Inside this reportState of Technical CDRs

Technical CO2 Removals Market:
Present and Future

While the market for Technical CDRs is
nascent, it is growing at a rapid pace.

Estimated Supply &DemandDemand for high-quality technical CDRs
and carbon storage is expected to outstrip
supply in 2030.

GEET KALRA, JAHNAVI MUPPANENI, MARGARETBERTASI, MICHAEL PROUDFOOT & NAVENDUSHARMA

Estimated Transactions
VolumeVolume of technical CDR transactions areprojected to be in the range of 50 MtCO2 180 MtCO2, per year in 2030, with anaverage price of $180 - $220 per tonne
CO2.
May 2022
1

EXECUTIVE SUMMARY
Carbon removals (“removals”) will play a pivotal role in the global commitment to emission reduction and climate change
mitigation. There is a pressing need for decisive and impactful growth in the removals industry to meet the aggressive goals
being established by both the private and public sectors. Technical carbon removals are a promising solution, though they arestill relatively young and under-adopted compared to their natural counterparts. However, technical removals have seen
massive adoption lately after the latest IPCC report of 2022. In the first four months of 2022, 0.43 MtCO2 of technical removals
have been purchased (including a single deal for 0.4 MtCO2), which is already a far greater number compared to the negligible
amount purchased just two years ago. The current supply remains limited, but the total available capacity of technical removal
projects across the globe stands at roughly 3 MtCO2.
We examined the current state of five different technical removal approaches to project the supply and demand for certified
technical carbon dioxide removals (CDRs) in 2030. To start, we looked at the current and historical purchases of removals inthe voluntary carbon market. We expect that the demand in 2030 may come from both voluntary and compliance carbon
markets. On the supply side, we conducted an in-depth literature review for each technology and projected future capacity andprice points. We used this research to arrive at our findings pertaining to the removals market in 2030.
The main findings were that the demand for certified technical removals in 2030 could range between 30.7 MtCO2 to 623 MtCO2
per year, depending on the adoption by various compliance markets. Looking at the pace of investment in the sector andprojections made by various suppliers, we estimated that the CO2 removals market will have enough supply to meet up to 210
MtCO2/yr of demand in our base case scenario. This supply, given the current projections, could rise as high as 450 MtCO2/yr
in an optimal case scenario. Based on the trends we have observed, we predict that the technical CDR market will most probably
lie between 50 MtCO2 to 180 MtCO2 per year with an average price across technologies ranging from $180 to $220 per ton of
CO2. Biochar, BiCRS, and DACCS are expected to lead demand preferences, with DACCS garnering the most interest among
the three. We also performed empirical analysis on existing CDR projects and found that the price of those CDRs depended
significantly more on factors such as permanence (durability) and additionality, as opposed to factors such as negative effects
on the environment. We believe such a trend will continue through to 2030 in the removals market.
To meet the global net-zero target by 2050, it is important that technical CDRs become cost-competitive with nature-based
removal solutions. After accounting for the additional benefits that technical CDRs offer such as permanence and additionality,
we believe that an average price of $90-100 per tonne for highly additional and permanent CDRs would result in corporations
considering the purchase of technical CDRs in lieu of nature-based removals. Adoption of CDRs by compliance markets will
accelerate the innovation and development in the technical removals market and would be a significant catalyst in achieving
this price drop.
This research was conducted by Geet Kalra, Jahnavi Muppaneni, Margaret Bertasi, Michael Proudfoot, and Navendu Sharma
at Tuck School of Business at Dartmouth College as part of the First-Year Project course with input from South Pole.

The information used for this report was obtained from sources that the authors believe to be reliable and accurate. However, this report has not been
independently verified and no representation or warranty- express or implied- is made as to the accuracy or completeness of any information obtained fromthird parties. The statements in this report provide expectations for future events based on specific assumptions and include any statement that does not directly
relate to a historical fact or a current fact. These statements involve known and unknown risks, uncertainties and other factors which are not exhaustive. The
companies contributing to this report operate in a quickly evolving environment and new risks emerge continually. Readers are cautioned to not place undue
reliance on these statements. The companies contributing to this report undertake no obligation to publicly revise or update any statements, whether as a resultof new information, future events or otherwise. They shall in no event be liable for any loss or damage arising in connection with the use of the information inthis report.

