Demand for carbon removal credits is expected to surge as market-friendly incentives attract buyers from various sectors, including technology, finance, chemicals, and aviation. Scientists believe that extracting billions of tons of carbon dioxide from the atmosphere annually is crucial to meeting climate change goals set under the U.N. Paris agreement.
Small startups are developing new technologies to remove carbon dioxide and generate tradable credits for companies to offset their emissions. While costs are currently higher compared to traditional methods like forest preservation, the U.S. Inflation Reduction Act aims to boost the market through tax incentives.
In 2023, around 4.6 million tons of credits from engineered removal projects were purchased, with biochar accounting for 93% of delivered credits. Companies like Puro.earth and Isometric are setting standards for assessing these credits to increase buyer confidence.
Puro plans to expand certification standards to include advanced technologies like ‘advanced weathering’ of rocks and chemical carbon removal. The company expects certifications to reach 400,000 this year, with a projected compound growth rate of nearly 100% over the next three years.
Despite high costs, companies like Bayer, Microsoft, and JPMorgan have already retired credits to offset their emissions. Regulatory involvement and increased interest from sectors like finance and air travel indicate a growing market for carbon removal credits.
Overall, the push for carbon removal credits reflects a growing awareness of the need to combat climate change and reduce emissions across industries.