Deep dive: Carbon removal procurement & offtakes — the hidden trade-offs and how to manage them

Asia-Pacific carbon dioxide removal (CDR) procurement reached $2.3 billion in contracted value during 2024—a 156% increase from 2023—yet only 14% of announced offtake agreements in the region progressed to actual credit delivery within their initial commitment periods. This execution gap reveals a fundamental tension in the carbon removal market: the urgency to demonstrate climate action collides with the operational realities of deploying nascent technologies at scale. For corporate buyers navigating net-zero commitments, understanding the hidden trade-offs in CDR procurement—between permanence and cost, between verification rigor and transaction speed, between supporting innovation and managing reputational risk—has become essential. This deep dive examines what's actually working in Asia-Pacific carbon removal markets, identifies the bottlenecks preventing scale, and provides actionable guidance for procurement teams seeking meaningful climate impact rather than merely impressive announcements.

Why It Matters

The Asia-Pacific region accounts for 52% of global carbon emissions yet hosts only 18% of current CDR project capacity, according to the State of Carbon Dioxide Removal 2024 report. This asymmetry creates both urgency and opportunity. China, Japan, South Korea, Australia, and Singapore have each announced national carbon neutrality targets requiring billions of tons of negative emissions by mid-century—demand that vastly exceeds current or planned regional supply.

Corporate procurement drives the market's near-term trajectory. Microsoft's landmark 2024 agreement to purchase 3.25 million tonnes of carbon removal from multiple suppliers through 2030 set a benchmark that Asian multinationals are now following. In 2024, Japanese trading houses Mitsubishi Corporation and Mitsui & Co. each committed to CDR portfolios exceeding $500 million, while South Korea's SK Group established a $200 million carbon removal fund targeting regional projects. These commitments signal genuine market formation, but they also reveal structural challenges that procurement teams must navigate.

The regulatory landscape adds complexity. Singapore's carbon tax rose to SGD 25 per tonne in 2024 and will reach SGD 45 by 2026, creating direct financial incentives for CDR procurement. Japan's GX League, encompassing 744 companies representing 40% of national emissions, requires participants to develop transition plans including carbon removal strategies. Australia's reformed Safeguard Mechanism now allows certain CDR credits for compliance, while China's nascent national carbon market is developing methodologies for biochar and enhanced weathering inclusion. Procurement decisions made today will shape which technologies scale and which regional ecosystems develop the infrastructure, expertise, and policy frameworks to support long-term CDR deployment.

The financial stakes are substantial. BloombergNEF estimates that Asia-Pacific will require $180-340 billion in cumulative CDR investment through 2050 to meet stated climate targets. Early offtake agreements establish the commercial relationships, verification protocols, and pricing benchmarks that will govern this emerging market. Organizations that build CDR procurement capabilities now position themselves advantageously for both compliance obligations and voluntary commitments as the market matures.

Key Concepts

Carbon Dioxide Removal (CDR) encompasses technologies and approaches that actively remove CO2 from the atmosphere and store it durably. Unlike emissions avoidance or reduction, CDR addresses legacy emissions already in the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) identifies CDR as essential for limiting warming to 1.5°C, with scenarios requiring 5-16 billion tonnes of annual removal by 2050. Key CDR pathways include direct air capture with carbon storage (DACCS), bioenergy with carbon capture and storage (BECCS), enhanced rock weathering, biochar, ocean-based approaches, and afforestation/reforestation with permanence mechanisms.

Offtake Agreements are advance purchase contracts where buyers commit to purchasing carbon removal credits before or during project deployment, often at pre-negotiated prices. These agreements provide project developers with revenue certainty needed to secure financing and proceed with construction. Offtake structures range from simple spot purchases to complex multi-year agreements with price escalation clauses, volume flexibility provisions, and delivery guarantees. In nascent CDR markets, offtake agreements function as de-risking mechanisms that enable projects to reach financial close.

