Report: Global carbon removal credit industry could reach $100bn

The global market for carbon dioxide removal credits could reach up to $100 billion a year between 2030 and 2035 from just $2.7 billion last year if barriers to the industry’s growth are addressed, according to a report released Thursday by consultancy firm Oliver Wyman. 

The report was written in collaboration with the City of London Corporation and UK Carbon Markets Forum. 

Carbon removal projects aim to remove and permanently store carbon dioxide from the atmosphere, gaining interest from investors and corporations due to their potential to tackle hard-to-abate emissions. It is a popular form of carbon offsetting – the practice of purchasing carbon credits and investing in greener forms of energy to “offset” a company’s emissions. 

Demands for credits have intensified from sectors across finance, technology, and aviation, but the report says the current system is not yet robust enough to facilitate the scale of projects that experts say are needed to meet climate goals.

In 2023, total sales of carbon removals were estimated at $2.7 billion, the report said. Based on current growth rates from 2020 to 2023, the market is expected to climb $10 billion annually by 2030 to 2035. 

Globally, some $32 billion has been invested in carbon removal projects to date, with $21 billion in engineered solutions, including direct air capture projects that pull carbon directly from the atmosphere, and $11 billion in natural solutions such as planting trees, according to the report. 

While engineered solutions accounted for roughly 10% of issuance volume in 2023, they accounted for about 65% of sales due to their high price point. And the demand base remains narrow: Over 90% of those purchases to date were made by just 10 companies, the report said. 

Barriers to growth

“Demand for [carbon dioxide removal] credits is growing but is still insufficient to support necessary investment levels to meet net-zero targets,” the report says. Barriers to the market’s growth include a lack of standards on carbon removal credits and a lack of guidance on how carbon removal can be used to meet decarbonisation targets. 

The report suggests providing more guidance to companies, establishing monitoring and verification thresholds, and more subsidy mechanisms. 

Questions on priorities

Critics warn that too much emphasis on removing carbon from the atmosphere could deter companies from reducing their emissions in the first place.