According to a report released by management consultancy Oliver Wyman, the carbon dioxide removal (CO2) credits market is poised for explosive growth, projected to reach $100 billion annually by 2030-2035. This marks a substantial increase from the estimated $2.7 billion in sales recorded in 2023.

The report highlights the urgency of carbon removal technologies. With climate change worsening and insufficient emissions reductions, there is a critical need to remove billions of tons of CO2 from the atmosphere annually to meet global climate goals. This can be accomplished through natural solutions such as tree planting or technological advancements like direct air capture (DAC).

Demand for carbon removal credits is already emerging across diverse sectors, including technology, finance, chemicals, and aviation. Yet, it has yet to reach the scale required to drive large-scale projects. The report, co-authored by the City of London Corporation and the UK Carbon Markets Forum, identifies key barriers to market growth.

One key challenge is the need for standardized carbon removal crediting systems. With universally agreed-upon methods for measuring and verifying CO2 removal, ensuring the legitimacy and effectiveness of these credits becomes easier. Additionally, clear guidance on how removal projects contribute to achieving climate targets is crucial for bolstering market confidence.

Globally, $32 billion has already been invested in CO2 removal projects, with investments divided between engineered solutions like DAC and nature-based solutions like tree planting.

However, critics caution against over-reliance on carbon removals, as this might diminish incentives for companies to prioritize emission reductions.
The report emphasizes the carbon removal credit market’s potential in combating climate change. Nevertheless, addressing standardization and establishing clear pathways for credit utilization is essential for unlocking the market’s full potential.