Sustainability Atlas
Climate Finance & Markets·10 min read··...

Myths vs. realities: Carbon removal procurement & offtakes — what the evidence actually supports

Myths vs. realities, backed by recent evidence and practitioner experience. Focus on implementation trade-offs, stakeholder incentives, and the hidden bottlenecks.

Opening stat hook: Microsoft accounted for 91% of all durable carbon removal offtake volumes in H1 2025—56.3 million tonnes contracted by a single buyer (CDR.fyi 2025). This extreme concentration reveals the uncomfortable reality of carbon dioxide removal (CDR) markets: despite $1.5 billion in offtake value by end of 2024 and projections of $10-40 billion by 2030, the market depends on a handful of corporate pioneers while most potential buyers remain on the sidelines.

Why It Matters

Carbon removal is no longer optional for credible net-zero claims. The IPCC estimates that limiting warming to 1.5°C requires removing 5-16 gigatons of CO₂ annually by 2050. Yet current delivery capacity measured in the hundreds of thousands of tonnes—0.02% of what's needed—creates a fundamental supply-demand tension that shapes procurement strategy.

For founders and sustainability leaders, offtake agreements represent the mechanism for de-risking CDR project development. These multi-year forward purchase contracts, analogous to power purchase agreements (PPAs) in renewable energy, provide the revenue certainty that enables project financing. Understanding the real dynamics of this nascent market—versus the hype—determines whether your organization can access carbon removal capacity at reasonable prices or gets priced out as scarcity intensifies.

The regulatory environment adds urgency. The Science Based Targets initiative (SBTi) Corporate Net Zero Standard may require CDR for interim targets, not just residual emissions after 2050. CSRD reporting demands transparent accounting of any carbon credits used. Aviation's CORSIA compliance mechanism will require 300 million tonnes annually by 2050. Early movers are locking in supply at today's prices while late entrants will face scarcity premiums.

Key Concepts

Myth 1: Carbon Removal Credits Are All Essentially Equivalent

Reality: CDR quality varies enormously across technology types, and prices reflect this differentiation. Durable CDR (geological storage, BECCS, direct air capture) commands $100-600 per tonne compared to $3-35 for nature-based removal (forestry, soil carbon) and $3 for traditional avoidance credits (CDR.fyi 2025).

The durability distinction matters. Forests can burn; soil carbon can be re-released through tillage; but CO₂ injected into geological formations remains sequestered for millennia. For organizations making long-duration climate commitments, matching credit durability to commitment timeframe is scientifically and reputationally essential.

Biochar dominates current durable CDR delivery, representing 86-93% of actual tonnes delivered despite receiving less investment attention than DAC. This reflects biochar's earlier commercial readiness rather than ultimate scale potential.

Myth 2: Prices Will Fall Rapidly as the Industry Scales

Reality: While costs are declining, the supply-demand trajectory suggests sustained high prices through at least 2030. Projected 2030 demand of 40-200 million tonnes exceeds expected supply of 33 million tonnes (Allied Offsets 2025). Even low-demand scenarios show a supply gap.

Biochar prices have actually increased from spot prices of $14-20 in 2024 to $35 by mid-2025 as demand outpaces capacity growth. DAC remains at $300-600 per tonne with limited near-term cost reduction visibility. The 18-25% offtake discounts versus spot prices observed in early deals will likely compress as more buyers enter.

The analogy to solar PV cost declines is misleading. Solar benefited from manufacturing economies of scale and technology learning curves. CDR requires site-specific geological storage, distributed biomass supply chains, or energy-intensive DAC processes with fundamentally different scaling dynamics.

Myth 3: Offtake Agreements Are Standardized and Straightforward

Reality: Offtake contracting remains bespoke and complex. Key negotiation points include:

  • Delivery risk allocation: Who bears the risk if the project underdelivers or fails?
  • Price adjustment mechanisms: Fixed pricing, inflation indexing, or cost-plus structures?
  • Verification requirements: Which registries and verification standards apply?
  • Credit vintage and timing: When must removal occur relative to payment?
  • Exclusive versus portfolio deals: Single project dependency or diversified supply?

