Myth-busting Carbon removal procurement & offtakes: separating hype from reality

Corporate buyers collectively committed over $2.8 billion to carbon removal offtake agreements by the end of 2025, yet fewer than 8% of contracted tonnes had actually been delivered. This gap between procurement commitments and physical removals represents the defining tension in the carbon removal market today, and it has spawned a dense layer of myths about what these agreements actually accomplish, what buyers receive, and whether removal procurement is a credible decarbonization strategy or an expensive form of greenwashing.

Why It Matters

The voluntary carbon removal market has grown from roughly $10 million in 2020 to an estimated $1.3 billion in annual procurement commitments in 2025, driven by net-zero pledges from major technology companies, financial institutions, and consumer goods firms. Microsoft, Google, Stripe, and the Frontier coalition alone account for over $1 billion in advance purchase commitments for permanent carbon dioxide removal. These agreements represent the largest private investment in negative emissions technology in history, and they are shaping the trajectory of direct air capture (DAC), enhanced rock weathering, biomass carbon removal and storage (BiCRS), and ocean-based carbon dioxide removal.

From a policy perspective, Article 6 of the Paris Agreement now provides a framework for international carbon credit transfers, and the US 45Q tax credit offers up to $180 per tonne for DAC with geological storage. The EU Carbon Removal Certification Framework (CRCF), finalized in late 2025, establishes monitoring, reporting, and verification (MRV) standards for removal credits used within European markets. These regulatory signals reinforce the importance of procurement mechanisms as demand-side drivers for scaling removal capacity.

Yet the market remains in its infancy, and the gap between aspiration and delivery creates fertile ground for misconceptions. Buyers, policymakers, and the public often conflate carbon removal with carbon offsets, misunderstand delivery timelines, and overestimate the current scalability of removal technologies. Correcting these myths is essential for informed capital allocation, credible corporate claims, and sound public policy.

Key Concepts

Carbon Removal vs. Carbon Avoidance distinguishes between activities that physically extract CO2 from the atmosphere and store it durably, and activities that prevent emissions from occurring. Removal includes direct air capture, enhanced weathering, and ocean alkalinity enhancement. Avoidance includes renewable energy projects, methane capture, and forest protection. This distinction matters because only removal generates "negative emissions" that can counterbalance residual emissions in a net-zero framework. The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report identifies 5-16 billion tonnes per year of carbon dioxide removal as necessary by 2050 under most 1.5C scenarios.

Offtake Agreements in the carbon removal context are legally binding contracts where a buyer commits to purchasing a specified quantity of carbon removal credits at a predetermined price, typically with delivery scheduled 3-10 years in the future. These advance market commitments serve a dual purpose: they provide removal companies with revenue certainty to secure project financing, and they give buyers locked-in pricing for credits whose future market value may increase substantially.

Permanence and Durability refer to how long removed carbon remains sequestered. The spectrum ranges from decades (soil carbon, biochar) to centuries (enhanced weathering) to millennia (geological storage from DAC). Permanence directly affects credit quality and pricing, with 1,000+ year storage commanding premiums of 5-15x over short-duration alternatives. Buyers increasingly specify minimum durability thresholds in procurement contracts, with 100 years emerging as a common baseline for high-integrity credits.

Measurement, Reporting, and Verification (MRV) encompasses the scientific protocols and third-party auditing processes used to quantify and confirm that carbon removal has actually occurred. Robust MRV remains the central challenge for emerging removal pathways, with costs ranging from $5-25 per tonne for well-established methods to $50-100+ per tonne for novel approaches with limited monitoring infrastructure.