2

INTRODUCTION
Certified tonnes of Carbon Dioxide Removals (CDRs) will bean essential part of the Intergovernmental Panel on Climate
Change’s (IPCC) recommended goal of limiting global, postindustrial temperature rise to 1.5⁰C. Currently, there are 950
Gt of anthropogenic CO2 in the atmosphere, concentrated at
415 ppm. To meet the goal laid out by the IPCC, and later
adopted at the Paris Climate Accord, at the minimum, 5-7
GtCO2 will need to be removed from the atmosphere perannum by 2050. Beyond 2050, annual atmospheric CO2 willneed to be removed at a rate of 20 GtCO2 per annum to keep
the aggregate atmospheric temperature rise below 1.5⁰C.
Industries are steadily shifting their stance on carbon
emissions as they move toward net zero goals and implement
mitigation methods to capture carbon at the source ofemission. However, further efforts must be taken to address
the high levels of atmospheric carbon.iii
The use of removals today will directly offset hard-to-abate
residual emissions and reductions in atmospheric carbon in
the near term. While still relatively modest today, supply is
anticipated to increase as demand rises for CDRs. Removals
are sourced according to two distinct classifications: naturebased and technical. Nature-based removals methods are an
important component to the reduction of atmospheric CO2,
but given the challenges, we believe that the total amount thatneeds to be removed cannot be done by nature-based
solutions alone.1 This study will therefore focus on technicalremoval processes which capture carbon dioxide from theatmosphere in a mechanical fashion. In particular, the study
will explore four discrete technologies: Biomass Carbon
Removal and Storage (BiCRS), Direct Air Capture andCarbon Sequestration (DACCS), Biochar, and Enhanced
Weathering. Mineralization applications were considered forinclusion, but the current state of technology is too
underdeveloped for any carbon capture to be consideredadditional. At present, mineralization serves as a viable
storage technology which is still developing atmospheric CO2
removal capacity.
Carbon capture and sequestration from negative emission
technologies (NETs) are currently traded in voluntary
markets. Prices vary significantly in these markets, with prices
for removals typically reflecting the quality of thecorresponding CDR. This report will use the following nineconsiderations in determining CDR quality.iii

1. Durability – Average duration of carbon stably
sequestered
2. Additionality – Measures if the VCM investment reallyenables additional carbon removals
3. Innovation – Novelty and efficiency of the technology
used in capturing and sequestering carbon
4. Risk – Drawbacks associated with capture andsequestration methodology
5. Social Co-benefits – Consequential benefits toemployment, education, and social welfare
6. Environmental Co-benefits – Consequential benefits tosurrounding environment such as improved soil or water
quality
7. Connection to Business – Consequential co-benefits
in business
8. Location – Mobility and ability to affect climate in local
communities
9. Price – Price of a CDR
Long-term demand for technical removal facilities will dependon the progression of policy and industrial adoption ofabatement technologies. The scientific justification for
promoting removal technologies, while apparent, is notenough for swift adoption alone. There are feasibility andcapacity constraints strongly related to the price of thecaptured carbon and the development of demand in themarket. Additionally, political pressure stemming from theParis Climate Accord is driving countries to establish
regulations around emissions abatement and net negativetechnologies. As these policies become more prevalent, thevalue of carbon may exceed the energy value of the inputs
used in capture.iv
While the policy is a significant driver of demand in the carbon
market, there is also significant voluntary market appetite.
Thus, the global carbon market is bifurcated and will betreated as such throughout the course of this report. Whileactors within the compliance market will purchase carbon
credits to offset their unavoidable production of greenhousegas emissions (GHG) to avoid regulatory penalties, thevoluntary carbon market consists of consumers that wish tohedge compliance, drive further development in NETs, build
conscientious environmental policies, and of course, improvethe environment.v However, we anticipate that it will be policythat significantly drives demand moving forward, and that
supply of technical CDRs will scale quickly once thesedemand signals become more apparent.

1 Nature-based removals are achieved through utilizing natural processes and include afforestation, soil sequestration, and mineralization. These methods arehigher risk and provide lower durability because of their vulnerability to natural phenomena. For example, the trees planted and credited for afforestation carbon
removals are susceptible to forest fires, which would release the captured CO2 back into the atmosphere prematurely.

