The opportunity

Growth potential

An analysis by BCG estimates the demand for durable CDR in 2030 could range from ~40-200 Mt CO2 ($10B - $40B), with the vast majority (~90%) expected to come from the voluntary carbon market. This demand is likely to be driven by early purchases from industries with progressive climate commitments and high willingness to pay, such as software and professional services.

Looking further ahead, a McKinsey report projects that a CDR industry capable of delivering gigaton-scale removals at net-zero levels could be worth up to $1.2 trillion annually by 2050. This estimate varies depending on the volumes of CO2 removal deployed and the balance of solutions used to deliver these volumes.

Based on the expected delivery of announced CDR projects, McKinsey estimates a market size of $40 billion to $80 billion by 2030, aligning with BCG's upper estimate. However, if demand for CDR credits is scaled up sufficiently to deliver the volumes needed to meet net-zero-compatible climatic needs by 2050, McKinsey projects annual revenues from the CDR industry could reach $0.3 trillion to $1.2 trillion.

These projections underscore the immense growth potential of the CDR market as the world increasingly recognizes the necessity of carbon removal in achieving global climate targets. The estimated market size in 2030 represents a critical stepping stone towards the trillion-dollar scale that may be required by mid-century.

How to scale

However, realizing this growth will require significant investment, innovation, and policy support to rapidly scale up CDR solutions and drive down costs. McKinsey estimates that delivering the necessary CDR capacity for net-zero could require cumulative investment of $6 trillion to $16 trillion by 2050, far exceeding current investment levels.

The convergence of these market projections from leading consultancies highlights the consensus around the substantial economic opportunity presented by CDR. As companies and governments alike sharpen their focus on achieving net-zero, the demand for high-quality carbon removals is poised for explosive growth in the coming decades. Early movers who help to establish a transparent, liquid, and trusted CDR market today could be well-positioned to capture a significant share of this trillion-dollar opportunity.

The opportunity

To unlock the trillion-dollar potential of the CDR market, there is an opportunity for a solution that enhances trust and liquidity while supporting the growth of emerging CDR technologies to become cost-effective and a quality alternative for buyers who are willing to pay a premium for carbon credits they can verify are effective in removing carbon dioxide from the atmosphere.

Trust can be built through a transparent and incentivized solution for verifying and grading CDR credits based on their 'persistence', the duration for which the removed carbon dioxide remains stored and prevented from re-entering the atmosphere. Liquidity and scale can be improved by creating a unified standard that facilitates efficient trading, enabling price discovery, increasing market depth, and allowing for innovative technologies to get the necessary scale to become cost efficient.

The success of this new standard relies on aligning incentives among stakeholders and fostering a collaborative ecosystem through market-based incentives. Stakeholders who actively contribute to the development and adoption of this new standard will be well-positioned to drive meaningful climate impact and capture significant economic value in. By working together to build a transparent and efficient market for high-quality carbon removals, the full potential of the CDR market could be unlocked.