Case study: Carbon removal procurement & offtakes — a startup-to-enterprise scale story

In 2019, South Pole Group brokered what was then the largest single carbon removal offtake agreement in the Asia-Pacific region: a 50,000-tonne commitment from a Japanese trading house for biochar credits sourced from rice husk pyrolysis operations in Southeast Asia. By 2025, the broader Asia-Pacific carbon removal procurement market had grown to $1.4 billion in annualized advance purchase commitments, representing a 38-fold increase in six years (Ecosystem Marketplace, 2025). This trajectory mirrors the journey of CarbonX, a Singapore-headquartered carbon removal procurement platform that scaled from a three-person team brokering its first 500-tonne offtake in 2020 to managing an enterprise portfolio of 2.8 million tonnes of contracted removal capacity across 47 projects in 11 Asia-Pacific countries by late 2025.

Why It Matters

The Asia-Pacific region accounts for approximately 52% of global greenhouse gas emissions but has historically received less than 15% of voluntary carbon market investment (World Bank, 2025). This imbalance is shifting rapidly. Japan's GX (Green Transformation) League, launched in 2023, created compliance-adjacent demand for high-quality carbon removal credits from over 680 participating companies. South Korea's K-ETS expanded to include carbon dioxide removal offsets beginning in 2025, with initial annual demand estimated at 8 to 12 million tonnes. Australia's Safeguard Mechanism reforms tightened baselines for 215 industrial facilities, driving procurement of Australian Carbon Credit Units backed by permanent removal pathways.

For investors, this market represents a rare convergence: regulatory tailwinds creating demand certainty, a deep pipeline of nature-based and engineered removal projects suited to tropical and subtropical geographies, and a buyer base that includes some of the world's largest industrial emitters seeking to meet net-zero commitments with verifiable removal credits. The startup-to-enterprise scaling pattern in this sector reveals how procurement platforms create value by reducing transaction costs, standardizing quality assurance, and aggregating fragmented supply into investable portfolios.

Key Concepts

Advance Market Commitments (AMCs): Binding purchase agreements for carbon removal credits to be delivered over a future period, typically 5 to 15 years. AMCs provide project developers with the revenue certainty needed to secure project finance. In the Asia-Pacific market, AMC contract sizes range from $500,000 for early-stage biochar projects to over $100 million for large-scale direct air capture facilities. The key innovation is shifting buyer risk from spot market price volatility to fixed-price or indexed offtake structures that mirror liquefied natural gas (LNG) contract conventions familiar to Asian buyers.

Measurement, Reporting, and Verification (MRV): The technical framework for quantifying carbon removed and stored. Asia-Pacific projects face distinct MRV challenges including tropical soil carbon flux dynamics, monsoon-driven variability in biomass accumulation, and limited ground-truth sensor infrastructure in remote geographies. Third-party verification costs range from $5 to $15 per tonne for nature-based solutions and $20 to $40 per tonne for engineered removal pathways, representing 8 to 25% of total credit production costs.

Portfolio Diversification: Procurement platforms construct portfolios spanning multiple removal pathways (biochar, enhanced weathering, mangrove restoration, direct air capture) to manage permanence risk and delivery uncertainty. A well-constructed portfolio targets a blend of 60 to 70% high-permanence removals (>1,000-year durability) and 30 to 40% nature-based removals with co-benefits, mirroring the approach pioneered by Frontier and adapted for Asia-Pacific conditions.

What's Working

CarbonX: From Broker to Enterprise Platform

CarbonX launched in Singapore in 2020 with a thesis that Asia-Pacific carbon removal procurement was underserved by Western-centric platforms. The founding team of three, drawn from carbon trading desks at Trafigura and commodity analytics firm Kpler, began by manually brokering biochar offtakes between Indonesian rice husk pyrolysis operators and Japanese corporate buyers. Their first deal, a 500-tonne offtake at $85 per tonne with Sumitomo Corporation's sustainability division, took four months to close and involved 23 separate document exchanges to satisfy Sumitomo's internal due diligence requirements.

This friction became the product insight. CarbonX built a standardized due diligence framework incorporating Verra VCS, Gold Standard, and Puro.earth methodologies alongside Japan-specific GX League reporting requirements. By mid-2022, the platform had reduced average deal closure time from four months to six weeks while increasing average deal size to 5,000 tonnes. Revenue grew from $42,500 in brokerage fees in 2020 to $3.2 million in 2022, reaching $28 million in 2025 across brokerage, portfolio management, and MRV-as-a-service lines.