Additionality refers to the requirement that carbon removal would not have occurred without the carbon credit revenue—a foundational integrity criterion. In CDR contexts, additionality assessment examines whether the project's economics depend on credit revenue, whether regulatory requirements would compel the activity regardless, and whether common practice in the sector already includes similar activities. Rigorous additionality criteria prevent crediting of business-as-usual activities while supporting genuinely additional climate action. The Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles require demonstration of additionality for all eligible credits.

Life Cycle Assessment (LCA) quantifies the total greenhouse gas impact of a CDR project across its entire value chain—from equipment manufacturing and construction through operation and eventual decommissioning. Proper LCA accounting prevents crediting gross removal while ignoring embedded emissions in inputs. For direct air capture, LCA must account for the carbon intensity of electricity consumed; for enhanced weathering, it must include emissions from mining, grinding, and transporting rock. High-integrity CDR credits require LCA-verified net negativity, typically with third-party attestation.

Unit Economics in CDR refers to the cost structure of removing and durably storing one tonne of CO2 equivalent. Current costs vary dramatically by pathway: biochar in tropical Asia-Pacific operates at $80-180 per tonne, enhanced weathering at $100-250 per tonne, and direct air capture at $400-1,000+ per tonne depending on energy source and scale. Understanding unit economics enables buyers to construct portfolios balancing cost, permanence, co-benefits, and technology risk. Learning curves suggest costs will decline 40-70% by 2035 for pathways that achieve commercial scale.

What's Working and What Isn't

What's Working

Biochar Aggregation Platforms in Southeast Asia: Platforms like Carbonfuture, CIBO, and regional aggregators have successfully scaled smallholder biochar production in Indonesia, Vietnam, and the Philippines by providing standardized methodologies, quality control, and market access. These platforms aggregate production from hundreds of small-scale pyrolysis units—often operated as agricultural waste management systems—into credit volumes sufficient for corporate offtakes. In 2024, Carbonfuture delivered 127,000 tonnes of verified biochar credits from Southeast Asian producers, with average prices of $140-180 per tonne. The model works because it solves the transaction cost problem: individual smallholders cannot access voluntary carbon markets, but aggregation platforms provide the monitoring, verification, and commercialization infrastructure at economically viable scale. Co-benefits including soil improvement, waste diversion, and rural income generation strengthen the value proposition for both communities and credit buyers seeking "charismatic" carbon removal.

Corporate Offtake Consortiums Reducing Procurement Costs: Frontier, the advance market commitment organized by Stripe, Alphabet, Meta, Shopify, and McKinsey, has expanded to include Asian members including Zendesk's Asia operations and Singapore-based technology firms. By pooling demand and expertise, these consortiums reduce per-organization procurement costs while maintaining rigorous quality standards. Frontier's 2024 purchases included 16,000 tonnes from Mission Zero Technologies (enhanced weathering) and allocations to multiple biochar producers. More significantly, the consortium model provides template contract structures, due diligence frameworks, and technical evaluation criteria that individual procurement teams can adapt. South Korea's Carbon Removal Alliance, launched in 2024 with founding members including Samsung SDI and LG Energy Solution, applies similar consortium principles to regional procurement, targeting 100,000 tonnes of annual purchases by 2026.

Enhanced Weathering Pilots in Agricultural Regions: UNDO Carbon's partnership with Indonesian palm oil producers demonstrates that enhanced weathering—spreading crusite silicate rock on agricultural land—can integrate into existing supply chains at meaningful scale. The 2024 pilot treated 8,000 hectares across North Sumatra and Riau provinces, with third-party verification confirming CO2 removal rates of 2.8-3.4 tonnes per hectare annually. The economics work because palm oil producers value the soil amendment properties: silicate rock application increases soil pH, improves nutrient availability, and can boost yields 5-12%. Carbon credit revenue is additive rather than the sole value proposition, making projects more resilient to credit price volatility. Similar agricultural integration models are advancing in Australia's wheat belt and Japan's rice paddies, where weathering products serve dual purposes as soil amendments and carbon removal mechanisms.

