What global vaccine market shaping can teach us about scaling up CDR

When utilized appropriately, innovative financing mechanisms could have a big climate impact.

Not a lot of people know this about me, but before I began working in climate change I spent a decade in the field of global health. I spent much of that time living in Malawi, a country with a very high burden of communicable diseases, working with the government and other stakeholders to scale up access to critical health commodities like HIV medicines, malaria diagnostics, and vaccines. And while there are still many improvements to be made in Malawi’s health system, almost 80% of HIV-positive adults are on lifelong HIV treatment and DTP3 vaccine coverage for children (don’t get me started on COVID vaccine coverage rates) is over 90%. Over the last year, I have often wondered which of the lessons learned from scaling up access to healthcare in resource-constrained countries can be adapted to the context of carbon dioxide removal (CDR). Like many in the CDR field today, global health folks had an obsession with lowering costs, improving quality, and scaling up the best innovations to help solve an important problem.

So you can imagine my delight coming across this opinion piece suggesting that innovative financing models used to incentivize vaccine development for developing countries could be applied to the scale-up of permanent CDR technologies. It felt like my former and current lives were on a collision course. The article describes how governments and philanthropists got together a decade ago and pledged $1.5 billion through an advance market commitment (AMC) to guarantee the purchase of pneumococcal (PCV) vaccine doses for developing countries if pharmaceutical companies produced them at a lower cost. This AMC¹ was a success. Hundreds of millions of vaccine doses were rolled out years faster than imagined, saving hundreds of thousands of lives in the process. Other market-based interventions in global health have seen similar successes, such as the advance purchase commitment to create new Zika diagnostics or increased access and lowered cost of HIV medicines (Dai Ellis has a great Twitter thread on that here).

If the notion of a similar market shaping intervention was applied to the CDR field, a large pooled fund with formalized funding commitments to buy $1 billion worth of high-quality, permanent carbon removals would essentially be created, sending a strong market signal for suppliers to increase their CDR production capacity now. Scientists and entrepreneurs would feel more secure increasing their production and investment dollars would flow in as companies innovated and competed for a piece of a (hopefully) growing AMC pie. 

I think this could be promising. Market shaping interventions that have been used in global health, such as pooled procurement, centralized purchasing platforms, AMCs, and volume guarantees can be transformative and drive the urgent action that’s needed while potentially evolving into a long-term payer for carbon removal. So what can we learn from market shaping interventions in global health, including the global PCV vaccine success story? Well, first, there is a value in having one large procurement fund instead of dozens of different buyers, each with their own procurement standards and quality requirements. Pooled procurement across donors makes long-term commitments more predictable and enables smaller players with lower volume demand to get access to better pricing. Furthermore, a buyer with $1 billion in committed resources has the negotiating power to demand a level of accountability, transparency, and performance more efficiently than individual buyers do, which as I’ve explored in a previous post, are critical flaws of the current carbon offset industry. Finally, a dedicated, centralized buyer can identify weaknesses in the market, wield political influence, and mobilize the expertise and resources to address them.

Our capacity to develop vaccines and similar health products far outpaces our capacity to deploy CDR today. Photo: Tony Blair Institute for Global Change

It’s worthwhile, however, to point out a few key differences between the market for health products and the CDR market. First, the know-how and production capabilities to manufacture health products far outpace our capacity to deploy CDR today (which by some measures is less than 50,000 tons of CO2 removed per year). Second, credible standard-setting bodies in the health world, while not always perfect, at least exist to evaluate and approve new medicines and diagnostics coming to market. And finally, making vaccines available to children around the world faces significant global support and entirely different political realities than scaling carbon removal, which is still sometimes called a “moral hazard” or “false solution.”

In summary, innovative financing mechanisms, like AMCs, are needed - and quickly - to scale up CDR technologies but there are key lessons to be learned from the global health experience in order for them to succeed.

