What the State of CDR Report Tells us about the Removal Market

The second edition of the State of CDR report was published on June 4. It is a collaboration among numerous researchers and offers the most comprehensive overview of where carbon removal stands today.

CDR.fyi co-founder Robert Höglund and collaborating writer Nadine Walsh were co-authors of Chapter 4 on the voluntary carbon market (VCM). CDR.fyi provided data on sales, deliveries, and prices for novel CDR for the report. Here are four key findings relating to the durable CDR market (among dozens of other equally interesting takes). Note that the report uses the phrase “novel CDR”, which is the same as what we refer to as durable CDR. The term “conventional CDR” is also used which mostly refers to forest carbon. In this post, we use “novel” and “durable” interchangeably.

1) The voluntary carbon market is really important for novel, but not conventional CDR

The VCM plays a significant role in financing novel CDR. Most durable removal methods would not deliver any carbon removal at all if it wasn’t for buyers making prepurchases or entering into offtake agreements. Just to take one data point, pre-purchases for novel CDR well exceeded the total amount of CO₂ removed through these new methods in the same year.This stands in contrast to conventional CDR methods like afforestation/reforestation, which receive minimal market support compared to the amount of removal they create. For instance, credits issued for afforestation/reforestation represented less than 1% of the total CDR (2 Gt) from these activities in 2023. That is not to say that credit sales aren’t essential for many conventional CDR projects, it is just that the voluntary carbon market in general is not playing a big role in using living biomass to remove carbon. in getting more carbon into living biomass.

2) At the same time, for some novel methods, more carbon is being removed than is sold

In 2023, over 1.35 million tons of CO₂ were removed via novel CDR according to the report, mostly from BECCS and Biochar, but only 139,202 tons were reported as delivered. A large part of the discrepancy stems from the fact that the State of CDR deployment chapter measures gross and not net carbon removal. For example, the CO₂ captured by BECCS facilities figures include non-removal uses like enhanced oil recovery, and CO₂ supplied to the food and beverage industry.Moreover, deliveries are for commercial agreements of carbon removal, and a significant share of CDR occurs outside the market, especially for biochar where most producers have not started selling credits yet (read more in our blog post about the IBI biochar report).

3) Novel CDR is catching up to conventional CDR in the VCM

Novel CDR is gaining traction in the VCM. While conventional methods still dominate in terms of total credits issued and retired, the volume of novel CDR purchased is growing quickly. For example, 13 million conventional CDR Credits were issued in 2023, a drop from 20 million in 2022. At the same time 4.6 million tonnes of novel CDR were sold, a 7x increase. 2024 is showing rapid growth for novel CDR as well.

However, note that the data for novel and conventional CDR aren't directly comparable. Novel CDR includes future delivery agreements and delivered tonnes, while conventional CDR covers only issued and retired credits in one year.

Worth remembering is that both conventional and novel CDR are very small parts of the overall VCM in terms of tonnes (but not so small part in terms of deal value).

4) Novel CDR companies have big near-term plans

Encouragingly, durable CDR companies have ambitious plans for the near term. The report shows that DACCS and BECCS companies project a cumulative annual capacity of 120 million tons by 2030. Similarly, our CDR.fyi supplier survey indicates projected sales of 253-660 million tons per year by 2030 from 91 responding suppliers.

However, increased demand is necessary for these scaling plans to be realized. All of the demand won’t come from the VCM though. Government delivery agreements and insetting without the issuance and sale of credits are two other mechanisms we expect to see a lot more of in the coming years.

We encourage you to dive into the full State of CDR report. There is so much more to explore, including in the Markets chapter. The report covers topics like the levels of investments in CDR, the policy landscape with multiple case studies of different countries, analysis of patents, what drives public perception of CDR, how CDR is discussed on Twitter and in the media, analysis of the CDR gap between country plans and global needs, the state of MRV, and much, much more.

Explore the full report and all the data in their portal - https://socdr-portal.apps.ece.iiasa.ac.at/