In 2024, the carbon removal market experienced significant growth, marked by technological advancements, increased corporate investments, and evolving regulatory frameworks. However, challenges related to market concentration, integrity, scalability, and distribution concentrations continued to pose significant obstacles.

State of the Voluntary Carbon Market

The voluntary carbon market has grown exponentially over the past decade, with 2024 witnessing a significant shift toward Carbon Dioxide Removal (CDR) credits. According to the Integrity Council for the Voluntary Carbon Market (ICVCM), CDR credits accounted for a growing proportion of transactions, signalling heightened demand for high-quality, long-term removal solutions. This shift aligns with the broader push for permanence in climate mitigation efforts, moving away from traditional avoidance and reduction credits and toward engineered removal solutions with durability over 1,000 years and a very low risk of reversal (AlliedOffsets).

Source: AlliedOffsets, VCM 2024 Review & Emerging Trends for 2025

However, the market’s growth has not been without contention. The ICVCM’s 2024 report highlighted persistent challenges in ensuring integrity and additionality in carbon credits. Concerns over greenwashing and the lack of standardised verification methods have eroded trust among buyers and stakeholders. Efforts to address these issues gained momentum, with the ICVCM introducing its "Core Carbon Principles" and the EU releasing its Carbon Removal Certification Framework (CRCF) to standardise credit quality and enhance market credibility.

CDR Market Expansion and Concentration

The CDR sector expanded by 78% in 2024, with total purchased volumes reaching nearly 8 million tonnes (CDR.fyi). This growth was predominantly driven by major corporations such as Microsoft, Google, Stripe, and Frontier, which collectively accounted for ~80% of purchases. Notably, Microsoft has been the leading player by far, contracting substantial volumes to advance the sector and build up a treasury of high-quality CDR credits from a diversified portfolio of leading suppliers.

However, to meet the Paris Agreement's goals, scientists estimate that we'll need to remove between 7 and 10 gigatons of carbon dioxide (GtCO2) from the atmosphere annually by 2050, with 20 Gt of CDR each year by 2100 (Centre For Climate and Energy Solutions). In 2024, ~318,600 tonnes (CDR.fyi) of CO2 were removed from the atmosphere by retired CDRs. That’s 0.032-0.045% of the 2050 annual target, with just 25 years left to scale.

CDR Delivery and Investment Trends

Deliveries of durable CDR increased by 120% from the previous year, totalling 318,600 tonnes (CDR.fyi). Despite this progress, the delivery-to-booking ratio remains low at 4.4%, reflecting the nascent stage of the industry. Investment in durable CDR companies amounted to $836 million in 2024, a 30% decline from 2023’s $1.2B. However, when excluding outlier transactions from previous years, both the number and average size of investments have risen, indicating a cautious yet sustained interest from investors.

Furthermore, carbon was the only sector to experience increased venture capital funding in 2024, with global venture capital and equity financing down 40% in 2024. BloombergNEF research partly attributes this to favourable policies for carbon removal and growing demand for high-quality CDR credits.

CDR Challenges: Market Dynamics and Policy Support

The sector faces challenges, including a modest 7% growth in unique purchasers and an 18% decline in first-time buyers (CDR.fyi). Repeat buyer volume grew by 95%, accounting for 91% of purchased volume, while new buyer volume remained flat, representing only 9% of purchases. This trend highlights the sector's reliance on existing buyers who understand the benefits of entering the CDR market and the pressing need to attract new participants, which can help the market scale to remove 7-10 GtCO2 from the atmosphere annually by 2050.

Additionally, the disparity between purchaser willingness to pay and supplier pricing expectations poses a risk of premature price-driven competition, potentially disadvantaging high-cost but innovative methods that show scaling potential. Policy interventions, such as government purchases and subsidies, are crucial to support the industry's development of scalable, high durability, low risk of reversal CDRs and mitigate the focus on near-term pricing.

CDR Technological Advancements and Regulatory Developments

Technological innovation continued to shape the carbon removal landscape in 2024. Direct Air Capture and Storage (DACCS) technologies gained significant traction, driven by investments from both private and public sectors. Companies like Climeworks and Carbon Engineering achieved milestones in scaling their operations, making DACCS a more viable option for large-scale deployment.

