Market map: Carbon removal procurement & offtakes — the categories that will matter next

The carbon dioxide removal (CDR) market crossed €2.1 billion in contracted offtakes during 2024, representing a 340% increase from 2022 levels—yet this volume still falls dramatically short of the 6–10 gigatonnes of annual removal capacity scientists estimate will be necessary by 2050 to limit warming to 1.5°C. For European decision-makers navigating this nascent but rapidly evolving landscape, understanding which procurement categories will matter most over the next 12–24 months is essential for strategic positioning. This market map examines the signals worth watching, the value pools emerging, and the structural shifts that will reshape carbon removal procurement through 2027.

Why It Matters

The EU's commitment to climate neutrality by 2050, enshrined in the European Climate Law, cannot be achieved through emissions reductions alone. The European Commission's 2024 Industrial Carbon Management Strategy explicitly acknowledges that the bloc will require approximately 280 million tonnes of annual carbon removal capacity by mid-century—a target that demands immediate procurement activity to drive technology maturation and cost decline.

Corporate net-zero commitments are accelerating this demand. As of late 2024, over 4,500 companies globally have set science-based targets, with approximately 1,200 headquartered in the EU. Under the Science Based Targets initiative (SBTi) guidance, these organisations must address residual emissions through permanent carbon removal, creating a structural demand driver independent of regulatory mandates. The Corporate Sustainability Reporting Directive (CSRD), which began phased implementation in 2024, further intensifies pressure by requiring detailed disclosure of climate transition plans, including carbon removal strategies.

Pricing dynamics reveal market immaturity but also opportunity. Durable carbon removal credits traded between €350 and €1,200 per tonne in 2024, compared to €60–90 for EU Emissions Trading System (ETS) allowances. This premium reflects both the scarcity of verified, high-permanence removal and buyer willingness to pay for quality. Advance market commitments—long-term purchase agreements that provide suppliers with revenue certainty—have emerged as the dominant procurement mechanism, with the Frontier coalition alone committing over $1 billion through 2030.

For EU-based organisations, several factors make early engagement critical. First-mover advantages in offtake agreements can secure future supply at prices that will likely increase as demand outpaces capacity expansion. Procurement experience builds internal expertise that will prove valuable as regulations tighten. Perhaps most importantly, early commitments send credible signals to stakeholders about climate ambition—a consideration increasingly relevant under CSRD disclosure requirements.

Key Concepts

Understanding carbon removal procurement requires familiarity with several interconnected concepts that shape market structure and buyer decision-making.

Removal Pathways

Direct Air Capture (DAC) uses chemical processes to extract CO₂ directly from ambient air, typically storing it in geological formations. DAC offers high permanence (1,000+ years) and precise measurement but remains energy-intensive and expensive, with current costs ranging from €400–1,000 per tonne. European projects, including Climeworks' Mammoth facility in Iceland and planned installations in Norway, lead global capacity.

Bioenergy with Carbon Capture and Storage (BECCS) combines biomass energy generation with CO₂ capture from exhaust streams. When biomass sources are sustainably managed, the process achieves net-negative emissions. BECCS offers lower costs (€100–300/tonne) than DAC but faces land-use constraints and sustainability concerns regarding feedstock sourcing.

Biochar involves pyrolysing biomass to create stable carbon-rich material that can be applied to soils, locking carbon for centuries while potentially improving agricultural productivity. Costs range from €80–200 per tonne, with European production concentrated in Scandinavia and the DACH region.

Ocean-based removal encompasses multiple approaches: ocean alkalinity enhancement, macroalgae cultivation and sinking, and electrochemical methods that increase seawater's CO₂ absorption capacity. These pathways remain earlier-stage, with significant measurement, reporting, and verification (MRV) challenges but potentially vast scale.

Enhanced weathering accelerates natural rock weathering processes that sequester CO₂, typically by spreading crusite silicate minerals on agricultural land. The approach is gaining traction in European research programmes, though permanence quantification remains contested.

Quality Attributes

Additionality refers to whether carbon removal would have occurred without the procurement transaction. Genuine additionality means the purchase directly enables removal that would not otherwise happen—a criterion that favours emerging technologies over established forestry projects with baseline activity.

Permanence measures how long removed carbon remains sequestered. Geological storage (DAC, BECCS) offers millennia-scale permanence, while biological approaches (afforestation, soil carbon) may release stored carbon through disturbance or climate change. EU guidance increasingly distinguishes between permanent (>1,000 years), long-term (100–1,000 years), and short-term (<100 years) storage.