Microsoft's mega-deals (6.75 Mt from AtmosClear, 4.9 Mt from Vaulted Deep) represent extensive legal and technical due diligence beyond most organizations' current capacity. Smaller buyers typically access CDR through aggregators like Frontier or marketplaces like Puro.earth that handle diligence and contract complexity.

KPIMarket BenchmarkMicrosoft StandardFrontier Coalition
Average deal size10-50 kt1-5 Mt50-100 kt
Price range (durable)$100-600/t$100-400/t$150-500/t
Contract duration3-5 years5-10 years3-7 years
Delivery window2025-20302025-20352025-2030
Verification requirementPuro/IsometricMultipleFrontier approved
Delivery guaranteePartialStructuredPortfolio hedge

Myth 4: Any Organization Can Effectively Procure Carbon Removal

Reality: Buyer concentration data reveals significant barriers to entry. Microsoft, Google, and Frontier represent 75-80% of durable CDR purchases in 2024. The first-time buyers entering in H1 2025 (50% of buyer count) contributed only 6 Mt of volume—roughly one-ninth of Microsoft's purchasing alone.

Effective procurement requires technical capacity to evaluate technologies, legal capacity to negotiate novel contracts, financial capacity to make multi-year commitments, and internal governance to approve purchases that may appear expensive relative to traditional offsets. Most organizations lack these capabilities, which is why aggregators and buying coalitions have emerged.

Myth 5: Waiting for Prices to Drop Is a Reasonable Strategy

Reality: The supply-demand math suggests waiting is value-destructive. Organizations that signed 3-year biochar offtakes in 2022 locked in 18-25% discounts versus current spot prices. With 95.6% of 2024 purchases still undelivered and new capacity requiring 3-5 years to develop, scarcity premiums will likely compound.

The accounting treatment also favors early action. Under IAS 37, CDR credits can be treated as assets that appreciate as market prices rise, creating balance sheet value from forward purchases.

What's Working

Portfolio Approaches

Sophisticated buyers construct portfolios across CDR methods—some biochar for near-term delivery, BECCS offtakes for 2027-2030, DAC for 2030+—that hedge technology risk while building supply relationships. Microsoft's diversification across AtmosClear, Vaulted Deep, CO280, and Gaia ProjectCo exemplifies this strategy.

Aggregator and Coalition Models

The Frontier coalition (Stripe, Alphabet, Meta, Shopify) pools purchasing power to achieve deal scale while sharing due diligence costs. Their $550 million committed by April 2025 demonstrates that coalition structures can mobilize capital beyond individual corporate champions.

Nordic BECCS Ecosystem

Sweden, Norway, and Denmark's integrated approach—combining district heating biomass plants with CO₂ transport infrastructure (Project Longship, Northern Lights) and government competitive bidding—creates a functioning supply chain that U.S. and other markets lack. Organizations prioritizing BECCS should watch Nordic capacity closely.

What's Not Working

Over-Reliance on Single Buyers

The market's Microsoft dependence is structurally fragile. Excluding Microsoft, H1 2025 volume drops from 38 Mt to 8 Mt. Any change in Microsoft's purchasing strategy—budget cuts, technology preference shifts, or leadership changes—would destabilize the entire market.

DAC Investment-Delivery Disconnect

Despite receiving a majority of climate tech venture capital, DAC accounts for roughly 1% of CDR purchases. The technology's high costs ($300-600/t) and limited operational capacity mean investment dollars haven't translated to delivered tonnes. Organizations shouldn't assume DAC availability before 2030.

Delivery Lag Compounding

With 95.6% of 2024 purchases undelivered, the gap between contracted and realized tonnes creates accounting complexity. Organizations must distinguish between purchase commitments (which don't count as removals until delivered) and actual verified removals in their climate claims.

