What Is Carbon Dioxide Removal? Top Buyers and Sellers of CDR Credits in 2024

The world must remove 5–16 billion metric tons of CO₂ annually by 2050 to limit global warming to 1.5°C. But with emissions still rising, can we scale Carbon Dioxide Removal (CDR) fast enough to make a real impact?

What Is CDR? Understanding Carbon Dioxide Removal Credits

Carbon dioxide removal includes technologies and natural methods that capture and store CO₂ from the air. CDR is crucial for achieving global climate goals, as reducing emissions alone is not enough to limit global warming.

The Intergovernmental Panel on Climate Change (IPCC) says that to keep global warming under 1.5°C, we need to remove 5–16 billion metric tons of CO₂ each year by 2050.

CDR credits let companies and governments balance their emissions. They do this by funding projects that actively remove CO₂. CDR credits are different from traditional carbon offsets.

While carbon offsets aim to reduce or avoid emissions, like stopping deforestation, CDR credits guarantee that CO₂ is pulled out of the air and stored for a long time. The voluntary carbon market (VCM) is expected to grow from $2 billion in 2023 to over $50 billion by 2030, with CDR credits playing a significant role.

How Does CDR Work? The Science Behind Carbon Removal

CDR captures CO₂ from the air. It then stores it permanently in geological formations, biomass, or other stable places. There are two main types of CDR methods:

Natural CDR: Includes afforestation, soil carbon sequestration, and ocean-based methods.
Technological CDR: Includes Direct Air Capture (DAC), biochar, and enhanced mineralization.

Permanence is key in carbon dioxide removal. High-quality CDR credits must keep CO₂ stored for centuries or even millennia. This prevents it from being released back into the atmosphere.

Recent research shows that engineered carbon removal solutions like DAC can store carbon for over 1,000 years. This makes them very effective for long-term carbon management.

Several global projects are currently implementing these solutions. In Iceland, the Orca plant by Climeworks is the largest DAC facility, capturing 4,000 metric tons of CO₂ per year, with plans to scale to 1 million tons annually by 2030.

In the U.S., the Department of Energy has committed over $3.5 billion to support DAC projects under the Regional DAC Hubs initiative.

The CDR Market: Who Buys Carbon Removal Credits and Why?

The CDR market is growing fast. Corporate buyers, governments, and voluntary markets are boosting demand.

In 2024, purchases of high-durability CDR credits reached almost 8 million metric tons, compared to 2.4 million metric tons in 2023. This represents an increase of approximately 233% year-over-year.

Key players in the market include:

Microsoft accounted for 63% of total CDR purchase volume in 2024 to achieve carbon negativity by 2030. The tech giant secured around 5.1 million metric tons of durable CDR credits.
Google purchased about 501 thousand tons of CDR credits, making it second to Microsoft.
Frontier buyers—including Stripe, Shopify, and Watershed—continued to support promising carbon removal projects, collectively purchasing 667.4K tonnes of CDR credits.

Market trends show that demand will keep rising. More companies are setting science-based climate targets. However, the supply of high-quality CDR credits remains limited, leading to a significant price premium. High-durability CDR credits cost between $100 and $600 per ton. The price varies based on the technology used.

Companies in hard-to-abate industries, such as aviation, cement, and steel production, are becoming major buyers. The aviation sector is predicted to need 300 million tons of carbon removals each year by 2050. This is to meet the net-zero goals of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation).

SEE MORE: Microsoft Leads as Carbon Removal Credits Hit 8 Million Tonnes in 2024

CDR Suppliers: Who Is Leading the Charge?

Several companies and organizations are at the forefront of scaling carbon dioxide removal solutions. These suppliers are focused on cutting costs. They also aim to boost efficiency and make high-quality carbon removal credits more available.

Top CDR credit suppliers in 2024 include:

Stockholm Exergi leads in BECCS (Bioenergy with Carbon Capture and Storage), securing large offtake deals, including a 3.3 million-tonne sale to Microsoft, the largest CDR transaction to date.
Ørsted, another Scandinavian utility, expanded its presence by adding a 1 million-tonne deal with Microsoft and a 330K-tonne sale to Equinor, strengthening its position in large-scale carbon removal.
1PointFive, backed by Occidental Petroleum, remains the largest supplier in DAC, securing a 500K-tonne sale to Microsoft through its Stratos project.

New startups are on the rise. In 2024, venture capital investments in CDR totaled $836 million, a 30% decline from 2023’s $1.2 billion. Despite this, the number of investments and average deal sizes increased when excluding large outlier transactions from previous years.

The new suppliers are important in tackling some of the major challenges faced by the market.

