Carbon dioxide (CO₂) is one of the building blocks of the Earth, but the rapidly growing concentration of it in the atmosphere threatens to alter the climate, bringing potentially devastating consequences. As we aim to limit the pace of climate change, we need to both emit less, and capture what we do emit. But if we capture it, then what do we do with all that CO₂?

Geologic storage is a proven destination for excess CO₂, but the notion of using carbon oxides (both CO₂ and carbon monoxide, or CO) in commercial products and processes is an option that is gaining attention. Gaze around the room or out the window, and you’re looking at a lot of products containing carbon. Turning our waste carbon into more of those products could create a true “circular economy.” Problem solved, right?

Not quite yet, but the notion of carbon utilization (also known as carbontech or carbon recycling) is a step in the right direction. A new report from C2ES explores how utilization can put us on the path to more decarbonization options that also may offer substantial economic benefits. The C2ES report considers previous research conducted by the University of Michigan’s Global CO₂ Initiative, the National Academies of Sciences, and others, and it lays out a policy roadmap for achieving the goals identified by those works. The conclusion: Adopting a suite of enabling policies now may encourage new markets to develop more quickly, and lead to greater positive climate impact later.

However, two challenges exist to ramping up markets for carbontech: The first is the “tech” part, where additional research and development (R&D) are needed to better develop these processes. The second is the market aspect: While using carbon to make products may be technically feasible, can it be done commercially? The challenges are closely related: In fact, the goal of R&D often may be simply reducing the cost of production.

Carbontech products can be broadly grouped into these categories:

• Construction materials (e.g., cement and aggregate)
• Fuels/Chemicals/Polymers
• Algae-based products (e.g., feeds, fuels, fertilizers)

Each sector and sub-sector has its own distinct development pathway, including separate R&D challenges, market value, and potential to contribute to greenhouse gas reduction. Of these, creating carbon oxide-based construction materials face the fewest technical challenges. However, these new products face significant market resistance: Do they meet accepted building codes and performance standards? Other sectors, such as fuels, chemicals, and polymers face different R&D challenges, and also have relatively high potential climate benefits. Algae, which are known as “CO₂ eating machines,” can produce the widest array of products.

Today, carbon utilization across all product sectors accounts for a very small percentage of actual greenhouse gas reduction. But the future potential is captivating. The C2ES report analyzed previous market projections for the different sectors and plotted both the market and climate potential. (Note: These aren’t forecasts, just relative estimates of how these markets could develop with supportive policies.) As the figure demonstrates, markets might be slow to develop in the near term (through 2025). But patience and enabling policies could lead to significant market growth—and associated climate benefits—by the end of the 2020s.

That result can only be achieved through four types of policy action:

First, adopting sector-specific market enablers, such as low-carbon procurement standards, can help these products overcome commercial disadvantages. That action can take place at the local, state, or federal level of government (or all three).

Second, money does matter: Federal carbontech R&D would benefit from increased spending, along with prioritizing technologies with the greatest climate potential and supporting larger pilot and demonstration projects.

Third, carbon utilization is a destination for carbon capture, so policies that broadly enable carbon capture should also benefit carbon utilization. Congress expressly made utilization eligible for the 45Q tax credit, but it should consider lowering the carbon use threshold to better encourage carbontech development. Next on the agenda, building pipeline infrastructure to move CO₂ around the country will reduce the input cost for carbontech products.

Finally, economy-wide climate policies, such as a carbon pricing system, will have a multiplier effect on all of the above policies. For carbon utilization to thrive, it needs to be a part of a more universal shift toward an economy that both places a value on carbon, and systematically encourages all pathways to removing it from the atmosphere.

These policy actions need to be implemented soon for carbon capture to play a significant (and necessary) role in decarbonizing the U.S. economy. A recent report from the Intergovernmental Panel on Climate Change warns that the world may be as little as a dozen years away from crossing a critical threshold—seeing a global temperature rise of 1.5 degrees C above pre-industrial levels, increasing the risk of dangerous climate change. Additionally, many state and local climate plans have 2030 emission reduction targets, which could be bolstered by complementary carbon capture policies. Aiming to commercialize these carbon capture, utilization, and storage before 2030 is critical to achieving longer-term climate goals.