MRV (Measurement, Reporting, and Verification) protocols establish confidence in removal claims. The EU Carbon Removal Certification Framework (CRCF), under development through 2024–2025, will establish harmonised rules for MRV across pathways, addressing a fragmentation that has complicated procurement decisions.

Carbon Removal Procurement KPIs

Metric	Definition	2024 Benchmark	Target 2026
Contract Volume	Total tonnes CO₂ under binding offtake agreements	1.2M tonnes (EU buyers)	>3M tonnes
Price Premium	Ratio of CDR price to ETS allowance price	5–15x	3–8x (as scale increases)
Permanence Threshold	Minimum storage duration required	>100 years	>1,000 years (durable only)
Additionality Score	Third-party verified contribution	85–95%	>95%
Delivery Risk	% of contracted volume at risk of non-delivery	15–25%	<10%
MRV Coverage	% of portfolio with standardised verification	60–75%	>90%
Pathway Diversification	Number of distinct removal methods in portfolio	2–3	4–5
Average Contract Tenor	Mean duration of offtake agreements	5–7 years	7–10 years

What's Working

Advance Market Commitments

The Frontier initiative, launched by Stripe, Alphabet, Meta, Shopify, and McKinsey in 2022, has proven that aggregated buyer commitments can accelerate technology development. By guaranteeing future purchases, Frontier reduces supplier financing costs and enables capital expenditure on scaling. Through late 2024, Frontier had contracted over 235,000 tonnes of removal at a total commitment exceeding $200 million, with prices declining approximately 20% from initial purchases as suppliers achieved scale efficiencies.

European analogues are emerging. The NextGen CDR Facility, backed by Swiss Re, Mitsui, and UBS among others, operates a similar model focused on European supply. The First Movers Coalition, coordinated by the World Economic Forum, has secured commitments from major European industrials including ArcelorMittal and Holcim to allocate procurement budgets to innovative climate solutions.

Corporate Buyer Sophistication

Leading corporate buyers have developed increasingly rigorous procurement frameworks. Microsoft's carbon removal programme, the largest single-buyer initiative globally, has published detailed criteria covering permanence, additionality, lifecycle emissions, and co-benefits. This transparency has created de facto standards that smaller buyers can adopt, reducing transaction costs and improving market efficiency.

European companies are following suit. Swiss Re has committed to reaching net-zero by 2030 using only permanent carbon removal for residual emissions. Ørsted, the Danish renewable energy company, has contracted with multiple DAC suppliers to neutralise lifecycle emissions from its operations. These examples demonstrate that procurement can be operationalised within existing corporate structures.

Regulatory Momentum

The EU Carbon Removal Certification Framework represents a significant advance toward standardisation. By establishing clear rules for what qualifies as certified removal, the CRCF will reduce buyer uncertainty and enable more confident procurement. The framework's emphasis on permanence and robust MRV aligns with scientific consensus on removal quality, potentially positioning EU-compliant removals as global benchmarks.

What's Not Working

Cost and Scaling Challenges

Despite notable progress, durable carbon removal remains expensive relative to decarbonisation alternatives. For most organisations, €500+ per tonne for DAC-based removal cannot compete economically with emissions reductions costing €50–150 per tonne. This reality means removal procurement remains confined to residual emissions that cannot be addressed through efficiency or fuel switching—a legitimate but limited market segment.

Scaling constraints compound cost challenges. Global DAC capacity reached approximately 15,000 tonnes annually in 2024—roughly 0.00015% of the multi-gigatonne annual removal ultimately required. Construction timelines for large facilities span 3–5 years, capital requirements run to hundreds of millions of euros, and supply chain constraints (particularly for specialised sorbent materials) create bottlenecks.

Verification Gaps

MRV remains inadequate for several promising pathways. Ocean-based removal approaches lack consensus methodologies for quantifying sequestration, creating buyer hesitation despite potentially transformative scale. Enhanced weathering protocols are contested among scientific experts. Even established approaches like biochar face questions about permanence variability and leakage potential.

The absence of universally accepted standards fragments the market. Buyers must either develop in-house expertise to evaluate competing methodologies or rely on certification bodies whose credibility varies. This uncertainty favours well-resourced buyers who can afford technical due diligence, disadvantaging smaller organisations seeking to participate.