Challenges of CDR: Cost, Scalability, and Greenwashing Risks

Like other markets, CDR has to deal with various issues to keep growing. Here are the major challenges it is currently facing:

High Costs

DAC and other engineered solutions remain expensive, with costs ranging from $100 to $600 per ton of CO₂ removed. However, with economies of scale and technological advancements, costs are projected to decrease by 40% by 2035.

The U.S. Department of Energy has set a target of reducing DAC costs to below $100 per ton by 2050 through increased investment and innovation.

Climeworks and Carbon Engineering are focused on improving energy efficiency. This helps reduce costs quickly.

Additionally, new funding models, such as advanced market commitments (AMCs) like Frontier, are being explored to help scale CDR. These commitments are like those for vaccines. Big companies and governments promise to buy CDR credits in the future at fixed prices. This method helps developers gain financial stability. It also encourages more investment in carbon removal technologies.

Scalability

The current supply of high-quality CDR credits is much lower than demand. In 2023, only 2.4 million metric tons of CO₂ were removed, a fraction of the estimated 5–10 billion metric tons per year needed by 2050.

To scale to gigaton levels, we need more than just tech upgrades. We also need to expand our infrastructure a lot. The land, energy, and storage requirements for engineered solutions like DAC remain a major challenge. For example, capturing 1 billion tons of CO₂ annually using DAC would require approximately 50 terawatt-hours (TWh) of energy, equivalent to the yearly electricity consumption of Spain.

Nature-based solutions, while more cost-effective, also face scalability issues. Afforestation and soil carbon storage need millions of acres. This can compete with farming and protecting biodiversity. Moreover, measuring and verifying long-term storage remains an ongoing challenge.

Greenwashing Risks

Some companies buy cheap CDR credits. They claim these help the climate but they don’t actually reduce emissions. This issue is particularly concerning in the voluntary carbon market, where transparency and accountability vary across different registries.

Investigations revealed that up to 30% of voluntary carbon offsets might not provide the promised reductions. This can happen because of overestimation or lack of permanence.

To combat greenwashing, organizations like Verra, Gold Standard, and the Integrity Council for the Voluntary Carbon Market (IC-VCM) are introducing stricter guidelines for credit verification. Third-party audits and blockchain tracking systems are being created. They aim to boost transparency and trust in the market.

CDR Policies and Regulations: What You Need to Know

Governments are increasing support for carbon dioxide removal through funding, tax incentives, and regulations. The U.S. Inflation Reduction Act (IRA) provides up to $180 per ton for DAC projects, making the U.S. one of the leading funders of carbon removal technologies.

The Department of Energy’s Carbon Negative Shot program also aims to reduce the cost of CDR to under $100 per ton. It plans to deploy scalable solutions by 2035.

The EU is developing the Carbon Removal Certification Framework (CRCF) in Europe. This framework will set quality standards for CDR projects. It will ensure that carbon removals are measurable, additional, and durable. With this, the European Commission launched a €1 billion fund for carbon removal. This will help support new and innovative projects.

Beyond the U.S. and EU, other countries are exploring similar regulatory approaches:

Canada has integrated carbon removal into its Clean Fuel Regulations, encouraging industries to invest in verifiable CDR solutions.
Japan has launched a Carbon Credit Market, with an emphasis on nature-based removals and early-stage DAC investments.
Australia is expanding its Carbon Farming Initiative to include engineered removals, providing subsidies for companies investing in long-term carbon storage.

Organizations such as Verra, Gold Standard, and Puro.earth are working to improve verification and ensure credibility in the CDR market. The Science Based Targets Initiative (SBTi) has also begun including engineered CDR in net-zero pathways, signaling further institutional support for scaling the industry.

As these policies and regulations develop, they will play a crucial role in shaping the future of CDR by ensuring market integrity, funding innovation, and supporting large-scale deployment.

The Future of CDR: Can It Scale to Meet Net-Zero Goals?

Analysts expect the CDR market to grow a lot. They predict it could reach gigaton-scale removal by 2050. Key drivers of growth include:

Technological advancements reduce costs and improve efficiency.
Corporate and government commitments increasing demand.
Regulatory developments ensure market integrity.

By 2050, DAC could remove up to 1 billion metric tons of CO₂ each year. Nature-based solutions might add another 3 to 5 billion metric tons annually. The overall CDR market could be worth over $100 billion by 2035 as more companies and governments integrate carbon removal into their climate strategies.

While challenges remain, carbon dioxide removal is set to play a crucial role in achieving global net-zero targets. Continued innovation, strong policy support, and increasing corporate investment will determine how quickly and effectively the sector can scale to meet climate goals.