Carbon Management Event: Economics Will Triumph Over Ideology, Eventually

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Biblical phrase -- "make bricks without straw" summarizes the main challenge facing those in the carbon dioxide reduction (CDR) industry: They are trying to create a carbon-reduction market without federal policy support.

The lack of consensus over carbon along with federal elected officials makes it especially hard for those who wish to create market mechanisms to facilitate the reduction of carbon dioxide (CO2) in the atmosphere. But market participants are not giving up. As was evident at a conference last month on carbon management in the Americas, a wide variety of companies and organizations are working to fill that federal absence through their work on climate, including evolving carbon-reduction technologies; measurement, management and verification efforts; pricing benchmarks; financing; improved storytelling; and other essential market components. The absence of federal policy support means they need to work that much harder, and market inefficiencies are expected to be the rule, not the exception.

For more on this conference and the carbon reduction landscape, see June 2, 2025, article - Carbon Dioxide Reduction Industry Stays Upbeat in the Face of Uncertainties and June 16, 2025, article - S&P Global: New Climate Scenarios Say Paris Agreement 'No Longer Possible.'

Several speakers at the conference sponsored by S&P Global, "Carbon Management Americas 2025," held last month in Denver, Colorado, discussed the financial challenges and opportunities of carbon reduction, mostly in the U.S.

One conference speaker, Yaowen Ma, a principal in climate sustainability with alternative asset manager Apollo Global Management (New York, New York), noted the vast spread between "nature-based" CDR, such as better forestry practices, which could remove CO2 emissions for under $50 per ton, and "engineered" solutions such as biochar and direct air capture (DAC), which cost between $200 and $1,000 per ton of carbon removal.

Speaking of engineered solutions, specifically DAC, he said, "There are some opportunities here, but this has not made its way to our investments yet."

Apollo Global Management has invested in sustainable aviation fuel (SAF) and renewable natural gas (RNG) infrastructure, so it's not new to sustainability investing. The asset manager also has invested in utility-scale and community solar generation. Apollo has a firm-wide goal of investing in $50 billion in clean energy and climate solutions by 2027, and a further goal of deploying $100 billion in that field by 2030, Ma said May 14.

"Policy support is very important for the stability and growth of the CDR industry," Ma told conference attendees. "European mandates around carbon capture and storage (CCS) and CDR product integrity have helped mature that market. We are trying to find opportunities to invest and help the solutions market grow."

Another speaker at the S&P conference, Chris Hughen, an associate professor of finance at the University of Denver, had faith that economics eventually will triumph over ideology.

"If investors care about it, it will get done," he told the conference. "A company's carbon exposure is critical to investors and other stakeholders."

Citing academic studies, Hughen said companies with a greater exposure to carbon have to generate about 0.5% higher returns than comparable firms with carbon mitigation plans in order to attract investors.

"Eventually, the economic arguments will win out," he predicted. "Disclosures will win out. Eventually, companies will have to disclose and perform in order to attract and retain investors' dollars."

"In the near term, I don't see much forward motion for CDR in the Trump administration," Hughen said. "Instead, we'll have to rely on investors" to move the needle. He referenced an audience poll, conducted earlier that day at the conference, in which 69% of respondents said they expected corporations and private investors, not the government, were better positioned to lead on carbon reductions over the next two to three years.

Several other conference speakers made the point that reducing or mitigating carbon or methane was good business sense because it reduced risks, resulting in lower borrowing costs and insurance fees. Also, plugging methane leaks at oil and gas production facilities, midstream processing plants and pipelines often is pretty inexpensive and would give gas companies more product to sell, speakers added.

"Investors and insurance companies are paying more attention to methane abatement strategies," Sean Hackett, senior manager in the energy transition U.S. policy at the Environmental Defense Fund (EDF) told conference attendees. He added, "There are more eyes than ever" on the energy sector. Other speakers mentioned credit-rating agencies and non-governmental organizations as other stakeholder groups that are paying more attention to methane and carbon.