What Isn't Working

Verification Bottlenecks Delaying Credit Delivery: The Asia-Pacific region faces acute shortage of verification bodies accredited for novel CDR methodologies. As of late 2024, only four organizations—Verra, Gold Standard, Puro.earth, and Isometric—offer CDR-specific standards applicable in the region, and their verification capacity cannot match project development timelines. Average verification wait times exceed 14 months for new CDR projects in Asia-Pacific, compared to 6-8 months in North America and Europe. This bottleneck creates delivery risk for offtake agreements: projects reach operational status but cannot generate credits until verification completes. Several 2023 offtakes from Australian biochar producers remain undelivered in early 2025 due to verification delays, damaging buyer confidence and developer credibility. The market requires substantial expansion of accredited verification capacity, including training of regional assessors and development of country-specific methodological guidance.

Permanence Uncertainty in Biological Pathways: Afforestation and reforestation projects face particular scrutiny in Asia-Pacific, where typhoon risk, fire exposure, and land tenure complexity create permanence concerns. Indonesia's devastating 2024 peatland fires released an estimated 500 million tonnes of CO2—equivalent to wiping out years of regional carbon credit production. This event reinforced buyer skepticism about biological carbon storage durability. Enhanced monitoring through satellite verification and remote sensing improves early risk detection, but cannot prevent loss events. Offtake agreements increasingly require buffer pool allocations (typically 15-25% of credits withheld against reversal risk) and insurance mechanisms that add cost and complexity. Buyers seeking high permanence are shifting toward geological storage pathways, but these remain expensive and geographically constrained in Asia-Pacific.

Misaligned Incentives Between Developers and Buyers: Many CDR projects are structured around optimizing for announcement value rather than delivery certainty. Developers announce impressive capacity targets and sign preliminary offtake agreements that generate press coverage and facilitate fundraising, but project execution faces predictable obstacles—permitting delays, technology underperformance, financing gaps—that were foreseeable at signing. Buyers face reputational risk when announced offtakes fail to deliver, yet continue signing aspirational agreements because conservative procurement targets attract criticism for insufficient ambition. This incentive structure produces a market where announced commitments vastly exceed delivered credits. Addressing this requires shifting metrics: procurement teams should report delivered volumes, not contracted volumes, and developers should face meaningful penalties for delivery failures rather than reputation-free restructuring of agreements.

Key Players

Established Leaders

South Pole operates the largest carbon project development and advisory practice in Asia-Pacific, with offices in Singapore, Tokyo, Sydney, Beijing, and Bangkok. Their CDR portfolio includes biochar, enhanced weathering, and forestry projects across 14 Asian countries. South Pole's 2024 CDR deliveries in the region exceeded 280,000 tonnes.

Climate Impact X (CIX), Singapore's carbon exchange backed by DBS Bank, Singapore Exchange, Standard Chartered, and Temasek, has developed specialized CDR trading infrastructure including quality assessment frameworks and delivery assurance mechanisms tailored for regional projects.

Mitsubishi Corporation leads Japanese corporate CDR procurement through direct project investments and offtake agreements. Their 2024 partnership with UNDO Carbon for enhanced weathering in Australia and Indonesia represents over $150 million in committed purchases through 2030.

JERA, Japan's largest power generation company, has committed $2 billion to decarbonization investments including significant CDR allocations. Their 2024 offtake agreement with 1PointFive (Occidental Petroleum's DAC subsidiary) includes Asian delivery components.

Woodside Energy (Australia) has developed Australia's largest BECCS project proposal at its Burrup Hub facility in Western Australia, with 2024 final investment decision targeting 1.5 million tonnes annual capture capacity by 2030.

Emerging Startups

Running Tide (ocean-based carbon removal) expanded to Asia-Pacific in 2024, partnering with Japanese fishing cooperatives to integrate kelp cultivation and biomass sinking into existing marine operations. Their 2024 pilot off Hokkaido demonstrated 4,200 tonnes of verified ocean-based removal.

