Information & Incentives are key solutions to create new CDR buyers

There's no question that nothing is more talked about in the carbon removal ecosystem than how to expand the base of buyers. While a few companies have stepped up to purchase carbon dioxide removal (CDR), most remain on the sidelines. Many organizations have the capacity to contribute but hesitate to engage. Recent data from CDR.fyi's quarterly update confirms this trend: the number of unique buyers has slightly decreased this year, with new buyers declining even faster.

In the emerging CDR market, buyers serve two critical functions: seed and scale. The scale part is straightforward. Buyers provide the capital needed to expand the market and help suppliers reach their potential. Transitioning from removing hundreds of thousands of tonnes to billions by mid-century requires substantial investment now. Early purchases enable suppliers to gain experience, build infrastructure, and reduce costs through economies of scale. Building a new industry takes decades— building bespoke solutions for the first time at scale, training people, establishing companies, securing permits, and developing new energy sources. The scale component demands an immediate start.

But not all CDR methods are alike. Some are ready for scaling today, while others are still in the innovation phase where we are figuring out what works best. This is where the seed function comes into play. Buyers drive innovation by getting a diverse ecosystem of methods and tested in practice. The most effective carbon removal methods may still be in development, and supporting a range of technologies increases the likelihood of breakthroughs that could lead to scalable and sustainable solutions. Even modest purchases can help new methods move from the lab to real-world application, making a significant impact. Milkywire for example has purchased from 27 early-stage CDR suppliers accelerating these companies’ deployments. Early CDR buyers can set a full table of tried and tested solutions for governments to scale. Even if voluntary purchases never reach massive volumes, each contribution plays a vital role in building a diverse portfolio of options ready for large-scale deployment.

Another crucial point to remember is that CDR doesn't have a natural buyer. Unlike renewable energy, green steel, or electric vehicles—which have consumers purchasing the end products—CDR is essentially invisible waste disposal without a direct market. Companies and governments are the only potential purchasers. That's why it's extra important for companies to start buying it—the market won't develop through any other means.

A lack of clear incentives is a primary reason for the shortage of buyers. Frameworks like the Science Based Targets initiative require permanent carbon removal for net-zero goals but do not yet mandate early action. Companies might see little immediate benefit in investing now when their targets are set for future dates. Purchasing CDR has also been complex, often requiring specialized knowledge and direct relationships with suppliers, but this is being remedied by actors such as Milkywire and Frontier. High costs and expectations of future price drops further discourage immediate investment. Yet price reductions depend on scaling removal efforts now; delaying purchases slows progress along the learning curve.

Information is key. One reason more companies are not buying may be a lack of understanding of why they should. The message outlined above needs to become better known. Standard-setting bodies should also incentivize immediate investments, for example by requiring interim targets that encourage near-term purchases. Accelerating the development of measurement, reporting, and verification standards—and publicly registering delivered tonnes—will enhance trust and reduce fear.

Achieving net-zero emissions and stabilizing global temperatures depends on expanding the pool of CDR buyers and developing a robust, diverse supplier ecosystem. Early and strategic engagement ensures that promising technologies are tested and refined, preventing the market from converging on less effective solutions. By acting now, we're laying the groundwork for a sustainable and scalable carbon removal industry that can meet the demands of the future.