Carbon Removal Procurement KPIs: Benchmark Ranges

Metric	Below Average	Average	Above Average	Top Quartile
Delivery Rate (contracted vs. delivered)	<5%	5-15%	15-30%	>30%
Cost per Tonne (DAC, geological storage)	>$800	$400-800	$250-400	<$250
Cost per Tonne (enhanced weathering)	>$200	$100-200	$60-100	<$60
Permanence Threshold (years)	<100	100-500	500-1,000	>1,000
MRV Cost as % of Credit Price	>15%	8-15%	4-8%	<4%
Portfolio Diversification (pathways)	1	2-3	3-5	>5
Contract Duration (years)	<3	3-5	5-8	>8

What's Working

Advance Market Commitments from Tech Companies

The Frontier coalition, launched by Stripe, Alphabet, Shopify, Meta, and McKinsey, committed $925 million to permanent carbon removal purchases through 2030. By early 2026, Frontier had executed offtake agreements with over 30 suppliers across DAC, enhanced weathering, ocean alkalinity enhancement, and BiCRS pathways. These commitments have directly enabled project financing for facilities including Climeworks' Mammoth plant in Iceland (36,000 tonnes per year capacity) and CarbonCapture Inc.'s Bison facility in Wyoming. The model works because technology companies can absorb premium pricing ($200-600 per tonne) while signaling long-term demand that reduces financing risk for project developers.

Portfolio Procurement Strategies

Sophisticated buyers have moved beyond single-supplier purchases to diversified portfolio approaches. Microsoft's carbon removal portfolio spans 15+ suppliers across six technology pathways, with delivery schedules staggered from 2024 through 2030. This strategy hedges against individual project failure (which has occurred with multiple early-stage suppliers), captures learning across technologies, and provides exposure to pathways with different cost-reduction trajectories. JPMorgan Chase and Swiss Re have adopted similar multi-pathway procurement models, combining higher-cost, higher-permanence removals (DAC) with lower-cost, shorter-duration options (biochar, enhanced weathering) to balance portfolio price with integrity.

Government Co-Investment and Tax Incentives

The US Department of Energy's $3.5 billion Regional DAC Hubs program, combined with the enhanced 45Q tax credit of $180 per tonne for DAC with geological storage, has de-risked private procurement by covering a significant portion of first-of-a-kind project costs. In practice, this means that a DAC facility with $500 per tonne production costs can sell credits at $320 per tonne after the tax credit, making offtake pricing commercially viable for corporate buyers. The EU Innovation Fund and UK Greenhouse Gas Removal program provide analogous support, collectively directing over $5 billion toward removal infrastructure through 2030.

What's Not Working

Delivery Delays and Underperformance

The carbon removal market's most uncomfortable reality is that delivery rates remain far below contracted volumes. Of approximately 5.2 million tonnes contracted through advance purchase agreements by the end of 2025, fewer than 400,000 tonnes had been physically delivered. Climeworks' Orca plant in Iceland, commissioned in 2021 with 4,000 tonnes per year nameplate capacity, operated at roughly 75% utilization due to equipment reliability issues. Multiple early-stage suppliers, including CarbonBuilt and Heirloom in their initial facilities, experienced commissioning delays of 12-24 months. Buyers must plan for significant delivery risk and build contingency into procurement strategies.

Greenwashing Risk and Accounting Ambiguity

Several high-profile corporate carbon removal claims have drawn scrutiny for conflating procurement commitments with actual removals. A 2025 analysis by Carbon Market Watch found that 40% of companies reporting carbon removal purchases in sustainability reports failed to distinguish between credits delivered and credits contracted for future delivery. The lack of standardized accounting guidance means that buyers can announce $100 million removal commitments while the physical carbon removed to date totals a fraction of that amount. The Science Based Targets initiative (SBTi) updated its guidance in late 2025 to require separate reporting of contracted versus delivered removals, but adoption remains inconsistent.

Credit Quality Fragmentation

The absence of a universal quality standard has created a fragmented market where credit integrity varies enormously. Enhanced rock weathering credits range from $50 to $300 per tonne, reflecting not just pathway differences but vastly different MRV rigor. Some suppliers quantify removal through field measurements with third-party verification, while others rely on geochemical models with limited empirical validation. Buyers without deep technical expertise struggle to evaluate credit quality, and the proliferation of registries and certification bodies (Puro.earth, Isometric, CarbonPlan, the CRCF) adds complexity rather than clarity.

