Global efforts to tackle rising emissions and a rapid warming of the planet will likely fuel the carbon removal market to a $100 billion a year industry by the end of the decade, according to a new report.
Total sales of carbon dioxide (CO2) removal credits were estimated at $2.7 billion in 2023 but have the potential to grow much more exponentially, a report by management consultancy Oliver Wyman said on Thursday.
The key caveat to achieving that would be addressing barriers to the market’s growth, the report cautioned.
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The carbon removal process involves extracting CO2 from the atmosphere and storing it for a long period of time either biologically or technologically. Some of the most effective methods for carbon removal include reforestation, biochar, rock weathering and direct air capture (DAC).
But the market faces barriers such as a lack of universally agreed standards on CO2 removal credits and a lack of guidance on how removals can be used to help meet climate targets.
Critics of using carbon removals also warn that focusing too much on their use could deter companies from reducing their emissions as much as possible.
Even so, UN scientists estimate that the process of reaching ‘Net Zero’ will require emissions reductions to go hand-in hand with carbon removal.
“Carbon dioxide removal will be necessary to achieve net negative CO2 emissions,” the UN’s Intergovernmental Panel on Climate Change said in 2023 report.
And experts estimate billions of tons of carbon must be removed from the atmosphere annually to meet global climate goals.
Strengthening adoption key
Demand for credits has begun to increase from sectors as diverse as technology and finance, chemicals and aviation, the report by Oliver Wyman, the City of London Corporation and the UK Carbon Markets Forum said.
But it is not large enough yet to drive the scale of projects that experts say are needed, it added.
For instance, to grow the market in Britain, the government will need to include removals in its emissions trading system, set out a financial framework to support the market and endorse the use of removals within company net zero strategies, the report said.
Globally, $32 billion has been invested in carbon dioxide removal projects to date, with $21 billion of this in engineered solutions, such as direct air capture (DAC) projects which suck CO2 from the atmosphere and $11 billion in nature-based solutions such as planting trees, the report said.
But on current growth rates between 2020-2023, the market can only reach $10 billion a year in value by 2030-2035, it added.
- Reuters, with additional inputs from Vishakha Saxena
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