Residual emissions, carbon removals & integrity: what the new SBTi draft really says
- Raphael Der Agopian
- Mar 31
- 6 min read
Updated: Apr 3
As pressure mounts on corporations to demonstrate credible climate action, the release of the Science Based Targets initiative (SBTi) Net-Zero Standard v2.0 Draft marks a pivotal moment. This update brings new clarity, and some controversy, to how companies may use carbon dioxide removal (CDR) credits, especially those derived from nature-based solutions, in their net-zero strategies.
Since its initial launch in 2021, the SBTi Corporate Net-Zero Standard has guided more than 1,500 companies in aligning their climate targets with science. But while the ambition has been clear - reduce emissions in line with a 1.5°C pathway - implementation has often collided with practical limits, especially for sectors with hard-to-abate emissions. Enter the question of residual emissions and how to deal with them responsibly.
This article offers a focused look at how the v2.0 Draft standard treats carbon dioxide removals, with a spotlight on nature-based solutions. We aim to answer:
What has changed in the SBTi's guidance on CDRs and residuals?
Where and how can nature-based removal credits be used credibly?
What remains constant in the hierarchy of climate action?
At Apolownia, as developers of large-scale mangrove restoration projects, we welcome clearer rules that promote integrity and drive funding to high-impact, durable nature-based CDRs.
1. What's new in the SBTi v2.0 Draft?
The updated draft introduces several major clarifications and shifts concerning the use of CDR credits:
Residual emissions: a tiered framework
One of the most consequential updates is the introduction of three potential approaches to residual emissions:
Mandatory removal targets including interim milestones.
Optional recognition for companies that voluntarily set removal targets.
Flexible allowance to address residuals via a mix of reductions or removals.
Importantly, these provisions apply only to Scope 1 emissions. The SBTi maintains that no residuals should remain under Scope 2 (given the accessibility of renewable energy), and residuals in Scope 3 are considered too uncertain to quantify meaningfully.
This is a more cautious stance compared to Version 1.2, where removals could be used for 5% of Scope 1+2 and 10% of Scope 3 emissions. The new draft sharply restricts removal use to a maximum of 10% of baseline Scope 1 emissions, with stricter justification.
Interim CDR targets and early action
Companies are encouraged to scale CDR solutions before their net-zero year, especially to catalyze market demand. This opens the door to pilot projects and nature-based interventions that can grow in impact over time.
Durability requirements: like-for-like or gradual transition?
Two options are on the table for removal durability:
Like-for-like: Permanent emissions (e.g., from fossil fuels) must be neutralized by equally permanent removals (e.g., DACCS or BECCS).
Gradual transition: Allows companies to use nature-based removals in the short term, provided they plan to shift to more durable solutions later.
This is a potential lifeline for nature-based CDR developers: while not a blank check, it enables near-term financing and implementation.
BVCM: a new layer of recognition
Beyond Value Chain Mitigation (BVCM) remains optional and is still excluded from target achievement under the SBTi framework. However, the v2.0 draft introduces a significant evolution: BVCM actions can now be formally recognized as a sign of corporate climate leadership. While these contributions, such as financing high-quality removals outside the value chain, won’t count toward official Scope 1–3 targets, the new framework allows companies to disclose and distinguish BVCM investments in their reporting. This shift brings SBTi closer to initiatives like the Voluntary Carbon Market Integrity Initiative (VCMI), signaling that going “above and beyond” the value chain may earn reputational credit, even if not compliance credit. In contrast to v1.2, where BVCM was merely recommended, the draft now lays groundwork for structured recognition, reinforcing the value of early, voluntary climate finance.
2. Nature-Based removals in practice: scope-by-scope
Before exploring scope-specific applications, companies must understand three fundamental principles:
First, CDRs complement but don't replace reductions. Nature-based solutions require careful implementation to ensure permanence. Then transparency remains non-negotiable in carbon accounting. Finally, we advocate for science-backed, durable nature-based CDRs that deliver co-benefits for biodiversity and communities.
3. Where Nature-Based CDRs can be applied
Let’s break down how the new draft standard applies nature-based removals across the three scopes.