Myths vs. Reality

Myth 1: Carbon removal credits and traditional carbon offsets are interchangeable

Reality: They are fundamentally different instruments. Traditional offsets typically represent avoided emissions (such as protecting a forest that might have been cleared) and face well-documented issues with additionality, permanence, and baseline inflation. Carbon removal credits represent physical extraction of CO2 from the atmosphere with verified storage. Pricing reflects this distinction: high-quality removal credits trade at $100-600+ per tonne, while conventional avoidance offsets average $5-15 per tonne. The SBTi's net-zero standard explicitly requires companies to use removals, not avoidance credits, to neutralize residual emissions.

Myth 2: Carbon removal is too expensive to scale

Reality: Current costs are high but declining rapidly along predictable learning curves. DAC costs have fallen from approximately $1,000 per tonne in 2021 to $400-600 per tonne for facilities under construction in 2025, with credible engineering projections indicating $150-250 per tonne at scale by 2035. Enhanced weathering costs have dropped below $100 per tonne for leading operators. Biochar and BiCRS pathways already operate at $50-150 per tonne. The cost trajectory mirrors early solar photovoltaics, where module costs declined 99% over four decades as manufacturing scaled.

Myth 3: Buying removal credits means you can delay emissions reductions

Reality: Credible frameworks explicitly reject this substitution. The SBTi, Oxford Offsetting Principles, and VCMI Claims Code all require companies to demonstrate near-term emissions reductions aligned with 1.5C pathways as a prerequisite for making neutralization claims using removals. Companies using removal procurement to avoid internal abatement face reputational risk and potential regulatory action under emerging anti-greenwashing legislation, including the EU Green Claims Directive.

Myth 4: All permanent carbon removal is equally credible

Reality: Permanence alone does not guarantee quality. A DAC facility with geological storage achieves 10,000+ year permanence, but the credit's integrity also depends on accurate measurement of captured volumes, verified injection into suitable geological formations, long-term monitoring for leakage, and chain-of-custody documentation. Enhanced weathering may achieve 1,000+ year durability, but quantification uncertainty ranges from 20-50% depending on the monitoring approach. Buyers should evaluate credits on a matrix of permanence, MRV rigor, additionality, and co-benefits rather than permanence alone.

Key Players

Established Leaders

Climeworks operates the world's largest DAC facility (Mammoth, Iceland, 36,000 tonnes per year) and has secured offtake agreements with Microsoft, JPMorgan, and the Swiss government totaling hundreds of millions of dollars.

Frontier serves as the dominant aggregation platform, pooling buyer demand to execute multi-year offtake agreements with vetted suppliers across removal pathways.

CarbonCapture Inc. is developing Project Bison in Wyoming, targeting 5 million tonnes per year of DAC capacity by 2030, supported by 45Q credits and DOE hub funding.

Emerging Startups

Lithos Carbon applies crushed basalt to agricultural fields for enhanced rock weathering, with field-measured removal rates and credits priced at $75-150 per tonne.

Charm Industrial converts biomass waste into bio-oil for deep geological injection, offering removal credits at $250-400 per tonne with verified permanence.

Ebb Carbon develops ocean alkalinity enhancement using electrochemistry, targeting CO2 removal costs below $100 per tonne at scale.

Key Investors and Funders

Breakthrough Energy Ventures has invested across the removal value chain, including Climeworks, CarbonCapture Inc., and several enhanced weathering startups.

Lowercarbon Capital focuses on frontier removal technologies with investments in over 20 carbon removal companies.

US Department of Energy provides the largest public funding through DAC Hubs ($3.5B) and Carbon Negative Shot initiative targeting $100 per tonne removal.