Meanwhile, advancements in biochar and enhanced weathering technologies offered promising alternatives. Biochar, a byproduct of biomass pyrolysis, demonstrated significant potential for soil enrichment and carbon sequestration, which may lead to an increased durability rating of over 100 years in the near future. Enhanced weathering, which involves spreading finely ground silicate rocks over land to absorb CO2, garnered attention for its dual benefits of removal and soil fertility improvement, with UNDO leading the way.

The increasing role of blockchain technology in the carbon market also merits attention. Platforms like CarbonMark have leveraged blockchain to improve transparency and traceability in carbon credit transactions. This innovation addresses long-standing double-counting issues and credit misrepresentation, bolstering buyer confidence.

CDR Policy and Regulation: A Double-Edged Sword

Regulatory frameworks have started to play a pivotal role in shaping the carbon removal market in 2024. On the one hand, policy clarity in major markets like the European Union and the United States spurred investment and innovation. The EU’s Carbon Removal Certification Framework (CRCF), launched in late 2023, set the stage for rigorous monitoring, reporting, and verification (MRV) standards, influencing global best practices.

Additionally, the European Commission released its proposal for a 2040 climate target, including a 90% net emissions reduction, which would require up to 75 million tonnes of carbon dioxide removals.

Conversely, regulatory fragmentation across jurisdictions created uncertainty for market participants. The lack of harmonised standards led to discrepancies in credit pricing and quality, complicating cross-border transactions. Industry players have called for greater international collaboration to establish uniform guidelines and foster global market cohesion.

Challenges: Integrity and Scalability

Despite its growth, the carbon removal market continued to grapple with significant challenges in 2024. Chief among them was the issue of integrity. The proliferation of low-quality avoidance credits and unverified projects continues to undermine buyer confidence, threatening the carbon removal market’s credibility. Despite some good news in the CDR market, the overall carbon market sentiment (measured as a combination of user inputs, retirements, and trading activity) continued to slide throughout the year, reaching a low in the slow summer months.

Efforts to enforce stricter MRV standards and implement blockchain-based tracking systems showed promise but remained in the nascent stages.

Scalability emerged as another critical hurdle. While technological advancements have reduced costs, most CDR solutions remain prohibitively expensive compared to traditional low-quality avoidance credits. Scaling these technologies to gigaton levels—necessary to meet global climate targets—requires unprecedented levels of investment and cohesive policy support globally.

2025 CDR Outlook: Opportunities and Strategic Imperatives

Looking forward, the carbon removal market’s trajectory hinges on addressing its inherent challenges while capitalising on emerging opportunities. The convergence of technology, policy, and finance presents a unique window to scale CDR solutions effectively before 2050.

The global CDR market is experiencing rapid growth, driven by a growing recognition of the need for negative emissions technologies to meet corporate Net Zero commitments. This rising demand will likely increase prices in the short to medium term, particularly for CDR credits that meet stringent integrity and additionality standards.

Nonetheless, robust sales of CDR credits and high prices indicate strong market confidence in carbon dioxide removal methods for achieving measurable emissions reductions.

The aviation sector is expected to become a significant carbon market player. The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will enter its first mandatory phase in 2027. However, airlines like British Airways may begin preparing sooner by purchasing credits to offset their emissions. This development will further enhance demand and drive innovation within the voluntary carbon removal market.

Despite increasing positive policy commitments, collaboration will be key to overcoming regulatory fragmentation and establishing uniform standards. International bodies like the United Nations Framework Convention on Climate Change (UNFCCC) and industry alliances must work in tandem to foster alignment and transparency.

The CDR market cannot rely on policy alone to dramatically drive demand for carbon removal in the next 12-24 months. The private sector must take the lead in this area, and more corporations should allocate funds for carbon removal as part of their commitment to tackling climate change, either by purchasing CDR credits or directly investing in the technologies themselves.

In sum, the 2024 carbon removal market underscored both the promise and pitfalls of this nascent sector. As the world inches closer to critical climate deadlines, the role of carbon removal will only grow in importance. By addressing its challenges head-on, the market can evolve into a cornerstone of global climate strategy, delivering both environmental and economic benefits.

Review of the 2024 Carbon Removal Market: Evolution, Trends, and Challenges