A recent report by management consultancy Oliver Wyman highlights the immense potential for growth in the global market for carbon dioxide (CO2) removal credits. The report suggests that if existing barriers to growth are addressed, this market could expand from $2.7 billion in 2023 to $100 billion annually between 2030 and 2035.
As climate change intensifies and efforts to reduce emissions fall short, the need for large-scale carbon removal becomes increasingly critical. UN scientists estimate that billions of tons of CO2 must be extracted from the atmosphere each year to meet global climate goals.
This can be achieved through both natural processes and technological innovations. The demand for CO2 removal credits is beginning to rise, driven by sectors as varied as technology, finance, chemicals, and aviation.
However, the current level of demand is insufficient to support the scale of projects required to make a significant impact. The Oliver Wyman report, produced in collaboration with the City of London Corporation and the UK Carbon Markets Forum, emphasizes that more robust demand is necessary to drive meaningful progress.
The report projects that the market for CO2 removal credits could grow from $2.7 billion in 2023 to as much as $100 billion annually by 2030 to 2035. This growth hinges on overcoming several key barriers, including the absence of universally agreed-upon standards for CO2 removal credits and a lack of clear guidance on how these removals can contribute to climate targets.
Based on the current growth trajectory observed between 2020 and 2023, the market is expected to reach $10 billion annually by 2030-2035. To foster market growth in the UK, the report recommends that the government.
Note that globally, $32 billion has already been invested in carbon dioxide removal projects. Of this, $21 billion has been allocated to engineered solutions, such as direct air capture (DAC) technologies that extract CO2 directly from the atmosphere.
The remaining $11 billion has been invested in nature-based solutions, including reforestation and other natural methods of CO2 removal. Despite the potential benefits, critics caution against an overreliance on carbon removal.
They argue that this could divert attention from the essential task of reducing emissions at the source. Striking a balance, ensuring that carbon removals complement rather than replace direct emission reduction efforts, is crucial.