Carbon at Risk Framework Aims to Standardize Permanence Risk Across CDR Technologies

A new framework called Carbon at Risk (CaR) proposes a standardized, probabilistic method for measuring permanence risk across different carbon dioxide removal (CDR) technologies. Inspired by Value at Risk in finance, CaR quantifies the shortfall between contracted removals and realized storage at a given confidence level and time horizon. This could help buyers, investors, and regulators compare and price CDR risks more consistently than current qualitative labels like 'permanent' versus 'nonpermanent' or buffer pool approaches with weakly quantified sizing. The framework, developed by researchers from established organizations, aims to make assumptions explicit and auditable, providing a common unit for risk comparison. While early applications rely on assumptions until empirical data improves, the authors argue that CaR offers a better alternative to existing heuristics that often hide unexamined assumptions. This could lead to more accurate capital allocation in carbon removal markets and better-informed insurance and reserve fund design.