Carbon Removal Projects and Prospects for Their Development | AIM Carbon
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Carbon Removal Projects and Prospects for Their Development

Carbon Removal Projects and Prospects for Their Development

In 2024, the voluntary carbon market was estimated at approximately $1.3 billion, of which carbon dioxide removal (CDR) projects accounted for about $800 million. These projects are particularly important because the carbon credits they generate are allowed on regulated carbon markets, unlike credits from emission avoidance projects. For example, the EU has developed the Carbon Removals Certification Framework, which proposes issuing CDR carbon credits. Currently, mechanisms are being developed to allow these credits to participate in the EU Emissions Trading System (ETS). These mechanisms could also support the development of similar projects in jurisdictions subject to the EU's Carbon Border Adjustment Mechanism (CBAM).

There are several types of CDR projects:

  • Nature-Based Solutions (NBS). Examples include tree planting (Afforestation, Reforestation, and Revegetation – ARR), improved forest management (IFM), and agricultural land management (ALM).
  • Technological Solutions. These include direct air capture and storage (DACCS) and bioenergy with carbon capture and storage (BECCS).
  • Hybrid Solutions. A mix of natural and technological solutions, such as biochar production and application, enhanced weathering, carbon utilization in materials like construction products, and the use of woody biomass for carbon-storing products like biofuels or long-lasting wood products.

The cost of CDR carbon credits derived from technological and hybrid solutions is 20–30 times higher than those from nature-based solutions. Reducing the costs of such projects is only possible through scaling. This requires substantial government and business support, including significant initial investments and scientific research. Such research must focus on finding solutions for long-term carbon storage (permanent sequestration) and preventing carbon leakage (carbon leakage).

“A study published in January 2025, concluded that political incentives are essential for developing the nascent CDR sector and reducing the price gap among market participants. We agree with this conclusion and believe that attracting initial investments to develop CDR technologies requires grant funding from governments and major development funds, as well as the creation of joint ventures to diversify the financing streams for such projects,” said Varvara Gryaznova, Senior Specialist at AIM Carbon.