If development constraints are removed, the worldwide market for carbon dioxide (CO2) removal credits could increase from $2.7 billion to $100 billion annually between 2030 and 2035, according to a paper released on Thursday by management consultancy Oliver Wyman.
U.N. scientists predict that billions of tons of carbon must be taken from the atmosphere annually by using nature or technology in order to satisfy global climate objectives due to worsening climate change and insufficient efforts to curb emissions.
Although the demand for credits has started to rise from a variety of industries, including technology and finance, chemicals, and aviation, the report by Oliver Wyman, the City of London Corporation, and the UK Carbon Markets Forum stated that this demand is not yet strong enough to propel the kind of large-scale projects that experts believe are necessary.
The study anticipated that the total sales of CO2 removals will be $2.7 billion in 2023, but by 2030–2035, that figure would reach $100 billion annually.
An inability to come to consensus on CO2 removal credit requirements and an absence of guidelines for the usage of removals to contribute to climate targets are obstacles to the market’s expansion.
The analysis projected that the market will reach $10 billion annually by 2030–2035 based on current growth rates between 2020–2023.
It stated that in order to stimulate the market in Britain, the government should include removals in its emissions trading scheme, provide a financial framework to assist the industry, and encourage the application of removals in business net zero strategies.
According to the paper, $32 billion has been invested globally in carbon dioxide removal initiatives to date. Of this, $21 billion has gone toward technical solutions like direct air capture (DAC) projects, which draw CO2 from the atmosphere, while $11 billion has gone toward nature-based solutions like planting trees.
Carbon removals critics caution that an excessive emphasis on their use may discourage businesses from cutting their emissions as far as possible.