Scope 1 – Direct emissions
Nature-based CDRs may be used:
Before the net-zero year, as part of interim removal targets.
At the net-zero year, to neutralize residual Scope 1 emissions, provided they are combined with more durable options.
Example: A cement manufacturer might use mangrove restoration alongside engineered CDR to balance emissions that cannot be abated.
Apolownia Insight: Our mangrove projects, which follow strict durability and co-benefit standards, are ideal for interim Scope 1 applications.
Scope 2 – Energy emissions
No residual emissions = no removals. The SBTi requires companies to meet Scope 2 targets via:
Procurement of renewable electricity.
Market- or location-based accounting.
However, companies may engage in BVCM to support grid decarbonization—e.g., forest conservation or wetland protection near energy production sites.
Scope 3 – Value chain emissions (upstream and downstream)
This is where things get complex:
Residuals not formally recognized due to data and projection challenges.
Supplier engagement is prioritized: Companies must show they’ve spent 3–5 years trying to decarbonize supplier operations.
If efforts fail, investments in value chain restoration or insets may be disclosed, but not counted toward targets.
Transparency and separation of CDR actions from Scope 3 reduction claims are critical.
4. What remains unchanged
The SBTi draft reaffirms its foundational climate action hierarchy:
Avoid emissions where possible.
Reduce emissions aggressively.
Neutralize residual emissions only after maximizing reductions.
Contribute beyond the value chain as voluntary climate leadership.
Carbon credits, whether removals or avoidance, must never replace actual decarbonization. The only acceptable use of CDRs is for neutralizing hard-to-abate residuals.
5. From policy to reality – market reactions & risks
The QCI Carbon Insights article captures how the new draft has "divided opinion" in the market. While many applaud the renewed clarity, others voice concerns:
Scope 3 exclusions: Some stakeholders view this as a missed opportunity, given that Scope 3 emissions often represent 90%+ of corporate footprints.
Durability debate: The idea of allowing gradual transition from short- to long-term removals is welcomed by many but still raises risk-management concerns.
Corporate appetite: Some companies are reluctant to embrace the new rules given how narrow and conservative removal eligibility has become.
6. Guidance for responsible use of CDRs
At Apolownia, we advocate for a pragmatic yet principled use of CDRs. Here’s how companies can align with the SBTi draft:
Step 1: Reduce first
Conduct detailed Scope 1-3 assessments and implement operational reductions wherever feasible.
Step 2: Choose high-integrity projects
Opt for projects with:
Minimum 30-year permanence commitments.
Independent verification (Verra, Gold Standard).
Co-benefits for biodiversity, communities, and resilience.
Apolownia’s mangrove projects are science-backed, community-based, and long-term.
Step 3: Be transparent
In reporting:
Separate reductions and removals.
Label any CDR outside your value chain as BVCM.
Avoid ambiguous claims like “net-zero product” unless justified.
Conclusion – A balanced way forward
The SBTi draft v2.0 sends a strong message: climate integrity comes first. CDRs have a place in credible corporate strategies, but only after reductions and only for residuals.
Nature-based solutions, when designed for permanence and co-benefits, are powerful tools for climate action. But they must be framed as part of a diversified portfolio that includes reductions, engineered removals, and transparent reporting.
At Apolownia, we believe in harnessing the power of restoration, through mangroves and other ecosystems, not as an excuse to delay decarbonization, but as a lever to regenerate nature and build resilient carbon sinks.
As companies respond to this evolving guidance, one principle should guide every decision:
Climate ambition without integrity is just branding. Let’s make net-zero real!
ABOUT APOLOWNIA
Apolownia is a mission-driven company committed to making a significant impact in the climate sector.
We support businesses and funds willing to engage in long-term and impactful decarbonization strategies - within and beyond their own value chain - by designing, implementing and monitoring science-based carbon reduction projects that restore natural ecosystems.
Through technology and innovative solutions, we aim at shaping a resilient and environmentally friendly world, by encouraging the decarbonization of the economy and supporting social and environmental initiatives.
You can drive positive change for the climate, biodiversity and local communities.
Contact us to engage or for more information. Find us on www.apolownia.com.
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