CDR.fyi

October 03, 2024

2024 Q3 Durable CDR Market Update - Time to Build the Base

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Highlights

  • Growth: Third highest quarter to date with 1.2 million tonnes of durable CDR contracted.
  • Top Heavy: Top 3 deals account for 75% of the contracted volume. One new buyer in the top 5 transactions. Lowest number of new buyers since Q3 2021.
  • Method Diversification: Three of the top five purchasers procured from more than three CDR methods. Six different durable CDR methods in the Top 10 Supplier Leaderboard
  • The Global South Delivers: 62% of deliveries came from biochar companies operating in the Global South.

Analysis

Despite a favorable top-line contracted volume, the number of purchases is trending downwards. The volume of large purchases has been increasing, but the number of unique buyers per quarter has started to plateau and even decline this year. The number of new buyers is also decreasing, with Q3 bringing the lowest since Q3 2021.

This is a concerning trend. Even if existing buyers continue to double down and make larger purchases, the only way for the durable CDR market to achieve the required long-term scale is to continually add more first-time buyers, and have them increase their purchases over time. Gigatonne carbon removal in 2050 will not come from a few buyers purchasing enormous volumes; rather, the only feasible way to achieve those volumes is from a broad base of buyers purchasing, with a few large ones leading the way.

The drop in the number of deals is even bigger, but mainly as a result of how deals are reported: more suppliers are aggregating their tonnes rather than reporting small sales.

What is causing the concerning buyer trend? One shorter-term possibility is the impending US election. In response to a recent CDR.fyi poll question on what will create the biggest impact in getting more purchasers to buy CDR, 53% stated policy and 25% stated price. And in the poll that is available now and until Oct 9, 2024, 71% believe that the pending US election will have a major or some impact on the purchases of durable CDR now. Will new buyers come to the table once the uncertainty of the election period is in the rear-view mirror?

A medium-term possibility is that market actors may put their hopes in the Science-based target initiative (SBTi) reviewing options to improve guidance related to neutralization for updating their Net Zero standard. What many CDR actors would like to see are mandatory interim targets for permanent carbon removal, mandating companies to ramp up removal purchases to the volume needed by net zero dates. This shift could drive the adoption of high-quality CDR solutions and ensure that carbon removal grows to meet its role at net zero, rather than being deferred until the last minute. Companies can use our CDR.fyi calculator, published in January this year, to get an idea of what appropriate interim targets may be.

Market Dynamics

Transaction Volume

2024 Q3 Results

2024 Q3 was the third-highest quarter to date, with 1.2 million tonnes of CDR contracted, raising the total 2024 volume to almost 6.6 million tonnes. The quarter’s volume was primarily driven by significant transactions involving major players like Microsoft contracting with 1PointFive for 500 kilotonnes, along with Equinor, a first-time entrant to the durable CDR market, purchasing 330 kilotonnes from Ørsted, and Google and Holocene at 100 kilotonnes. The Google-Holocene transaction is particularly interesting as it has an open-ended delivery date stretched into the early 2030s, at USD$100 per tonne.

Top Transactions

Microsoft remains the dominant CDR purchaser, representing over 45% of quarterly transaction volumes at 559,400 tones. Equinor, as a new entrant to the market, accounted for 27% of the quarterly volume, and Frontier continues to play a critical role through its Advanced Market Commitment (AMC), with its latest rounds of prepurchases and offtakes contracting for 124,994 tonnes, or 10% of the quarterly volume. Also notable was Google inking its first bilateral carbon removal purchasing agreement outside of the Frontier AMC with Holocene at 100,000 tonnes, or 8.1% of the quarter’s volume.

Purchasers

Top Purchasers

While the usual suspects top the chart, the diversified portfolio approach to durable CDR procurement is evident in this quarter’s transactions. Three of the top five purchasers, Microsoft, Frontier, and British Airways, purchased from more than three CDR methods this quarter. On the other hand, Equinor’s purchase of the BECCS credits can be seen as part of a strategy to develop the demand side for CDR solutions, in addition to their efforts in exploration of CO2 storage facilities (with Ørsted and the Danish state through Nordsøfonden) to address the supply side of this emerging market.

Suppliers

Top Suppliers

Three suppliers signed 100K+ CDR deals this quarter: 1PointFive, Ørsted, and Holocene. While the former two have done so previously, this is the first time Holocene has signed an agreement of this size. Prior to its agreement with Google, Holocene had sold a combined total of 492 tonnes to four buyers. Equally notable is that CarbonRun and Arbor, two companies who have previously signed prepurchase agreements with Frontier in 2023 (for 1136 tonnes) and 2022 (for 667 tonnes), respectively, expanded upon those exploratory deals to sign significant offtake agreements with Frontier.

Promisingly, from a diversification perspective, six durable CDR methods are represented in the Top 10 Supplier Leaderboard, with DACCS and BECCS projects dominating by volume.

Deliveries

Top Deliverers

Deliveries in Q3 were led by biochar companies, especially those operating in the Global South: Exomad Green (Bolivia), Aperam BioEnergia (Brazil), Planboo (South-east Asia and Africa), and Carbonners (Africa) accounted for over 28000 tonnes (or 62%) of CDR delivery this quarter. CarbonCure was the only non-BiCRS company to make it onto the Top 10 Delivery Leaderboard, accounting for 15% of the quarterly delivery volume.

Method Delivery Volumes

BiCRS projects continued to dominate the Delivery Leaderboard in Q3, with numerous Biochar Carbon Removal (BCR) suppliers, Biomass Direct Storage (Vaulted Deep), and Bio-oil Sequestration (from Charm Industrial) accounting for ~85% of total deliveries; ex-situ mineralization (from CarbonCure) made a respectable showing with 15% of the quarterly volume.

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. See Methodology, Considerations & Limitations for additional details on our approach. To provide feedback on the CDR.fyi data model, reach out to us at partners@cdr.fyi.
  • 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.

CDR.fyi tracks carbon removal purchases & deliveries with a permanence of hundreds to thousands of years. 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 Q3 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 Q3 Durable CDR Market Update was provided by Alex Rink, Robert Höglund, Katya Larina, Tank Chen, Ifeoluwa Daranijo, Nadine Walsh, and Roden Sherpa.

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