Delivery Risk

Supplier financial stability remains a concern. Many removal startups operate with limited cash reserves and depend on advance payments from offtake agreements to fund operations. If multiple suppliers fail to deliver—a scenario that becomes more likely during economic downturns—buyers face both financial losses and shortfalls against climate commitments.

Portfolio diversification mitigates but does not eliminate this risk. The 2024 experience of Frontier, which saw several smaller contracted suppliers miss delivery milestones, illustrates the challenge. Buyers increasingly require supplier financial due diligence and staged payment structures, adding transaction complexity.

Key Players

Established Leaders

Microsoft operates the world's largest corporate carbon removal programme, having contracted over 5 million tonnes of removal through 2030. Their detailed procurement criteria and annual progress reports have established transparency standards for the industry.

Swiss Re has committed to net-zero by 2030 using only high-permanence removal, making substantial investments in DAC offtakes and emerging technology pilots through the NextGen CDR Facility.

Frontier (Stripe-led consortium) has aggregated over $1 billion in buyer commitments, functioning as both procurement intermediary and market-maker by guaranteeing purchases that enable supplier scale-up.

First Movers Coalition coordinates commitments from 96 companies representing over $12 trillion in market capitalisation, including dedicated carbon removal pledges from European members.

Emerging Startups

Climeworks (Switzerland) operates the world's largest DAC facility and has secured offtakes from Microsoft, Shopify, and numerous European corporates. Their Mammoth plant, operational in 2024, represents 36,000 tonnes of annual capacity.

Charm Industrial (US, with European partnerships) converts biomass waste to bio-oil for geological injection, achieving costs around $600 per tonne with a pathway to sub-$200. They have delivered over 9,000 tonnes under Frontier contracts.

Carbfix (Iceland) pioneers mineral carbonation for permanent storage, partnering with Climeworks and other capture companies to provide storage services for EU removal projects.

Running Tide (US/EU operations) cultivates kelp on biodegradable ocean platforms, sinking biomass to the deep ocean for long-term sequestration. Despite pathway controversies, they have secured substantial advance purchases.

44.01 (Oman, with European investor backing) injects CO₂ into peridotite rock formations where it mineralises permanently, offering potentially lower-cost geological storage.

Key Investors and Funders

Breakthrough Energy Ventures (Bill Gates-led) has invested over $2 billion in climate technologies, with significant carbon removal portfolio companies including Climeworks and CarbonCapture Inc.

Lowercarbon Capital specialises exclusively in climate technology, backing numerous removal startups and actively promoting market development through buyer engagement.

EU Innovation Fund provides grant support for carbon capture and storage projects, having allocated over €3 billion through 2025 with additional calls planned.

German Federal Ministry of Economics has committed €400 million to carbon management research and pilot projects, making Germany a hub for European removal technology development.

Examples

1. Ørsted's Multi-Pathway Portfolio

Danish renewable energy company Ørsted has assembled a diversified carbon removal portfolio to address lifecycle emissions from its operations. In 2024, they announced agreements with Climeworks for DAC-based removal and with multiple biochar producers for agricultural applications. The company's approach—combining high-permanence DAC for critical claims with lower-cost biochar for broader neutralisation—illustrates sophisticated portfolio construction. Total contracted volume exceeds 50,000 tonnes through 2030, with prices negotiated on declining scales as suppliers achieve cost reductions.

2. Swiss Re's NetZero 2030 Programme

Swiss Re's commitment to net-zero operational emissions by 2030 using only permanent carbon removal has driven substantial procurement activity. Through the NextGen CDR Facility and direct contracts, the reinsurer has secured offtakes with five technology providers across DAC, BECCS, and enhanced weathering pathways. Their procurement framework explicitly requires >1,000-year permanence, third-party verification, and supplier financial stability assessment. By 2024, Swiss Re had contracted approximately 25,000 tonnes of future removal, representing over €15 million in committed expenditure.

3. Frontier's 2024 Purchase Round

Frontier's 2024 procurement cycle contracted 182,000 tonnes of carbon removal across 13 suppliers at a weighted average price approximately 18% below their 2023 purchases. Notable European recipients included Carbyon (Netherlands-based DAC), Silicate (Ireland-based enhanced weathering), and Neustark (Switzerland-based concrete mineralisation). The round demonstrated that aggregated buyer commitments could drive meaningful cost reduction while maintaining quality standards—prices declined even as permanence and MRV requirements intensified.

