Global CDR market may reach $100bn between 2030-35: Study

The global carbon dioxide removal (CDR) market may reach $100 billion a year between 2030 and 2035 if barriers to scale are addressed. However, without targeted intervention, the CDR market may only reach 10% of its potential size. This was revealed in a report published by management consultancy Oliver Wyman together with the City of London Corporation and the UK Carbon Markets Forum.

The report says that CDR projects are gaining interest from corporate purchasers, investors, and project developers due to their potential to address hard-to-abate greenhouse gas emissions. Climate authorities emphasise the need for substantial scaling of CDR projects to limit global warming, with over $30 billion already invested globally in anticipation of this growth.

With discussions with over 30 companies in the carbon removal space, the research highlights promising developments and significant challenges that must be addressed for the market to scale.

The research shows that globally, $32 billion has been invested in CDR projects, with approximately $21 billion in engineered solutions and $11 billion in nature-based ones. Public spending accounts for $15 billion, while private investors, mainly venture capital funds and corporate entities, contribute $17 billion. However, current demand needs to scale 3-5 times to support the existing level of investment.

Some major barriers to CDR demand identified in the report include the lack of guidance on removals in decarbonisation targets and the absence of universally agreed standards on quality. It highlights key actions that the industry can take, such as articulating the role of removals in the net zero strategy, providing guidance to companies on their role, establishing clear thresholds for monitoring, verification, and reporting, including removals in compliance markets, detailing subsidy and support mechanisms, and supporting the development of the CDR financial market ecosystem.

James Davis, Partner, Co-head of Climate and Sustainability, Europe, Oliver Wyman, said, “We are witnessing a significant increase in attention and investment towards CDR projects, highlighting the growing recognition of their role in the transition. However, the demand for carbon credits generated by these removal projects is not yet sufficient to support even current levels of investment, let alone the level required to meet climate goals. Action will be needed to overcome the barriers to scaling and accelerate progress.”

Chris Hayward, Policy Chairman for the City of London Corporation, said: “The role of green technologies in powering the net zero transition cannot be understated. CDR technologies are at the heart of this push as evidenced in these findings and therefore we must continue to highlight their significance in climate strategy.”

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