2024 Q2 Durable CDR Market Update - Microsoft: Market-Maker

Highlights

Record Transaction Volume: We recorded 4.8M tonnes of durable CDR transaction volume in 2024 Q2, the highest quarterly figure to date. Through 2024 H1, the market is up 18% on full-year 2023.
Dominance of BECCS: Bioenergy with Carbon Capture and Storage (BECCS) solidified its prior leadership in cumulative transaction volume, with over 90% of the tonnes sold in the quarter.
Microsoft's Market Influence: Microsoft continues to be the tide to lift all boats in the CDR market, accounting for 91% of the total transaction volume in 2024 Q2.
The prominence of Scandinavian Suppliers: Suppliers from Sweden and Denmark, particularly Stockholm Exergi and Ørsted, topped the supplier leaderboard due to record-setting transactions and expansions respectively with Microsoft. While the Global South continues to figure prominently in biochar projects, the very high volumes from the North in Q2 underscore the global nature of the CDR market.

Analysis

With another quarter in the books, Microsoft continued to lengthen its lead as the most prolific purchaser of durable SDR. As of the end of Q2, Microsoft’s purchases now represent around 75% of the all-time volume of contracted durable CDR.

What does it mean for the sector to have such a dominant buyer? There are analogies to other industries. In the 1960s, the Department of Defense was the dominant buyer of semiconductors. The early semiconductor industry needed such a juggernaut to develop. Left to only the market, the industry probably would have advanced much more slowly.

In a sense, Microsoft is fulfilling a role that the government is best positioned to play. Most current government CDR support like the 45Q, and Denmark's and Sweden's tenders, still requires a corporate buyer. The DOE in the US is launching a small direct procurement program, but it represents a fraction of Microsoft's purchases.

It is important to note that Microsoft is dominant in terms of volume, but not in the number of purchases. Microsoft has bought from 25 CDR companies, Shopify from 34, Frontier from 28 and Milkywire/Klarna/WRLD Foundation from 27. 84 percent of Microsoft's purchased volume comes from two BECCS suppliers. Microsoft tends to line up larger contracts with semi-developed technologies, rather than making small pre-purchases from an innovative supplier trying new ideas, as Frontier and Milkywire do. Buyers can fill different roles, such as aiding early innovation or scaling up.

Microsoft’s market-making purchases are a cause for celebration in that they underpinned the 7.5x transaction volume growth in 2023 and raised the market’s floor by over 3M tonnes in 2023 and 2024. Furthermore, they represent a huge stamp of approval for suppliers, whether they be in BECCS, Biochar Carbon Removal (BCR), Direct Air Carbon Capture and Storage (DACCS), or other methods.

The durable CDR market is at an embryonic stage and requires more nurturing from diverse sources. While Microsoft is blazing the trail for others to follow, collective confidence and momentum will increase when other companies step up voluntarily to help seed the durable CDR market.

Market Dynamics

Transaction Volume

2024 Q2 Results

The second quarter of 2024 recorded an unprecedented transaction volume of 4.8 million tonnes in durable CDR, setting a new quarterly record and surpassing the total volume recorded in 2023. This remarkable surge was predominantly driven by significant transactions involving major players like Stockholm Exergi and Ørsted, along with continued substantial investments from Microsoft. Microsoft's influence is particularly noteworthy as it accounted for 4.39 million of the 4.82 million tonnes transacted, representing 91% of the quarter's volume. The concentration of transactions in a few large deals, especially Microsoft's overwhelming share, underscores the ongoing challenge of market dependence on singular, large-scale investments.

Top Transactions

One purchaser - Microsoft - accounted for 4.39M of the 4.82M tonnes, or 91% of the volume transacted in the quarter. The next two, Frontier Buyers, and Swiss Re, accounted for 5%, and 63 other purchasers accounted for 4% of the quarter’s volume.

Suppliers

Top Suppliers

Stockholm Exergi and Carbonity recorded their first durable CDR transactions this past quarter. Ørsted added to its then record-setting sale to Microsoft in 2023 Q2, Vaulted Deep’s sale to Frontier vaulted it to the third position, and familiar suppliers Exomad Green and 1PointFive (the top suppliers in cumulative transaction volume in BCR and DACCS respectively) rounded out the top five.

Purchasers

Top Purchasers

Microsoft's influence as a leading buyer continued in 2024 Q2, highlighted by its major transactions with Stockholm Exergi and Ørsted. These purchases positioned Microsoft far ahead of other buyers, almost 30 times Frontier Buyers in the second position and an astonishing 2,500 times ZKB in the tenth position for the quarter. Swiss Re’s sizeable transaction with Carbonfuture placed it third, and while Shopify’s volume is included with Frontier Buyers, its individual purchase would have been the only other over 10,000 tonnes.

Deliveries

Top Deliverers

Exomad Green, based in Bolivia, continues to be one of the most prominent purveyors of biochar and leads the Delivery Leaderboard for Q2. They are joined in the top three by Aperam BioEnergia, based in Brazil, and Carboneers, based in the Netherlands but running their projects in the Global South. All of the top ten Deliverers in Q2 operate in biochar.

Method Delivery Volumes

In Q2, 88,017 tonnes of durable CDR were delivered, a historic high for a quarter. Biochar Carbon Removal (BCR) dominated these deliveries, accounting for 99% of the total. BCR’s relatively low price and short delivery cycle have made it the preferred durable CDR method for those seeking short-term delivery and retirement of carbon credits, or an economical option for experimenting with durable CDR.

Notes on the Data

Data Sources: All of the data used in the preparation of this report is based on reported transactions, including public announcements, direct submissions by suppliers and purchasers through the CDR.fyi Portal, and integrations with ecosystem service providers.
Ecosystem Services: We have elected to omit the Ecosystem Services Leaderboard from this report due to inconsistencies in the level of information provided.
New CDR.fyi Data Model: We will be implementing enhancements to our data model and integrations with ecosystem partners. These enhancements are designed to increase the consistency of information across partners, improve clarity around deliveries, and increase transparency. Please contact us at team@cdr.fyi if you would like to be a reviewer for the new data model.
Pricing: In 2024 H1 we saw indications of a continuation of the price decline we have witnessed from previous years. However, we have elected not to report price trends in this edition of the market report due to insufficient data. To encourage market participants to be transparent with pricing data that is essential for market growth, CDR.fyi offers the option to share pricing on an anonymous and confidential basis to be used only for aggregate reporting, and in such a way as to not be traced back to individual transactions (see image below). Furthermore, we will be implementing changes to our “give to get” Data Partner model such that those who share pricing information will receive the highest level of benefits. For questions about how to keep your pricing private but available for aggregate reporting, please email us at team@cdr.fyi. With your support, we can all contribute to a CDR market that remains fair, transparent and efficient.

CDR.fyi tracks carbon removal purchases & deliveries with a permanence of hundreds to thousands of years. Data are drawn from public and private disclosures. See Methodology, Considerations & Limitations for additional details on the approach. For any corrections or questions, contact team@cdr.fyi. For data licensing & partnership inquiries, contact partnerships@cdr.fyi.

Acknowledgments

Thank you for exploring the CDR.fyi 2024 Q2 Durable CDR Market Update report.

This blog post is an abridged version of the comprehensive edition exclusive to our Data Partners and Platform Subscribers. For access to the full report or further information, kindly contact us at partners@cdr.fyi.

Data, analysis, and content for the CDR.fyi 2024 Q2 Durable CDR Market Update was provided by Alex Rink, Nadine Walsh, Robert Höglund, Tank Chen, Ifeoluwa Daranijo, and Roden Sherpa.

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