First, we need improved, widely understood quality standards for CDR of all types. Projects eligible for funding need to demonstrate measurable, additional, and permanent carbon removal. The CDR framework being contemplated by the European Commission could be a starting point (shameless plug: my MOBILE Framework). That also means we need to improve measurement, reporting, and verification (MRV) for CDR projects which are still in their infancy. There are not only evolving healthy and safety standards that new medicines need to meet, but the global health field has a robust foundation for monitoring and evaluation (M&E) of different health interventions. Attributing the impact of a health intervention to health outcomes is really hard, and the stakes are high with lives being on the line. We need to apply a similarly high degree of rigor in establishing standards and verifying results to ensure funds are targeting high quality CDR projects.

Second, we need to invest in complementary and supporting infrastructure. The global health community quickly realized that steep declines in the cost of essential medicines and vaccines were not a panacea to improving healthcare. Governments and public health agencies needed to strengthen and invest in supporting health infrastructure to effectively deliver those health products. Think cold chain storage for vaccines, improved supply chains, and better health worker training. CDR will similarly need a roadmap and resources for complementary investments in supporting infrastructure. These investments could include  trained workers, safe CO2 storage, pipelines for transportation, incentives to deploy CDR, and processes for streamlining responsible and equitable CDR deployment.

Third, we need direct participation from the public sector.  Marshaling $1.5 billion for the PCV vaccine was no small task. It took an injection of philanthropic capital, but it was money from public coffers and commitments by politicians that made it happen and sustained it to this day. Gavi, the multilateral institution that continues to manage global vaccine procurement has $7.5 billion in received and planned contributions (not including COVID vaccine commitments) through 2025, most of which originates from donor governments. The point? A functioning, right-sized pooled fund using AMCs to scale up CDR needs meaningful skin in the game from the public sector. To date, however, CDR procurement has been the exclusive domain of private companies like Stripe and Shopify. We have no experience around the complexities, politics, and nuances of public sector procurement of CDR. Encouraging the public sector to procure CDR is a first step in helping mobilize governments as early participants in a large, global, pooled fund that makes credible AMCs that successfully build the CDR market.

Finally, we need to establish clear goals and milestones. Using AMCs to build the CDR market is a worthy cause, but given CDR’s nascency, we lack the critical market data and commercialization experience to establish the metrics to know if it’s working. Whatever financing mechanisms are used to scale up CDR, we need to orient it towards a series of intermediate milestones (e.g. an average price per ton target by 2030) and ultimate goals (e.g. total installed capacity) and build in the ability to course-correct as needed. 

The article rightly points out that we need to move quickly, and a $1 billion AMC is not a silver bullet but a shot in the arm to start building the CDR capacity we need long term. Other financing instruments, like the International Finance Facility for Immunization, shows how further financial innovation can catalyze AMCs, driving even more resources and accelerating progress for worthy causes. In fact, we should be exploring the full gamut of market shaping and/or innovative approaches that have been used elsewhere - pooled procurement, a centralized purchasing platform, open innovation challenges, volume guarantees, or quality assurance mechanisms - to urgently scale-up high quality CDR. (For anyone interested in further reading, USAID’s Center for Innovation and Impact developed a market shaping primer to describe these approaches here). In parallel, we should start addressing these necessary priorities in order for any CDR market-based approach to succeed - standards, supporting infrastructure, public sector involvement, and targets. Taken together, we can completely transform today’s niche CDR market to the massive, global, highly functioning market we know it needs to be in order to effectively combat climate change.

The views expressed in this post are mine alone and no compensation was received for publishing it. To receive regular ideas and analyses on carbon removal and the new carbon economy, please subscribe. If you enjoyed this post, please share it with friends. And if you’d like to get in touch, you can find me on LinkedIn and Twitter.

1.  Advance market commitments (AMCs) can be defined as an explicit agreement by buyers to guarantee a market for new products that meet a target product profile (TPP) at an agreed-upon price.  Source: https://www.usaid.gov/cii/market-shaping-primer