Carbon Dioxide Removal (CDR) Market (2026-2036)

The growth of this market is mainly driven by corporate net zero commitments that require companies to neutralize residual emissions with carbon removals, very large long-term purchase agreements by technology companies, especially Microsoft, the scientific consensus that billions of tonnes of carbon dioxide will need to be removed from the atmosphere each year by mid-century to meet climate goals, growing government support through tax credits, procurement programs, and certification frameworks such as the EU Carbon Removals and Carbon Farming Certification Regulation, the integration of removals into compliance markets in some countries, and falling costs as projects scale up. However, factors such as the high cost of durable removal methods, limited delivery capacity compared with contracted volumes, the concentration of demand among a few buyers, uncertainty in measurement, reporting, and verification, permanence concerns for nature-based removals, and changes in government policy support are expected to restrain the growth of this market to some extent.

Carbon dioxide removal (CDR) refers to activities that capture carbon dioxide from the atmosphere and store it in geological formations, land, oceans, or long-lived products. CDR is different from emission reductions, which prevent carbon dioxide from being released, because it actively removes carbon dioxide that is already in the atmosphere. CDR methods include nature-based approaches, such as afforestation and reforestation and soil carbon sequestration, and engineered or hybrid approaches, such as biochar, bioenergy with carbon capture and storage (BECCS), direct air capture with storage (DACCS), enhanced rock weathering, and ocean-based methods. Durable methods store carbon for hundreds to thousands of years or more, while nature-based methods store carbon in trees and soils, where it can be released by fires, disease, or land-use changes.

This market covers the global revenue from the sale of carbon dioxide removal, measured in value as the value of removal credits and removal services delivered to buyers. It includes removals sold through voluntary carbon markets, long-term offtake agreements, government procurement programs, and compliance schemes that accept removals. It is segmented by removal method, durability, buyer industry, and geography, with geography based on the location of removal projects. The value of contracted but not yet delivered removals, carbon capture from fossil fuel power or industrial emissions that does not remove carbon dioxide from the atmosphere, and emission reduction credits are not included.

Carbon removal is needed for two main reasons, both linked to the goal of reaching net zero emissions. First, some emissions, such as those from aviation, agriculture, and certain industrial processes, are very difficult to eliminate, so companies and countries aiming for net zero will need removals to balance them. Second, many climate scenarios that limit warming to 1.5°C or well below 2°C require removing large amounts of carbon dioxide to reduce atmospheric concentrations after emissions peak. The State of Carbon Dioxide Removal report estimated that the world currently removes about 2 billion tonnes of carbon dioxide each year, mainly through forestry, but only about 1 million tonnes through novel methods, while many scenarios require 7 to 9 billion tonnes of removals per year by 2050.

The market for carbon removal has grown rapidly since 2022, driven mainly by corporate buyers. Microsoft has become by far the largest buyer, signing long-term agreements for tens of millions of tonnes of removals from reforestation, BECCS, biochar, enhanced weathering, and direct air capture projects. Frontier, an advance market commitment founded by Stripe, Google, Shopify, Meta, McKinsey, and others, has committed to buy more than USD 1 billion of durable removals by 2030, and other buyers, including airlines, banks, and consumer brands, have made smaller purchases. According to ClimeFi, new contracts for durable removals reached about 29.6 million tonnes in 2025.

However, deliveries remain small compared with contracted volumes, and this gap is one of the most important features of the market today. CDR.fyi reported that cumulative deliveries of durable removals passed 1 million tonnes only in late 2025, mostly from biochar projects, while large BECCS and direct air capture plants are still under construction or ramping up. The gap between contracted and delivered volumes reflects the time needed to build projects and the challenges of financing and scaling new technologies.

Governments are increasingly supporting carbon removal through tax credits, grants, procurement programs, and certification frameworks. The U.S. provides a tax credit under section 45Q of up to USD 180 per tonne for carbon dioxide captured by direct air capture and stored geologically, and the EU's Carbon Removals and Carbon Farming Certification Regulation provides a framework for certifying removals. Denmark and Sweden have launched subsidy programs for BECCS, Japan's GX emissions trading system recognizes removals, and the Paris Agreement's Article 6.4 mechanism has adopted standards for removal activities.

The market includes a wide range of project developers and technology companies. Direct air capture companies include Climeworks, 1PointFive, a subsidiary of Occidental, Heirloom, and CarbonCapture Inc. BECCS developers include Stockholm Exergi and Ørsted, which have signed large agreements with Microsoft. Biochar producers include Exomad Green, the largest supplier by volume, while Charm Industrial converts biomass into bio-oil for underground storage. Enhanced weathering companies include UNDO and Terradot, CarbonCure Technologies stores carbon in concrete, and reforestation developers include Mombak, Chestnut Carbon, and re.green.

Over the forecast period, the CDR market is expected to grow very rapidly from a small base, as contracted volumes are delivered, costs fall, and policy support increases. North America is expected to remain the largest market, while Europe is expected to grow fastest because of BECCS projects, government support, and the EU certification framework.

We cannot eliminate all of our flight emissions with today's technology, so we are starting to buy durable removals now. Prices are high, but we want to support projects early and learn how to build a removal portfolio before regulations require it.

This explains why durable removals are growing faster than nature-based removals, why aviation buyers are increasing purchases, and why Europe is the fastest-growing region.

Our BECCS support scheme gives developers a guaranteed price for removals over many years, which makes large projects bankable.

This explains why governments and the public sector form the fastest-growing buyer group and why public procurement is expected to add steady demand over the forecast period.