Carbon removals are an essential part of the war chest we have to deploy against climate change, writes Antti Vihavainen
Carbon markets are rapidly changing. The first generation of the Voluntary Carbon Market (VCM), once projected to reach $50 billion, has faced challenges regarding integrity and quality1. These challenges are being addressed, through the important work of initiatives such as the Integrity Council for Voluntary Carbon Markets (ICVCM).
There is also now a clearly defined second generation of the VCM, one of that is characterised by the presence of scientifically quantified, independently verified, durable, carbon dioxide (CO₂) removals (CDRs).
CDR refers to processes that pull CO₂ from the atmosphere and store it over a long period of time – typically for more than 100 or 1,000 years – to reduce the CO₂ concentration in the atmosphere. This market is expanding rapidly, with companies developing and scaling these technologies while buyers pay for verified removal credits to meet climate goals.
As a climate solution, it's growing quickly. According to CDR.fyi, purchases of carbon removal credits surged 6.5 times in 2023, rising from 800,000 tonnes in 2022 to 5.2 million tonnes by the end of 2023. This sharp increase reflects growing confidence in the credibility and scalability of durable CDR.
As this market continues to grow, proactive engagement with carbon removal credit developers is not only an imperative for the planet, but also a smart business strategy. But this window of opportunity can – and will – quickly close.
Why should companies act now? Early movers will secure strategic advantage. As catalytic buyers, they can negotiate to receive priority access as a senior buyer of these credits, or secure first right of refusal for deliveries after the initial period.
As the market matures and compliance frameworks begin to integrate CDR, those who delay may face higher costs and limited availability. Furthermore, engaging early enables businesses to help shape industry standards and best practices, reinforcing their leadership in sustainability.
High prices for certain types of CDR technology are often cited as a current challenge. One might assume that early buyers would pay higher prices for something that later decreases in cost as economies of scale are achieved. However, index-linked reference price products, available through global exchange platforms such as Nasdaq, allow buyers to lock in favorable terms at an early stage of purchasing.
There are also clear marketing benefits. Companies that finance emerging, but highly effective removal solutions will be recognized as climate leaders.
"If just 0.4% of buying activity on the European Emissions Trading System (ETS) – the main compliance carbon market in Europe – was allocated to carbon removal, this could generate 5 megatonnes of demand just in the first year"
Companies have been stepping up to the mark – and early movers have already been reaping the rewards of engaging with this market early.
Examples include Microsoft, which has committed to purchase over 8.2 million tonnes of carbon removal credits, including a landmark deal with Stockholm Exergi to remove 3.3 million tonnes of CO₂ over 10 years.
Airbus has its own dedicated carbon capture offer which has attracted multiple airlines, including easyJet and Lufthansa. As part of this programme, in 2023 Airbus agreed a pre-purchase of carbon removal credits equating to the value of 400,000 tonnes of CO₂ to be delivered over four years.
British Airways became the UK's largest carbon removals buyer in 2024 through a 33,000-tonne carbon removal credit purchase via CUR8.
In many respects, these companies are leading the way, and there are plenty of other examples.
There are positive sounds emerging from regulation and policymakers that are supportive of CDR. This is good for the market but is precisely what closes the window of opportunity for buyers.
The EU is rolling out the Carbon Removals Certification Framework (EU CRCF), its first certification standard for high-quality carbon removals. Meanwhile, the Science Based Targets initiative (SBTi) recently published potential changes to its Corporate Net Zero Standard, pending consultation feedback, with one change outlining how companies could use removals for residual emissions2. SBTi is also proposing interim CDR targets before net-zero, pushing companies to invest early rather than delaying action.
There are signals from various compliance programmes that are starting to look at integrating carbon removals. This could drive significant growth in demand. I recently calculated that if just 0.4% of buying activity on the European Emissions Trading System (ETS) – the main compliance carbon market in Europe – was allocated to carbon removal, this could generate 5 megatonnes of demand just in the first year.
CDR isn't just a nice to have – it's an essential part of the war chest we have to deploy against climate change.
This is critical because it directly addresses climate change by reducing excess CO₂ in the atmosphere. It is no longer optional, all Intergovernmental Panel on Climate Change pathways demonstrate that limiting global warming to below 2°C will require significant CDR production volumes. Scientific consensus underscores the necessity of removing billions of tonnes of CO₂ annually to meet the 1.5°C target outlined in the Paris Agreement. A report co-led by Oxford University researchers estimates that between 7 and 9 billion tonnes of CO₂ must be removed each year by mid-century .
Corporate buyers of CDR that act now will benefit the most – securing supply, shaping market mechanisms, and driving real climate impact that will last for many generations.
When this second-generation market moves to the next generation, and durable carbon removals are integrated into compliance markets and enter the mainstream, this early-mover advantage disappears.
Antti Vihavainen is Vice Chairman of Puro.earth.