22 June 2022

Carbon Dioxide Removal in the VCM

5 min

BeZero Carbon has published a report to provide insights into the current landscape of the Voluntary Carbon Market (VCM), engineered Carbon Dioxide Removal (CDR), and the necessary transitions that must occur in the near term to ensure CDR reaches the scale necessary to avert climate crises.

Click here to download the full report
Click here to read a CDR explainer

Report Overview


1. The VCM is dominated by avoidance credits, but this is set to change.

  • At present, avoidance credits dominate the market. The VCM is currently 93% avoidance credits and 7% removal*. The removal section are dominated by nature-based solutions (NBS) - those that replicate the natural processes of the carbon cycle by storing carbon in biological matter. Of these removal credits: 66.3% of credits is afforestation and reforestation, 24.5% is improved forest management, 7.3% is carbon sequestration in agriculture and less than 1.5% is ecosystem restoration 

  • Over the next century, the global economy will rely on removals at an immense scale.

  • Our analysis of IPCC, BloombergNEF (BNEF) and the Taskforce for Scaling Voluntary Carbon Markets (TSVCM) models finds that by 2030, with a market size of 1.5-2 billion tonnes p.a. 44% of the VCM will be avoidance credits and 56% will be removal.  

2. This shift will include an influx in engineered CDR credits as nascent projects increase retirements.

  • The TSVCM estimates an increase to 1.5-2 billion credits traded p.a. by 2030. Of this, experts project that engineered CDR will increase to 30-100 million credits by 2030 from 0 credits in 2022 (engineered removal credits are not currently an available option through the VCM registries).

  • There are two key reasons for this:

    • First, as BeZero - and others such as Verra, GoldStandard and Puro.Earth - set out, permanence is one of the key factors when assessing the quality of a carbon credit. Some CDR methods, such as DAC, forecast over a 1000 years of permanence in geological storage. Carbon sequestered in biomass and soils, as for NBS, is potentially more prone to near-term reversal, for example through drought, fire, pests, or future demands on the land and resources.

    • Second, engineered CDR can be highly scalable. By 2050, we need 70-225 GtCO₂ of cumulative removal. If this was to be solely fulfilled by afforestation, for example, it would require 500-1500 million hectares of land, almost the entire land area on Earth. If this was to be fulfilled by direct air capture, it would require just 100-300 thousand hectares of land.

3. The market for engineered removal is growing rapidly but supply is still low.

  • In 2020, 2021, and 2022 (Q1/Q2) the overall number of credits purchased from engineered CDR was over 525,000, but this includes ex-ante credits, meaning the carbon has not actually been removed yet. Only 59,000, 11% of total credit purchases, were ex-post removal credits. So far, a selection of corporate pioneers, mostly from the technology sector, have created the bulk of the demand. This group of CDR customers, which includes Microsoft, Shopify, Stripe, Airbus, Bank of Montreal, have a desire to be a first mover and leader in the carbon removal space and have been buying both ex-post and ex-ante credits. So far, an estimated $53 million has been spent on CDR credits by corporate purchasers, all of which has taken place in the last two years.

  • Corporate net zero initiatives will further increase demand. The Science Based Targets Initiative (SBTi) does not allow companies to use carbon credits to account for emissions reductions in near term targets. However, the SBTi’s criteria for setting Net Zero targets allows companies to neutralise residual emissions once they have reduced their own emissions as close to zero as possible. This is going to create an increasingly high demand for carbon removal credits as companies approach their net zero target year, with this early corporate activity demonstrative of what will come.

4.  The market needs to develop if the price is going to come down at the rate necessary. 

  • At the moment, the vast majority (96%) of credits are bought bilaterally, from CDR suppliers to consumers, not through an intermediary. This means that those who are purchasing the credits have the internal resources to do due diligence on each of the projects and then pay relatively high prices on top of that for the credits.

  • If costs remain at current pricing until 2050, the annual cost to remove the IPCC’s projected 165 billion tonnes of removal will be excessively high. The cost per year in 2050 to neutralise remaining emissions beyond net-zero targets could be as high as $8.5 trillion USD.

  • To avoid this global financial burden, mechanisms of the VCM can support the emergence of CDR projects. Project suppliers should be encouraged to bring their methods into the VCM. Bringing CDR into the VCM can have four key positive spillovers: Competition, Resilience and Stability, Integration, and Accessibility. These devices of the market, powered through the VCM, can replicate the success of former green technologies such as Solar PV and bring down the cost curve of CDR at the rate necessary.


1. Accreditation needs to improve

  • To be valuable and tradable, credits need to demonstrate a level of integrity. Accreditation is necessary to demonstrate feasibility, durability and viability and maintain standards across this emerging marketplace. It can facilitate third-party insight on different offset projects, ensuring impartiality. 

  • At the moment, the key registries either do not have methodologies in place for CDR, or they are in the infancy of the development. Gaining the stamp of approval from the most established and respected registries in the market will increase the confidence of buyers, especially those with fewer resources who are not able to do project specific due diligence. 

  • To facilitate this, three things need to happen:

    • Data transparency needs to improve.

    • Monitoring, Reporting and Verification (MRV) needs to improve and become standardised across the sector. 

    • Additionality testing needs to become the norm.

  • Without the inclusion into the current VCM infrastructure, the market will struggle to have access to the large pool of buyers currently active in the VCM. At the moment, these buyers are mostly purchasing avoidance credits because the price per credit for removal is high, but also because there are few accredited removal available. This needs to change and bringing CDR into these frameworks will be crucial to this development. 

2. Ratings need to be implemented

  • There is a lack of correlation between price and quality in the VCM. Over time, as the adoption of carbon credit rating increases, it will become an increasingly important element to determine their pricing, with a more coherent relationship between quality and price as a result. Credits are often rewarded not on their carbon efficacy but on the branding and co-benefits associated with the credit. This trend would be particularly counterproductive for many CDR projects which have very high additionality and permanence, but not as high co-benefits such as DAC.

  • Ratings can address this market failure. As CDR projects are expensive, as we discussed earlier in this paper, it is important that their relative risk is demonstrated in a way that allows customers to understand the reason behind their prices. Implementing ratings into the market will be crucial to enabling the orderly development of the CDR market.

3. Strong public sector support is needed

  • Financial support is necessary. The public sector has been pivotal in bringing down the cost curve in green technologies such as with solar and wind. For instance, the contracts for difference in the UK, implemented as a subsidy for offshore wind, brought the cost down from £140–150/ MWh for projects allocated in 2013, to £39–41/MWh for projects allocated in 2019. This kind of long term contract to ensure a strike price for investors could be an effective solution for the CDR sector and would help alleviate some of the investor insecurity that is often seen. 

  • Regulatory support is also necessary. As already mentioned, business models are currently being explored across the EU, UK and US to incentivise the take up of CDR. These include some CDR technologies into regulated markets such as the EU ETS. Such an inclusion would drastically improve the legitimacy and verifiability of some of these technologies, consequentially improving their own role within the VCM.


Vast amounts of carbon removal are needed, that much is certain. It would cost the public sector worldwide enormous sums of money if governments attempt to do this alone. To scale CDR, the sector needs to go beyond its current nascent state and become enveloped into the VCM. First, data transparency and systems for MRV need to be developed alongside methodologies in key registries. Second, projects need to become eligible for ratings. Third, continued public sector support is necessary.

*This statistic was corrected on 23/06/22 from ‘81% avoidance credits and 19% removal’ to ‘93% avoidance credits and 7% removal’. 

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