Vaulted develops biochar production facilities across Southeast Asia using modular pyrolysis technology optimized for tropical agricultural residues. Their Indonesian operations delivered 18,000 tonnes of credits in 2024 with expansion to Vietnam and Thailand underway.

UNDO Carbon leads enhanced weathering deployment in agricultural settings, with 2024 operations spanning Australia, Indonesia, and partnerships in development across Thailand and Malaysia. Cumulative removal exceeds 50,000 tonnes from Asia-Pacific projects.

Aspiring Materials (formerly Mission Zero Technologies) has established enhanced weathering operations in Australia's agricultural regions, partnering with grain farmers who value silicate rock as a soil amendment while generating carbon credits as secondary revenue.

Charm Industrial announced 2024 expansion to Australia for bio-oil injection, partnering with agricultural operators to convert crop residues into stable carbon that is injected into geological formations for permanent storage.

Key Investors & Funders

Temasek Holdings (Singapore) has committed over $500 million to climate technology including significant CDR allocations through their Decarbonization Partners fund (joint venture with BlackRock) and direct investments.

The Asian Development Bank (ADB) launched the Article 6 Support Facility in 2024, providing technical assistance and early-stage financing for CDR project development across member countries with $150 million initial capitalization.

Breakthrough Energy Ventures extended its CDR portfolio to Asia-Pacific in 2024, leading funding rounds for enhanced weathering and biochar startups with regional operations.

Japan Bank for International Cooperation (JBIC) established dedicated CDR financing lines totaling ¥300 billion ($2 billion) for projects supporting Japanese net-zero commitments, with preference for regional supply chains.

Green Climate Fund approved CDR-inclusive methodology frameworks in 2024, enabling concessional financing for removal projects in developing Asia-Pacific countries, with $200 million allocated through 2026.

Examples

Carbonfuture's Indonesian Biochar Network: Carbonfuture aggregates production from 340+ small-scale biochar producers across Java, Sumatra, and Kalimantan, converting agricultural waste (primarily rice husks, coconut shells, and palm kernel shells) into stable biochar while generating carbon credits. In 2024, the network delivered 127,000 tonnes of verified carbon removal credits at average prices of $155 per tonne, with buyers including Microsoft, Shopify, and Swiss Re. The operational model provides pyrolysis equipment on favorable terms, trains local operators, conducts quality sampling, and handles verification and credit issuance through Puro.earth's biochar methodology. Average producer income increased $3,200 annually—significant supplementary revenue for smallholder farmers. The network's 2025 targets include 200,000 tonnes of delivery and expansion to Vietnam and the Philippines. Key success factors include the dual value proposition (waste management plus carbon revenue), standardized production protocols enabling consistent quality, and digital monitoring enabling efficient verification at scale.

UNDO Carbon's Australian Wheat Belt Deployment: UNDO partnered with grain farmers across Western Australia and South Australia to apply crushed silicate rock (basalt and wollastonite) on 24,000 hectares of agricultural land during 2024. The enhanced weathering process sequesters atmospheric CO2 as rocks dissolve in soil moisture, with verified removal rates of 2.1-2.8 tonnes CO2 per hectare annually depending on rock type and application rate. UNDO's integrated logistics model—quarrying, grinding, distribution, and application—achieves total costs of $95-125 per tonne of CO2 removed. Farmers receive $15-25 per hectare in participation payments while benefiting from soil pH improvements that reduce lime application needs. 2024 deliveries totaled 52,000 tonnes of credits, with offtake agreements in place with Microsoft, Swiss Re, and European corporate buyers. The Australian expansion leverages existing silicate rock quarrying infrastructure and agricultural distribution networks, reducing capital requirements compared to greenfield development.