Action Checklist

• Establish internal emissions reduction targets aligned with SBTi pathways before initiating removal procurement
• Develop a portfolio procurement strategy spanning at least three removal pathways to hedge technology risk
• Require suppliers to provide third-party verified MRV data using protocols recognized by Isometric, Puro.earth, or equivalent registries
• Specify minimum permanence thresholds (100+ years recommended) and monitoring obligations in offtake contracts
• Separate accounting for contracted versus delivered removal tonnes in all internal and external reporting
• Include delivery risk provisions in contracts, such as milestone-based payment schedules and supplier replacement clauses
• Engage legal counsel to review credit ownership, retirement rights, and regulatory compliance under emerging frameworks (CRCF, VCMI)
• Monitor cost trajectories across pathways to identify opportunities for early commitments at favorable pricing

FAQ

Q: What is a realistic price range for high-quality carbon removal credits in 2026? A: Prices vary dramatically by pathway. DAC with geological storage ranges from $400-700 per tonne. Enhanced weathering costs $60-200 per tonne depending on monitoring rigor. Biochar credits trade at $80-200 per tonne. BiCRS and bio-oil injection range from $200-400 per tonne. Buyers should expect prices to decline 15-25% annually as facilities scale, but should lock in current pricing for near-term delivery to secure supply from constrained capacity.

Q: How do I know if a carbon removal supplier is credible? A: Look for third-party MRV verification from recognized bodies (Isometric, CarbonPlan, Puro.earth), transparent methodology documentation, published delivery track records, and independent scientific advisory boards. Request site visits and references from other buyers. Be cautious of suppliers who cannot provide empirical removal data from operating facilities and rely solely on modeled estimates.

Q: Should my company buy removal credits now or wait for prices to decrease? A: Both strategies have merit. Buying now secures limited supply, supports technology learning, and builds procurement expertise. Waiting reduces per-tonne costs but risks missing volume commitments needed for net-zero claims. The most effective approach combines small near-term purchases (5-10% of anticipated long-term needs) with larger forward contracts at declining price points, allowing organizations to build market knowledge while managing costs.

Q: How do carbon removal offtake agreements interact with compliance carbon markets? A: Currently, most removal credits trade in voluntary markets and are not fungible with compliance instruments like EU ETS allowances. However, regulatory convergence is underway. The EU CRCF establishes quality criteria that may eventually enable removal credit use within the ETS. California's cap-and-trade program is evaluating engineered removal protocols. Companies should structure procurement agreements with flexibility to convert voluntary credits to compliance instruments if regulatory pathways open.

Q: What happens if a supplier fails to deliver contracted removal tonnes? A: Well-structured offtake agreements include provisions for non-delivery, including milestone-based payments (reducing buyer exposure), replacement obligations (requiring the supplier to source equivalent credits from alternative providers), and termination rights with refund mechanisms. Buyers should avoid 100% prepayment structures and instead link payment tranches to verified delivery milestones. Portfolio diversification across multiple suppliers further mitigates individual project failure risk.

Sources

• Frontier. (2025). Annual Progress Report: Carbon Removal Procurement 2020-2025. San Francisco: Frontier Climate.
• Carbon Market Watch. (2025). Corporate Carbon Removal Claims: Transparency and Accountability Assessment. Brussels: CMW.
• Science Based Targets initiative. (2025). Net-Zero Standard: Carbon Removal Accounting Guidance. London: SBTi.
• International Energy Agency. (2025). Direct Air Capture: Technology Status and Cost Projections. Paris: IEA Publications.
• Smith, S. M. et al. (2024). The State of Carbon Dioxide Removal, 2nd Edition. University of Oxford.
• US Department of Energy. (2025). Regional Direct Air Capture Hubs: Program Update and Performance Data. Washington, DC: DOE Office of Clean Energy Demonstrations.
• Intergovernmental Panel on Climate Change. (2023). AR6 Synthesis Report: Carbon Dioxide Removal Requirements for 1.5C Pathways. Geneva: IPCC.