Action Checklist

• Inventory residual emissions that will require removal under your net-zero pathway, distinguishing between Scope 1, 2, and 3 sources
• Establish internal procurement criteria covering permanence thresholds, additionality requirements, and acceptable MRV standards
• Allocate pilot budget for initial offtake agreements (€100,000–500,000 for mid-sized organisations) to build procurement expertise
• Evaluate joining aggregated buyer initiatives (NextGen CDR, First Movers Coalition) to access better pricing and reduce transaction costs
• Develop supplier due diligence protocols covering technology maturity, financial stability, and delivery track record
• Build pathway diversification into procurement strategy, targeting 3–4 distinct removal methods to manage delivery risk
• Engage with EU Carbon Removal Certification Framework development to ensure organisational readiness for compliance
• Establish internal governance for carbon removal claims, including board-level oversight and third-party verification requirements

FAQ

Q: How should EU organisations balance carbon removal procurement against emissions reduction investments? A: The mitigation hierarchy remains clear: avoid and reduce emissions first, only then remove residual emissions that cannot be addressed otherwise. For most organisations, significant abatement opportunities remain at costs below €100 per tonne—far cheaper than current removal prices. Removal procurement makes sense for emissions genuinely resistant to reduction (certain Scope 3 categories, process emissions from hard-to-abate sectors) and for organisations whose net-zero timelines require near-term neutralisation. A reasonable heuristic: allocate no more than 10–15% of climate investment to removal until reduction opportunities below €200/tonne are exhausted.

Q: Which removal pathway should EU buyers prioritise? A: Portfolio diversification generally outperforms pathway concentration. DAC offers the highest permanence and measurement confidence but at premium prices; BECCS provides lower costs but faces sustainability scrutiny; biochar combines affordability with agricultural co-benefits but involves complex lifecycle accounting; ocean-based approaches may offer scale but remain immature. Leading buyers typically anchor portfolios in high-confidence DAC/BECCS while allocating minority positions to emerging pathways. The CRCF will likely influence priorities by establishing differential treatment for permanence categories.

Q: How will the EU Carbon Removal Certification Framework affect procurement decisions? A: The CRCF, expected to finalise rules in 2026, will establish standardised criteria for what counts as certified EU removal. For buyers, this means reduced due diligence burden—CRCF-certified removals will carry regulatory credibility. However, the framework may exclude or disadvantage certain pathways (particularly ocean-based methods lacking established MRV). Organisations should track CRCF development, ensure current suppliers are preparing for certification, and consider whether existing portfolios will remain compliant.

Q: What contract structures best protect buyers in this emerging market? A: Staged payment tied to delivery milestones reduces exposure to supplier failure—avoiding 100% advance payment is advisable. Multi-year contracts with price adjustment mechanisms (tied to supplier cost trajectories or reference indices) balance commitment with flexibility. Volume optionality—rights to increase purchases at predefined prices—preserves upside as capacity expands. Verification requirements should specify third-party auditors and reserve rights to reject non-compliant deliveries. Finally, diversification across 4–5 suppliers ensures single-supplier failure does not compromise climate commitments.

Q: How do carbon removal credits interact with EU ETS compliance? A: Currently, carbon removal credits cannot substitute for ETS allowances—they operate in separate markets. However, policy developments may create linkages. The European Commission is exploring how certified removals might integrate with compliance markets post-2030, potentially creating demand uplift. For now, removal purchases serve voluntary commitments and stakeholder credibility rather than regulatory compliance, though this distinction may erode as policy frameworks mature.

Sources

• European Commission, "Industrial Carbon Management Strategy," COM(2024) 62, February 2024
• State of Carbon Dioxide Removal (CDR) Report, Oxford University / ETH Zürich / University of Melbourne, 2024 Edition
• Frontier Climate, "2024 Annual Purchase Report and Supplier Performance Assessment," October 2024
• Science Based Targets Initiative, "Net-Zero Standard Guidance on Carbon Removals," Version 2.0, 2024
• Swiss Re, "NetZero 2030 Progress Report and Carbon Removal Procurement Disclosure," September 2024
• European Commission, "Proposal for a Regulation Establishing a Union Certification Framework for Carbon Removals," COM(2022) 672, with 2024 amendments
• BloombergNEF, "Long-Term Carbon Offsets Outlook: 2024 Update," November 2024
• Microsoft, "2024 Environmental Sustainability Report: Carbon Removal Progress," March 2024