The scaling inflection came in 2023 when CarbonX secured $18 million in Series A funding from Temasek Holdings, JERA Ventures, and Breakthrough Energy Ventures. This capital funded three critical capabilities: a proprietary MRV technology stack integrating satellite imagery, IoT soil sensors, and machine learning models calibrated for tropical ecosystems; a portfolio construction engine that optimized buyer portfolios across permanence, co-benefits, geography, and price; and a regulatory compliance module mapping credits to six Asia-Pacific compliance and voluntary frameworks simultaneously.

By 2025, CarbonX managed 2.8 million tonnes of contracted removal capacity and served 143 enterprise buyers, including 12 of Japan's 20 largest emitters. The platform's gross margin expanded from 8% on pure brokerage to 34% on integrated portfolio and MRV services.

South Pole's Asia-Pacific Expansion

South Pole Group, the Zurich-headquartered carbon finance firm, scaled its Asia-Pacific removal procurement operations from a four-person Bangkok office in 2021 to a 120-person regional team across seven offices by 2025. The company's strategy centered on developing proprietary removal projects, particularly mangrove restoration in Indonesia and Vietnam, that provided both supply certainty and higher margins than third-party brokerage. South Pole's Kalimantan mangrove project, a 15,000-hectare restoration initiative, generated its first verified removal credits in 2024 at a production cost of $18 per tonne and a sale price of $45 to $65 per tonne to corporate buyers including Unilever, Toyota, and ANZ Banking Group (South Pole, 2025).

Climeworks and Japan's Industrial Buyers

Climeworks, the Swiss direct air capture company, signed its first Asia-Pacific offtake agreement in 2024: a 10-year, 50,000-tonne commitment from Mitsubishi Corporation at a reported price of $350 to $400 per tonne. While the volume is modest compared to nature-based procurement, the deal signaled that Japanese industrial buyers are willing to pay premium prices for high-permanence engineered removal. Mitsubishi subsequently announced plans to aggregate demand from its portfolio companies, targeting 500,000 tonnes of annual DAC procurement by 2030 (Mitsubishi Corporation, 2025).

What's Not Working

MRV Infrastructure Gaps

Despite advances in satellite-based monitoring, ground-level MRV infrastructure in the Asia-Pacific remains inadequate for the scale of procurement commitments being made. A 2025 audit by the Integrity Council for the Voluntary Carbon Market (ICVCM) found that 34% of Asia-Pacific nature-based removal projects examined had material discrepancies between claimed and verified removal volumes, with overstatement ranging from 15 to 45% (ICVCM, 2025). The root causes include insufficient soil carbon sampling density in tropical peatland projects, reliance on default biomass accumulation factors calibrated for temperate forests rather than tropical ecosystems, and limited independent verification capacity in countries such as Myanmar, Laos, and Cambodia.

Buyer Credit Risk and Contract Enforcement

Several high-profile offtake defaults have shaken market confidence. In 2024, a major Indonesian conglomerate defaulted on a $12 million advance purchase commitment for enhanced weathering credits, citing force majeure related to commodity price declines in its core palm oil business. The project developer, which had already invested $4.5 million in site preparation and basalt sourcing, had no practical recourse through Indonesian commercial courts, where carbon credit contract disputes lack established legal precedent. This case highlighted the structural vulnerability of advance market commitments in jurisdictions where carbon credit contracts do not yet have clear legal standing.

Price Discovery Challenges

The Asia-Pacific carbon removal market lacks transparent price benchmarks. Unlike European markets served by the EU ETS and voluntary registries with public transaction data, Asia-Pacific pricing remains opaque and relationship-driven. CarbonX's internal data shows price variance of 40 to 60% for equivalent-quality biochar credits sold to different buyers in the same quarter, reflecting information asymmetry rather than genuine quality differences. This opacity discourages new buyer entry and creates adverse selection risks where sophisticated traders capture disproportionate value.

Key Players

Established Companies

• South Pole Group: largest carbon finance intermediary in Asia-Pacific, managing over 700 projects across the region with integrated development and brokerage operations
• Mitsubishi Corporation: leading Japanese trading house driving DAC offtake aggregation and establishing corporate procurement standards for high-permanence removal
• JERA: Japan's largest power generation company, committing to 1 million tonnes of annual carbon removal procurement by 2030 across multiple pathways

Startups

• CarbonX: Singapore-based procurement platform managing 2.8 million tonnes of contracted removal capacity with proprietary MRV and portfolio construction technology
• Puro.earth (Nasdaq-owned): Helsinki-based registry expanding into Asia-Pacific with biochar and enhanced weathering methodologies tailored for tropical geographies
• Carbonplace: bank-owned carbon credit settlement platform (launched by consortium including MUFG and NAB) streamlining institutional transaction infrastructure

Investors

• Temasek Holdings: Singapore sovereign wealth fund backing carbon removal infrastructure across portfolio companies and direct venture investments
• Breakthrough Energy Ventures: Bill Gates-founded fund investing in removal technology companies and procurement platforms with Asia-Pacific deployment
• JERA Ventures: corporate venture arm of Japan's largest power generator, targeting carbon removal and clean fuel supply chain investments

