Why SBTi 2.0 turns carbon removal into a balance-sheet liability — and why the time to act is now, not 2035.
Carbon Finance Labs · Notes from the Lab · July 2026 · 15 pp · For Board / Audit & Risk Committee · Licensed CC BY 4.0
Bottom line up front
SBTi 2.0, finalised in June 2026, makes carbon removals mandatory from 2035 for large “Category A” companies. The obligation starts small — 1% of ongoing emissions — but rises to 100% by the corporate net-zero year, weighted toward durable, engineered removals that are scarce and expensive.
For an average obligor the annual bill grows to roughly $80 million by 2045 (~$0.9 bn cumulative). The durable portion behaves like compliance carbon — 40–55% annual price volatility, with a history of threefold spikes — and corporations are structurally short it. They are also not the only buyer: aviation e-fuel mandates, EU compliance on-ramps and hyperscaler demand already lay claim to the same scarce durable supply.
And 2035 is close: as far ahead as early 2018 is behind. Durable projects take two to seven years to build, and historically fewer than one in four announced tonnes arrive on time and in full. The recommendation is to act now: lock the durable core through a laddered, price-collared offtake book, take a strategic stake in one or two projects, and keep the cheap short-duration tonnes on spot. Corporates carry the removal liability regardless — delay only removes the ability to hedge it while a supply cliff forms.
~$80m/yr
removals line by 2045, average obligor (~$0.9 bn cumulative)
8.5 years
2035 is as close ahead as early-2018 is behind
2–7 years
to take a durable project from financing to first verified credit
<1 in 4
announced tonnes that historically arrive on time and in full
What's inside
The rule — what SBTi 2.0 actually requires: two nested, durability-weighted obligations that switch from voluntary to mandatory in 2035.
Why it matters — a liability certain in rule, uncertain in price, constrained in supply; the ~1.7 Gt structural deficit by 2045.
The competition — hyperscalers, EU compliance on-ramps and aviation e-fuels already claim more durable capacity than exists.
The price risk — how violently the durable market can move; a cost-at-risk spread of $35–130 m on a single 2045 obligation.
The clock — how close 2035 really is, slow project gestation, and an unreliable announced pipeline.
The decision — wait, buy or build — and why the answer is a barbell blend of offtakes, equity and spot.
The board ask — five decisions to take now.
Risk register — six risks, and how the plan addresses each.
Approve a removals procurement mandate and a multi-year budget line indexed to the decarbonization path — treat it like any long-dated input cost.
Authorize a laddered, price-collared offtake program (~65% of durable need) with creditworthy, diversified suppliers, signed across 2026–30 while it is a buyer's market.
Approve a strategic pre-finance / equity envelope (~20%) for one or two durable projects — priority volume and a physical hedge with learning-curve upside.
Keep short-duration on spot (~15% flex, plus options): biomass is cheap, ample and delivers in weeks — no need to pre-commit capital.
Re-underwrite annually against SBTi V3 and market pricing. The direction of travel is tighter, not looser; plan to the trajectory.
Cite this
Carbon Finance Lab (2026). The 2035 Removals Cliff: A CFO Decision Briefing. Carbon Finance Lab. https://carbonfinancelab.com/2035-removals-cliff/
@misc{removals_cliff_2035_2026,
author = {Carbon Finance Lab},
title = {The 2035 Removals Cliff: A CFO Decision Briefing},
year = {2026},
publisher = {Carbon Finance Lab},
howpublished = {\url{https://carbonfinancelab.com/2035-removals-cliff/}}
}
Sources & method. SBTi Corporate Net-Zero Standard V2.0 (Jun 2026). Competing demand: CDR.fyi, ReFuelEU Aviation, EU Carbon Removals Certification Framework, ICAO CORSIA. Supply, cost & lead times: IEA (2025); WEF / Oliver Wyman / ClimeFi (2026); CDR.fyi–OPIS pricing survey; IDTechEx; S&P Global. Delivery track record: IEEFA; S&P Global; CDR.fyi. Volatility proxies: ESMA EU Carbon Markets Reports (2024–25); WFE; ClearBlue; World Bank State & Trends. All firm-level curves and the price cone are transparent scenario models on a 1 Mt illustrative obligor — decision aids, not forecasts. SBTi's 2035 percentages are illustrative and subject to revision in Standard V3.