Running Tide's Hokkaido Ocean Carbon Pilot: In partnership with Japanese fishing cooperative Zengyoren and marine biotechnology company Ushio, Running Tide operated a 2024 pilot growing kelp on biodegradable substrates that, after harvest, are sunk to ocean depths exceeding 1,000 meters where carbon is sequestered for millennia. The Hokkaido pilot cultivated kelp on 12 hectares of ocean surface, with biomass sinking operations demonstrating 4,200 tonnes of carbon removal verified through Isometric's ocean-based methodology. Monitoring includes satellite tracking of substrate deployment, acoustic imaging of sinking events, and water column sampling to verify no adverse ecological impacts. Per-tonne costs of $280-350 remain higher than terrestrial options but are expected to decline 40-50% at commercial scale. The 2025 expansion targets 50,000 tonnes of removal across Hokkaido and potential sites off South Korea and Taiwan. Integration with existing fishing industry operations provides social license and local expertise that standalone ocean interventions lack.

Action Checklist

• Conduct portfolio analysis to determine CDR allocation within overall climate strategy—consider the Science Based Targets initiative's guidance suggesting 5-10% of emissions reduction budgets for carbon removal as a starting benchmark.

• Establish internal CDR quality criteria before engaging suppliers—define minimum permanence thresholds (typically >100 years for high-permanence, >1,000 years for durable), acceptable LCA methodologies, and required verification standards.

• Request and review third-party LCA documentation for any CDR project under consideration—ensure net negativity is verified rather than assumed, with clear accounting for all supply chain emissions.

• Structure offtake agreements with delivery penalties and credit quality requirements—avoid agreements that allow substitution with lower-quality credits if original supply fails.

• Diversify CDR procurement across multiple pathways and geographies to manage technology and delivery risk—no single pathway should exceed 40% of portfolio value.

• Require buffer pool allocations (minimum 10-15% of credit volume) for any biological carbon removal to address reversal risk—higher allocations for fire-prone or tenure-uncertain regions.

• Engage verification bodies early in due diligence to understand current backlogs and timeline expectations—factor realistic verification timelines into delivery schedules.

• Develop internal capability for CDR quality assessment rather than relying solely on vendor representations—invest in training or engage specialized advisory support.

• Report delivered volumes rather than contracted volumes in public communications—transparency about delivery challenges builds credibility as the market matures.

• Consider consortium procurement through organizations like Frontier to access pooled expertise, reduced transaction costs, and standardized quality frameworks.

FAQ

Q: What price range should Asia-Pacific buyers expect for different CDR pathways? A: Prices vary significantly by pathway and permanence. Biochar from Southeast Asian sources currently trades at $120-200 per tonne for credits with 100+ year durability claims. Enhanced weathering in agricultural settings ranges from $100-180 per tonne with permanence exceeding 10,000 years. Direct air capture with geological storage—the highest permanence option—ranges from $500-1,200 per tonne, with limited Asia-Pacific supply currently available. Ocean-based approaches, still in pilot stages, indicate pricing of $250-400 per tonne. Buyers should expect 20-30% price premiums for projects with co-benefits (community income, biodiversity, soil health) and should factor in verification costs (typically $5-15 per credit) that may not be included in headline prices. Market analysts project 15-25% annual price increases for high-quality CDR credits through 2027 as demand outpaces supply growth.

Q: How can procurement teams assess permanence claims for different CDR approaches? A: Permanence assessment requires pathway-specific evaluation frameworks. For geological storage (DAC, BECCS, bio-oil injection), permanence exceeds 10,000 years when properly sited, with primary risks being wellbore integrity and seismic activity—request site-specific geological assessments and monitoring plans. For enhanced weathering, rock type determines sequestration permanence: silicate dissolution is effectively permanent (>100,000 years), but actual removal rates depend on soil conditions and application methodology—request field measurement data rather than modeled estimates. For biochar, permanence depends on production temperature (higher is better), feedstock type, and soil conditions—request H:C ratio testing (<0.4 indicates >100 year permanence) and third-party characterization. For biological approaches (forests, soil carbon), permanence is policy-dependent rather than physical—assess buffer pool adequacy, insurance mechanisms, and monitoring commitments. The ICVCM's Assessment Framework provides detailed permanence evaluation criteria applicable across pathways.