Action Checklist

• Evaluate Asia-Pacific carbon removal procurement platforms for portfolio diversification across permanence levels, geographies, and removal pathways
• Require independent third-party MRV verification using ICVCM-aligned methodologies before committing capital to advance purchase agreements
• Structure offtake contracts with milestone-based payments tied to verified delivery rather than upfront lump-sum commitments to mitigate buyer credit risk
• Assess regulatory alignment across target markets including Japan's GX League, South Korea's K-ETS, and Australia's Safeguard Mechanism for credit fungibility
• Build counterparty risk frameworks that account for the limited legal precedent for carbon credit contract enforcement in Southeast Asian jurisdictions
• Monitor price benchmarks through platforms such as CarbonX and Puro.earth to reduce information asymmetry in bilateral negotiations

FAQ

Q: What is a realistic return profile for investing in Asia-Pacific carbon removal procurement? A: Procurement platforms operating at scale report gross margins of 25 to 35% on integrated portfolio and MRV services, compared to 6 to 10% on pure brokerage. Project-level equity investments in nature-based removal (biochar, mangrove restoration) show unlevered IRRs of 12 to 18% at current credit prices of $40 to $80 per tonne, with significant upside if compliance demand drives prices toward the $80 to $120 range projected by Bloomberg NEF for 2028 to 2030. Engineered removal investments (DAC, enhanced weathering) require longer time horizons and typically underwrite to 8 to 12% IRRs at scale, with technology risk premiums reflected in higher hurdle rates.

Q: How should investors evaluate MRV quality for Asia-Pacific removal credits? A: Key indicators include: sampling density for soil carbon projects (minimum 1 core per hectare for peatland, 1 per 5 hectares for mineral soils), use of locally calibrated biomass allometric equations rather than IPCC Tier 1 defaults, independent verification by an accredited body (VCS, Gold Standard, or ICVCM-endorsed), and continuous monitoring data streams from IoT sensors or satellite imagery rather than annual manual surveys. Projects that rely solely on modeled rather than measured removals should be discounted 20 to 30% in portfolio valuations.

Q: What are the key risks specific to Asia-Pacific carbon removal markets compared to North American or European markets? A: Three risks dominate: first, legal enforceability of offtake contracts varies significantly across jurisdictions, with Singapore and Australia offering the strongest commercial law frameworks and countries such as Indonesia, Vietnam, and the Philippines presenting elevated contract risk. Second, currency exposure is material because credits are typically denominated in US dollars while project costs are incurred in local currencies that can fluctuate 10 to 20% annually. Third, land tenure and community consent requirements for nature-based projects are more complex in tropical Asia, where indigenous land rights, community forestry arrangements, and overlapping government concessions create title risks that do not have direct parallels in Western markets.

Q: Is the Asia-Pacific market large enough to support multiple procurement platforms at scale? A: Yes. The projected demand of 50 to 80 million tonnes of carbon removal credits annually by 2030 from Asia-Pacific buyers alone (driven by Japan's GX League, Korean K-ETS, Australian Safeguard Mechanism, and voluntary corporate commitments) substantially exceeds current contracted supply of approximately 12 million tonnes. This supply-demand gap creates space for multiple platforms differentiated by removal pathway specialization, geographic focus, buyer segment, and technology stack. Market consolidation is likely after 2028 as compliance frameworks mature and scale advantages become more pronounced.

Sources

• Ecosystem Marketplace. (2025). State of the Voluntary Carbon Markets 2025: Asia-Pacific Regional Analysis. Washington, DC: Forest Trends.
• World Bank. (2025). State and Trends of Carbon Pricing 2025. Washington, DC: World Bank Group.
• South Pole Group. (2025). Asia-Pacific Carbon Removal Portfolio: Annual Impact Report 2024. Zurich: South Pole Group AG.
• Integrity Council for the Voluntary Carbon Market. (2025). Assessment of Carbon Credit Quality in Asia-Pacific Markets. London: ICVCM.
• Mitsubishi Corporation. (2025). Carbon Removal Procurement Strategy: Medium-Term Management Plan 2025-2030. Tokyo: Mitsubishi Corporation.
• Bloomberg NEF. (2025). Carbon Removal Market Outlook: Pricing, Demand, and Supply Projections 2025-2035. London: Bloomberg LP.
• Japan Ministry of Economy, Trade and Industry. (2025). GX League Progress Report: Emissions Trading and Carbon Credit Utilization. Tokyo: METI.
• Puro.earth. (2025). Carbon Removal Marketplace: Asia-Pacific Methodology Expansion and Transaction Data. Helsinki: Puro.earth Oy.