Carbon dioxide removal (CDR) needs to scale rapidly but today’s market remains fragmented, costly and reliant on bespoke transactions, limiting its ability to attract capital at scale.
A recent World Economic Forum (WEF) paper explored what is needed to turn CDR into commerciality, as the gap between ambition and deployment remains ‘substantial’.
Around two gigatonnes of CO2e is removed globally each year, almost entirely from land-based approaches. Durable methods, including direct air capture with carbon capture storage (DACCS), bioenergy with carbon capture and storage (BioCCS), biochar and enhanced weathering currently account for less than two megatonnes of CO2 per year.
“The challenge, therefore, is no longer simply developing carbon dioxide removal technologies. It is building the financial, regulatory and market infrastructure needed to move CDR from early-stage projects to industrial-scale deployment,” it notes, echoing many of the sentiments in the .
“It requires a deliberate market architecture that progressively reduces transaction costs, standardises what can be standardised, differentiates what must remain differentiated, aggregates risk and demand, regulates what needs to be regulated to establish transparency and trust, and ultimately creates the conditions for institutional capital.”
Bespoke transactions, extensive due diligence, limited comparability and regulatory uncertainty increase costs and constrain the market’s ability to mobile capital at scale.
“As CDR moves towards industrial deployment, it must attract a broader investor base, including banks, institutional investors, insurers and asset managers. This requires clearly defined assets, comparable risks, predictable cash flows and reliable market infrastructure.”
The WEF report highlights six interconnected layers: asset & quality; contractual & legal; demand & financing; data & registry; market infrastructure; and transparency & governance. The four phases for development include laying foundations, building bankability, developing market infrastructure, and scaling and integration.
Tech firms drive market growth
Tech giant Microsoft is leading the market charge, anchoring over 75% of the total disclosed volume for durable CDR. Aiming to be carbon negative by 2030, it continues to expand its corporate CO2 removal portfolio. During 2025, it added 29 CDR projects and is targeting more than 45 million tonnes of carbon removals over the next 30 years.
In May, the company signed a seven-year agreement with Danish to purchase 650,000 tonnes of permanent CO2 removals generated through BECCS. The deal followed a 15-year agreement with North Star to purchase 626,000 tonnes of CO2 removal credits from a in Saskatchewan.
Aside from Microsoft, the most significant force in the CDR market is Frontier, an advanced market commitment founded to jumpstart the industry. The coalition has collectively pledged over $1.8bn to purchase permanent carbon removal by 2030. Alphabet is a primary funder and independently, Google has made $100m in direct CDR forward-purchase commitments. Climeworks Solutions in the first six months of 2026, totalling around 450,000 tonnes.
Regulatory frameworks
More international coordination is needed to help chart a coordinated path forward. The EU set out the first voluntary standard for permanent carbon removals .
The next step is the operationalisation and recognition of certification schemes under the Carbon Removals and Carbon Farming (CRCF) framework, alongside legislative negotiations to integrate permanent removals into the EU Emissions Trading System.
Following the landmark July 2026 proposal to link permanent CDR to the EU ETS, the European Parliament and Member States are entering an 18-month negotiation period to shape the compliance market framework.
Elsewhere the UK published its first full-form Greenhouse Gas Removals contract and standard terms in 2025 as part of a business model designed to support investment in engineered removals, and Singapore is integrating eligible international credits into its carbon-tax framework. Switzerland and Sweden launched pilot transfers of industrial removals in May.
“Over time, greater alignment in asset definition – including certification standards, measurement, reporting and verification, data, registries and quality classifications – can further improve comparability and reduce transaction costs,” the WEF report adds.
“Scaling CDR therefore requires a common market architecture that advances standardisation at both the contract and asset frameworks, enabling the sector from bespoke bilaterial transactions to greater bankability, liquidity and global integration.”
It concludes that the scale of the challenge makes delay costly.
“Building a liquid, transparent and institutionally investable CO2 removal market requires the standards, legal frameworks, demand mechanisms and infrastructure to be developed now, transforming today’s fragmented ecosystem into a market capable of mobilising capital at scale.”
