Near-term demand will come primarily from the voluntary market (~90%), mostly driven by early purchases from industries with the highest willingness to pay (for example, professional services, software). As further developments lead to scaling of the technologies and lowering of costs, the demand from buyers with historically lower willingness to pay (for example, industrials) can be unlocked, filling up the upper end of this market opportunity. Broader adoption in the voluntary markets will be contingent upon cost reductions below $200/t CO₂, where demand tends to be more elastic.

In the Voluntary Market, Quality Will Drive Purchases, with Buyers Taking a Portfolio Approach

CDR quality is defined primarily by parameters of permanence, additionality, and measurement, reporting, and verification (MRV). Buyers indicate the importance of these factors in their purchasing decisions, with over 75% optimizing for credit quality over quantity. Seeking quality, companies with climate mitigation commitments report an expected willingness to pay up to a ~3.5x price premium by 2030 for high-durability removal credits (for example, direct air capture) over lower durability removals (for example, reforestation). The size of this price premium will vary for each technology, given differences across the quality dimensions.

Additionally, buyers indicate a preference for a portfolio approach to purchasing durable CDR, balancing costs and ensuring quality while hedging for risks by diversifying across removal technologies. For buyers outside the early-adopters segment, which mostly includes high-margin and low-emissions volume industries, achieving reasonable prices across their removals portfolio is a non-negotiable priority. Assuming durable CDR reaches a certain price point, surveyed buyers aim for durable CDR to make up a larger percentage of their portfolio over time (~35% by 2030 and up to ~48% by 2040). Beyond managing financial and technological risks, diversifying purchases across suppliers and types of durable CDR will be unavoidable, as no single CDR solution will be able to meet projected demand by 2030.

Increased Commitment From Policymakers Could Transform the 2030–2040 Market

While the estimated demand is meaningful, it is well below what is needed for global decarbonization, according to IPCC (5–16 Gt CO₂删除公共广播的2050年,旨在限制全球warming to 1.5°C/2°C). As a result, governments may take increasing actions to stimulate demand over time, leveraging mechanisms such as removal mandates and procurement models to meet specific climate goals. This could likely shift the durable CDR demand from the voluntary markets to non-voluntary carbon markets.

However, existing regulations have thus far focused on supporting durable CDR through supply-side policies aimed at lowering costs of investment and production, including research and development subsidies and tax credits. Demand-side policies, such as market-based schemes and direct government procurement, are either in their infancy or at the legislative proposal stage.

To enable durable CDR demand in carbon compliance markets, eligibility of durable CDR credits will be a precondition. Today, only one compliance scheme (South Africa’s carbon tax) allows for durable CDR to account for some portion of regulated emissions. That could soon change with active discussions around the passing of standard-setting regulations (for example, EU Carbon Removal Framework) and integration of durable CDR into compliance schemes (for example, UK ETS). However, eligibility alone is insufficient for broad market adoption. In aggregate, carbon prices will also need to grow ~10% annually through 2040 to make durable CDR credits a financially feasible option to meet compliance obligations.

Even if all these conditions are met, compliance market demand will still be dwarfed by the voluntary side. Governments, by using the removal purchase mandates and direct procurement initiatives at their disposal, are positioned better than almost any other stakeholder to fill the gap. While demand-side proposals are currently under consideration at the state and federal levels in the US, even the most ambitious of projections would still fall short of climate needs.

An Opportunity Not to Be Missed: A Call to Action to Stakeholders

Given the projected supply constraints,buyersthat limit or delay their credit purchases may have to pay a premium in the future or ultimately fail to secure durable CDR to meet their commitments. Companies also face growing pressure, from both regulators and increasingly aware customer bases, for their responsibility in fighting climate change. Securing access to durable CDR today is not only a risk management strategy but also a sensible investment.

Forinvestors’part, investments today could be deemed as high risk. But demand and supply dynamics, and positive signals coming from both early buyers and government incentives, demonstrate long-term market potential. If done right, serving as early investors could be beneficial, as winning suppliers of 2030 are being determined today.

CDR supplierscan help accelerate overall development of the durable CDR ecosystem by supporting mutual learning and collaborating on the procurement of commercial inputs, increasing efficiency without exposing intellectual property.

Carbon accounting and standard-setting organizations,by adjusting their durable CDR protocols, are well-positioned to encourage the procurement of high-qualitycarbon credits alongside meaningful emissions reduction measures.

Finally,governmentsmust accelerate support for durable CDR to enable further cost reductions and market development, including both supply- and demand-side mechanisms. The scale of this support will need to grow above and beyond existing legislative proposals. Governments will also enable broader markets by advancing official guidelines on what constitutes “high-quality durable CDR” and by adequately supporting the development of robust MMRV methods.