/tCO₂e for Engaged and Advanced, and $80/tCO₂e for Leadership), giving finance teams a concrete basis for sizing budgets today.
Notably, OER contributions must have occurred within the five years prior to recognition, meaning that companies seeking recognition at their first V2.0 in 2027 need credits from 2022 onwards. For companies who are not yet procuring, the window to qualify is now.
Mandatory requirements from 2035 onwards
The most significant update from 2.0 is that from 2035 onwards, Category A companies must support eligible removals covering 1% of their ongoing emissions, rising linearly to 100% by their net-zero year. Within that, at least 10% must come from durable CDR, with that share scaling to 100% over time.
Removals are ring-fenced for addressing residual emissions, and cannot substitute for reductions: durable CDR is the only route for meeting what remains. The volumes required will increase every year from 2035, and the projects that will be capable of delivering them are being developed and contracted today.
Temporal matching
Under V2.0, removals used for mandatory post-2035 OER must deliver verified outcomes within the same reporting period as the emissions they cover - otherwise known as ‘temporal matching’. This is a tightening of the five-year recognition window applicable prior to 2035. After 2035, credits purchased in advance cannot be banked against future requirements: in 2036, for example, a company needs a supplier physically removing carbon in that same year, and again in 2037.
Tonnes must be delivered in the same year they are claimed, meaning what will matter after 2035 is the reliability of streams that deliver credits year-on-year.
Shared responsibility across the value chain
V2.0 also introduces a significant change for companies with shared Scope 3 exposure. Where previously one party had to own and claim a removal credit, companies can now co-fund a removal and each claim a proportional share against their Scope 3 emissions.
For buyers with complex supply chains, this makes engagement much easier, as it distributes both the obligation and the spend across value chain partners, significantly lowering the entry barriers for higher cost, durable CDR.
For industrial companies whose clients mostly have an SBTi target, and in the short-term OER commitments, having already purchased high-quality carbon removal can prove a real competitive advantage.
The ClimeFi view
The early commentary has framed the V2.0 update as ‘nine years of choice’, with early recognition available for those who act sooner. In our view, that framing captures the demand side accurately. However, it significantly understates the supply-side risk.
1. Capacity available in 2035 is largely being decided now
Supply will be tight from 2035, and demand arriving late will have to compete for what remains.
Durable carbon removal projects take five to ten years to scale. The projects that will deliver for 2035 obligations are not the ones that will be initiated when the mandate approaches; instead, they will be projects that already exist or are being developed today.
However, suppliers also need revenue until 2035 to sustain their development pipelines. Without early demand, some projects that would otherwise deliver in 2035 will no longer be around to do so.
2. Early engagement gives buyers a competitive advantage
Companies tend to act on binding deadlines as opposed to distant ones. Unprepared buyers are likely to begin procurement as 2035 approaches, or potentially in the five years prior - by which point we expect supply to be severely constrained, and the favourable contract terms that are currently available will disappear.
Companies that contract in the next four to five years can secure terms that are unlikely to be available later, whether that is on price, optionality, or delivery priority.
3. Contracting is just the start
V2.0 places substantive obligations on buyers: documented due diligence, additionality requirements, independent assurance, reversal risk assessment, and mandatory monitoring and reporting plans. These are ongoing obligations, not just one-offs at the point of purchase.
Not every supplier contracted today will still be delivering in 2035, so it is essential to manage the gap between contract and delivery.
What can companies do?
The Standard has now set the date, and now companies must prepare. Those that use the coming years to build robust, reliable streams of removals, as opposed to just inventories of credits, will reach 2035 with their obligations covered and their costs under control.
Portfolios need to be constructed for high delivery reliability and be actively managed. In addition, companies will need a monitoring and reporting system for their removals portfolio to document progress against the SBTi requirements.
If you would like to discuss further with ClimeFi team, please don’t hesitate to reach out at procure@climefi.com.