Key Players

Established CDR Suppliers

  • Climeworks (Switzerland): DAC pioneer with operational plants in Iceland; lead supplier for premium DAC credits
  • 1PointFive (U.S.): Occidental subsidiary building the world's largest DAC facility in Texas
  • Stockholm Exergi (Sweden): BECCS leader with operational CO₂ capture on district heating
  • Charm Industrial (U.S.): Bio-oil injection into geological storage; Frontier portfolio company

Emerging Startups

  • Vaulted Deep (U.S.): Biomass sequestration with 5+ Mt sold to date; Microsoft's largest single supplier
  • AtmosClear (U.S.): Recent entrant with massive 6.75 Mt Microsoft contract
  • CO280 (Finland): Nordic BECCS developer with 3.7 Mt Microsoft deal
  • Planetary (Canada): Ocean alkalinity enhancement with Frontier offtake

Key Investors & Aggregators

  • Frontier (U.S.): Advance market commitment aggregator; $550M+ deployed across 15+ suppliers
  • Lowercarbon Capital (U.S.): Chris Sacca-led fund backing CDR infrastructure across technologies
  • Breakthrough Energy Ventures (U.S.): Bill Gates-backed fund with significant CDR portfolio
  • Swiss Re (Switzerland): Reinsurer making strategic CDR purchases to derisk market development

Real-World Examples

  1. Stripe Climate: The payments company allocates a portion of revenue to CDR purchases, creating predictable demand for early-stage projects. Stripe's willingness to pay premium prices ($500+/t for earliest DAC) enabled technology demonstration that wouldn't have occurred otherwise. The company has purchased from 30+ suppliers, providing diversified market development.

  2. JPMorgan Chase CDR Program: The bank committed $200 million to long-term offtakes in 2023, expanding to 500,000 tonnes purchased in Q2 2025 alone. Financial sector entry—with balance sheet capacity and long-term investment horizons—signals potential for broader market participation beyond tech companies.

  3. Puro.earth Marketplace: The Nasdaq-owned registry and marketplace handles smaller transactions (1,000-50,000 tonnes) that don't justify bespoke contracts. By standardizing verification and contract terms, Puro.earth enables SME participation on both buy and sell sides, addressing the accessibility gap that keeps most organizations out of direct procurement.

Action Checklist

  • Quantify residual emissions post-reduction to determine CDR procurement volume needed for net-zero alignment
  • Assess internal capacity for direct procurement versus need for aggregator/marketplace intermediation
  • Develop technology portfolio strategy across biochar (near-term), BECCS (mid-term), and DAC (long-term)
  • Evaluate Frontier membership or similar coalition structure for smaller purchasing volumes
  • Establish accounting treatment and disclosure approach for forward purchases versus delivered credits
  • Build board and finance team understanding of CDR economics to enable budget approval

FAQ

Q: What price should we expect for credible durable carbon removal? A: Plan for $100-250/t for biochar/biomass routes and $300-600/t for DAC through 2030. Prices below $100/t typically indicate nature-based approaches with shorter durability or less rigorous verification. Multi-year offtakes may achieve 15-25% discounts versus spot, but this premium is narrowing as demand grows.

Q: How do we verify that purchased removal is real and additional? A: Use established registries (Puro.earth, Isometric) that require third-party verification. Request lifecycle assessment documentation confirming net-negative emissions. Understand the MRV protocol—geological storage verification differs from soil carbon measurement. For material purchases, consider independent technical due diligence beyond registry certification.

Q: Should we wait for SBTi to finalize CDR treatment before purchasing? A: No. SBTi's Corporate Net Zero Standard is expected to formalize CDR requirements, but the direction is clear: CDR will be required, not optional. Early procurement builds organizational capability and locks in supply. Organizations waiting for regulatory certainty will face higher prices and limited availability.

Q: What's the relationship between CDR and traditional carbon offsets? A: CDR removes CO₂ from the atmosphere; traditional offsets prevent emissions or preserve existing carbon stocks. For net-zero claims, CDR neutralizes residual emissions you can't eliminate. Offsets may have interim value but don't satisfy the physics of net-zero—you cannot be net-zero with offsets alone if you're still emitting. Price accordingly: CDR commands 10-100x offset prices.

Q: How should founders approach CDR in their business models? A: If building CDR supply, focus on cost reduction and delivery reliability—the market will pay premiums for credible tonnes. If building CDR-adjacent services (verification, brokerage, financing), recognize that market infrastructure remains underdeveloped with significant opportunity. If incorporating CDR into product sustainability claims, ensure your supply contracts can withstand regulatory scrutiny on additionality and permanence.

Sources

Topics

carbonremovalopexcarbon priceCSRDbenchmark KPIsgreen bonds

Related Articles