Another speaker, Matt Kittell, director of sustainable finance at Société Générale (Paris, France) added, "Insurance companies set their rates for a project based on all of its project's risks," including carbon risks. Plus, "banks charge a premium for loans without a carbon risk-management plan," he said.

"Building a (carbon) resilient project costs more at first but non-resilient projects have higher insurance costs, higher debt costs and higher equity hurdle rates," Kittell added.

Telling a Better Story
While several conference speakers rued over things that they can't control, such as federal government policy, one speaker said there is one thing companies engaged in voluntary carbon reduction activities can do: tell better stories about their work and how it benefits people.

The voluntary carbon market (VCM) has been operating since the late 1980s, but it has yet to come up with enough positive stories that resonate with stakeholders, and that's keeping it from growing, a VCM communications executive told the conference.

Instead, said Hillary Navarro, chief communications and engagement officer at Verra (Washington, D.C.), major segments of the news media seem to believe that VCMs are little more than a greenwashing scam. She said the VCM industry is still reeling from a 2023 article by The Guardian that over 90% of VCM credits certified by Verra are likely to be fake.

VCMs are decentralized, voluntary markets where buyers, sellers, developers, ratings agencies, financiers, governments and non-governmental organizations interact to monitor, price and sell carbon offset credits that reflect the prevention or removal of CO2 from the atmosphere.

In a VCM, companies committed to reducing their carbon footprint could buy carbon offsets from organizations anywhere in the world that are removing carbon from the atmosphere or preventing it from being redirect air capture, DAC or improved forestry practices.

There are dozens of VCMs around the world. In aggregate, the value of carbon offsets traded in 2022 was about $2 billion.

Verra is one of several non-profit organizations working to build rigorous, verifiable and transparent standards for a variety of carbon-prevention and reduction activities. Verra said its Verified Carbon Standard (VCS) Program is the world's most widely used greenhouse gas (GHG) crediting program.

But being well known and respected within the VCM industry apparently has not carried over to the broader mainstream news media. Navarra made it clear that growth of VCMs depends on broader confidence and trust by the public at large as well as regulators and policymakers. And that happens, largely, through stories in the news media.

"How good are we at telling stories, compared to the news media?" Navarro asked rhetorically at conference. Not very good, she said.

"A story well told is 261% more impactful than a story that is not well told," she told about 125 attendees at the conference, citing a 2015 medical article, "Why Inspiring Stories Make Us React: The Neuroscience of Narrative." That article, written by Paul J. Zak, a scientist and academic, looked at the behavioral effect of a neurochemical in the brain called oxytocin. In a series of tests, captured on video, his lab discovered that compelling narratives cause oxytocin release and have the power to affect people's attitudes, beliefs and behaviors.

According to the Cleveland Clinic, oxytocin is a chemical messenger in your brain that has "an important role in many human behaviors and social interactions," including building trust.

In an interview after the conference, she asserted "the dominant narrative" today around VCMs is driven by what she called the Global North's media outlets, which takes the view that, "if it bleeds, it leads," and Global North organizations, "many of which are ideologically opposed to market-based solutions. Voices from the ground on VCM projects, and from across the Global South, often are not included in the narrative." She added that VCMs "needs to do a better job holding the microphone to voices in the Global South, so their perspectives can be heard."

Speaking at the conference, Navarro suggested that the market's problems with the news media are partly its own fault. Companies participating in VCMs do not adequately invest in communications and storytelling necessary to win the public's confidence and support, she said: "We're bringing a noodle to a gunfight." Many companies participating in VCMs have one person trying to do all communications, or communications is one of several functions assigned to one person. "One person can't do all the communications around VCMs," she added.

"A story is only as good as its storyteller," she told the conference. "The VCM industry needs to accept the validity of storytelling, which requires an investment in communications as well as collaboration between companies."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).