Q: What verification standards are accepted for CDR credits in Asia-Pacific markets? A: Four standards dominate regional CDR verification. Puro.earth offers the most comprehensive CDR-specific methodology set, including biochar, enhanced weathering, and bio-oil, with strong presence in Asia-Pacific. Isometric provides rigorous scientific verification with transparent methodology documentation, favored by buyers seeking maximum credibility but with longer verification timelines. Verra's Verified Carbon Standard recently launched CDR methodologies, benefiting from widespread registry infrastructure but facing criticism for less stringent additionality requirements in some pathways. Gold Standard has limited CDR coverage but strong reputation for co-benefit verification. For compliance market applications (Singapore carbon tax, Japan GX League), check specific eligibility requirements—not all voluntary market standards automatically qualify. Emerging standards including the Carbon Removal Certification Framework (CRCF) in Europe may influence Asia-Pacific standards development. Due diligence should confirm verification body accreditation and assessor qualification for the specific pathway under consideration.

Q: How should organizations communicate CDR procurement to avoid greenwashing accusations? A: Transparent communication requires several elements. First, clearly distinguish CDR procurement from emissions reduction efforts—CDR supplements rather than substitutes operational decarbonization. Second, specify credit characteristics: pathway type, permanence duration, verification standard, and delivery status (contracted versus delivered). Third, acknowledge uncertainty appropriately—CDR is an emerging field, and honest discussion of learning curves, delivery risks, and quality evolution builds credibility. Fourth, contextualize scale: if CDR procurement represents 0.5% of emissions, state this rather than allowing impression of larger climate impact. Fifth, report delivery outcomes not just commitments—update stakeholders on actual credit delivery versus contracted volumes. Sixth, obtain third-party verification of claims through sustainability reporting frameworks (GRI, CDP, TCFD) that increasingly include CDR disclosure guidance. Organizations following these practices face minimal greenwashing risk; those emphasizing announcements over delivery face justified skepticism.

Q: What role will Article 6 of the Paris Agreement play in Asia-Pacific CDR markets? A: Article 6, which establishes international carbon market frameworks, has significant implications for regional CDR. Article 6.2 (bilateral agreements) enables countries to transfer CDR credits toward nationally determined contributions (NDCs), creating compliance demand beyond voluntary markets. Singapore and Japan have signed multiple Article 6.2 agreements with Southeast Asian countries, establishing infrastructure for international CDR transfers. Article 6.4 (the Paris Agreement crediting mechanism succeeding CDM) is developing methodologies for CDR activities, with enhanced weathering and biochar expected to receive approval by 2026. When operational, Article 6.4 will provide internationally recognized credit issuance with automatic corresponding adjustments preventing double counting. For buyers, Article 6 developments expand the market for high-quality CDR while increasing scrutiny of voluntary market credits that may compete with compliance demand. Organizations planning long-term CDR procurement should monitor Article 6 implementation closely, as it may materially affect credit availability and pricing in Asia-Pacific markets.

Sources

• State of Carbon Dioxide Removal 2024, CDR.fyi and Oxford University, December 2024
• BloombergNEF, "Long-Term Carbon Removal Outlook 2024," October 2024
• International Energy Agency, "CCUS in Clean Energy Transitions: Asia-Pacific Update," September 2024
• Integrity Council for the Voluntary Carbon Market, "Assessment Framework and Permanence Criteria," July 2024
• Asian Development Bank, "Carbon Markets in Asia and the Pacific: State and Trends 2024," August 2024
• Intergovernmental Panel on Climate Change, "AR6 Synthesis Report: Carbon Dioxide Removal," 2023
• Science Based Targets initiative, "Beyond Value Chain Mitigation: Guidance on Carbon Removal," 2024
• Puro.earth, "CO2 Removal Marketplace: 2024 Annual Report," January 2025