In a significant policy shift that could reshape corporate climate strategies, the Science Based Targets initiative (SBTi) today unveiled proposals that would allow companies to use carbon removals (CDR) to meet their net-zero goals. 

The draft Corporate Net-Zero Standard Version 2.0, which represents a notable evolution in SBTi’s approach to climate action, is now open for public consultation. It outlines three potential options for integrating CDR into a company's net-zero pathways. This marks a departure from its previous stance, which primarily emphasized emissions reductions within company operations and value chains.

Under the proposed framework, carbon removals would be permitted specifically for addressing “residual emissions” — as in, the hardest-to-abate emissions that remain after companies have exhausted all feasible reduction measures. The SBTi is considering multiple approaches to balance ambitious emissions cuts with the reality some sectors face when decarbonizing.

SBTi’s proposed requirements for residual emissions

The draft standard outlines specific responsibilities for different types of residual emissions:

• ‍Direct emissions: Companies must set long-term carbon removal targets that fully match (100 percent) any remaining scope 1 residual emissions at their net-zero target year‍
• Value chain emissions: Larger companies (classified as "Category A" by SBTi) must ensure scope 3 residual emissions are neutralized — either by the responsible value chain partners themselves or through company-provided support

At CEEZER, we expect this policy change, if implemented thoughtfully and holistically, to significantly impact the voluntary carbon market (VCM) by potentially expanding demand into new sectors. 

“The SBTi proposal to integrate CDR into their net-zero framework represents a pragmatic evolution in climate leadership,” said CEEZER CEO Magnus Drewelies. “This framework could unlock significant investment in carbon removal technologies that complement — rather than replace — ambitious emissions reductions. We welcome this science-based, thoughtful approach that recognizes the full spectrum of tools needed in our collective journey towards a net-zero future.”

Key changes to SBTi’s framework related to the carbon markets

SBTi’s draft Corporate Net-Zero Standard Version 2.0 introduces significant changes to how companies can incorporate carbon credits and carbon removals into their climate strategies:

Beyond value chain mitigation (BVCM)

• Companies may receive additional recognition for addressing ongoing emissions through BVCM measures, with additional reporting requirements to ensure quality.
• Additional reporting requirements will ensure quality and transparency of these efforts.

Three options for addressing residual emissions are under consideration:

• Mandatory removal targets Companies would set both emissions reduction and carbon removal targets. (For more on documentation of target-setting methods, read here.)
• Optional recognition Companies setting voluntary removal targets would receive additional recognition.
• Flexible approach Companies could address residual emissions through either additional abatement efforts or carbon removals.

Comprehensive requirements for carbon removals

• By 2050 (or earlier), total removals must match 100 percent of residual emissions.
• Companies shall set and progressively increase removal targets using the new Removal Growth Target (RGT) method, which produces a company-level interim removal target expressed as volume of durable removals over a five-year time period. All removals must adhere to minimum durability thresholds.

Two approaches to carbon removal durability under consideration

• Like-for-like Matching the durability of removals to the atmospheric lifetime of residual emissions.
• Gradual transition Starting with shorter-term removals and progressively increasing durability over time.

"The draft standard addresses complex, emerging issues and lays the foundation to enable more companies to move further and faster towards net-zero," said SBTi Chair Francesco Starace in the Wall Street Journal. "Working hand-in-hand with stakeholders across the ecosystem to seek and consider a diverse range of views, we aim to produce a standard that is both rigorous and practical, and works for businesses and the planet."

Origin and purpose of SBTi

SBTi emerged in 2015 as a collaborative effort between CDP (formerly the Carbon Disclosure Project), the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature. This partnership formed in response to the urgent need for corporate emissions reduction strategies aligned with climate science, particularly the Paris Agreement's goal to limit global warming to below 2°C.

SBTi’s objective is to provide companies with a clear, science-based framework for reducing greenhouse gas (GHG) emissions. The strict criteria it sets for the development and validation of science-based targets (SBTs) helps businesses transition toward net zero and contribute to global decarbonization efforts.

Evolution and market adoption of SBTi

Since its launch, SBTi has enjoyed strong market reception, with strong initial adoption from companies across various industries. Since its launch, businesses have increasingly recognized the importance of aligning their climate strategies with scientific benchmarks, especially as investors, consumers, and regulators demand greater accountability for carbon emissions. Many large corporations, including Fortune 500 companies, have committed to setting science-based targets as a way to future-proof their businesses and gain long-term competitive advantages.

The initiative gained significant momentum, with thousands of companies worldwide validating targets, cementing SBTi's position as the leading framework for corporate climate action. However, it has faced scrutiny regarding the complexity of meeting its requirements, especially in hard-to-abate sectors. As SBTi has evolved, introducing stricter net-zero standards and expanding into financial institutions, some stakeholders have called for greater flexibility and sector-specific guidance.

That has been particularly true in sectors like aviation, cement, steel, and heavy manufacturing, where leaders argue that SBTi's methodology lacks sufficient flexibility for industries where direct emissions reductions remain technically or economically challenging. Some have requested sector-specific pathways that recognize the technological, financial, and operational challenges of decarbonization while still ensuring alignment with climate science.

The debate over carbon credits

One of the most contentious aspects of SBTi is its position on carbon credits. Historically, SBTi has maintained that companies cannot use carbon credits to meet near-term science-based targets. Instead, businesses must focus on absolute emissions reductions within their operations and value chains (scopes 1, 2, and 3). While SBTi acknowledges the role of carbon removals and credits in achieving long-term net-zero goals, it restricts these to addressing beyond-value-chain emissions.

This stance has sparked significant debate, particularly from industries where complete decarbonization remains technologically unviable. Many companies and stakeholders advocate for a more pragmatic approach, arguing that high-quality carbon credits should be integrated into SBTi pathways as complementary tools for accelerating the net-zero transition.

As demand for credible, science-aligned climate action continues to grow, SBTi is refining its methodologies and is expected to develop more sector-specific frameworks while clarifying the role of offsets in addressing complex challenges like scope 3 emissions.

Interested in learning now CEEZER can help your company navigated the ever-changing carbon market? Schedule a call today!