3TECHNICAL CDR OVERVIEWBIOMASS CARBON REMOVAL AND
STORAGE (BiCRS)

DIRECT AIR CARBON CAPTURE AND
SEQUESTRATION (DACCS)BiCRS is a relatively new term introduced by the ICEF in 2020
and refers to all technologies that use biomass to remove CO2from the atmosphere and sequester it for long periods of time.
BECCS (bioenergy carbon capture and storage) is included
under the umbrella of BiCRS and is a more specificcategorization of removal in which biomass is burned togenerate energy and the CO2 is captured. BiCRS technology
has been around for 20 years and there are several
operational facilities today. BiCRS has enormous potential inremoval efforts and can command high prices because of its
durability.

DACCS is a process that utilizes technology to remove
carbon dioxide directly from the atmosphere. DACCS’technological readiness, high additionality, the durability of
1,000 years, fast scalability, and low social and environmental
risks make it an attractive investment opportunity. However,its vast energy requirements, infrastructure needs, small cobenefits, and low maturity raise concerns for the future. vi
There are currently two DACCS facilities in operation andmore in the planning phases.

BIOCHAR

ENHANCED WEATHERING

Biochar is a form of charcoal created through pyrolysis using
elevated temperatures (300-600⁰C) and biomass inputs suchas wood, sawdust, crop residues, or manure – without thepresence of oxygen. The biomass used in the production ofbiochar naturally captures CO2 throughout its lifetime. Whenbiomass is normally discarded and left to decay, it releases
the carbon it captured over its lifetime back into theatmosphere. By collecting this biomass instead and placing it
into a kiln to go through pyrolysis, the carbon is concentrated
and secured within the charcoal-like compound where it willremain stable and can be sequestered in soil. There are manybiochar facilities operating, but most are still small-scale.
Biochar is an attractive technology when looking toward thefuture since it offers 1,000-year durability when generated athigh temperatures, but there are still questions around thefeasibility of such large-scale production.

Enhanced weathering is a theoretical proposal to remove CO₂
by spreading large quantities of finely ground rock material
onto extensive land or water areas to accelerate the natural
weathering process. On land, enhanced weathering is usually
proposed for agricultural fields as it has the ability to increasesoil fertility. In marine environments, it’s known as ocean
alkalinity. Adding ground minerals directly to the ocean or
dumping them in beaches increases CO₂ uptake. While no
projects exist yet at scale, research and trials are being
conducted through several projects.vii

MINERALIZATION APPROACHES
Different approaches at mineralization were considered forinclusion in the study scope, but the current state oftechnology appears too underdeveloped for any carbon
capture to be considered additional. At present, mineralization
approaches are viable storage technologies. Technologies
that capture atmospheric CO2 would become more prevalent
in the future.

4

DEMANDOVERVIEW OF COMPLIANCE MARKETS

Figure 1: The top five compliance markets and the allowance of removals.
Compliance Carbon Markets (CCMs) operate either as cap-and-trade programs with requirements established by Emissions
Trading System (ETS) that are in turn regulated by government entities and laws or as baseline and credit programs.
Governments usually impose a regulatory cap on emissions by granting a limited allowance of emissions per sector or company.
Allowances for excess emissions need to be purchased on the market and unused allowances can be sold. The motivation for
CCMs comes from regulation; prices have historically been driven by government intervention and response to economic crises.
According to Refinitiv, the total market size in 2020 for CCMs was $261bn with 10.3 GtCO2 being traded.viii Global emissions
covered by an ETS in force nearly doubled in 2021, rising from 9% to 16%, as the number of systems grew from 21 to 24. ix
There are currently 24 ETSs globally, with eight more scheduled to begin operations and another 14 under consideration.
Notably, China launched its first ETS in 2021, and now one-third of the global population lives under an ETS jurisdiction.x China
has the largest ETS with a market volume of ~7800Mt of CO 2, followed by the EU ETS which has a market volume of ~1500Mt
of CO2.
We conclude that CDRs could capture up to up to 600 MtCO2
per year of demand by 2030 based on the following
assumptions:••

The U.S. commits to 300-500 MtCO2 removals per yearby 2050 using technical CDRs assuming only 10% of
total removals will be achieved by 2030.
The EU ‘Fit for 55’ generates 225 Mt CO2 in removal
demand by 2030.
N.B. Technical CDR demand assumes the upper bound of allowance in each ETS

The number of jurisdictions enforcing carbon pricing, and subsequently, the volume of emissions covered continues to increase
year over year. Though carbon pricing is becoming widespread, various studies have shown that carbon prices will need to rise
to $50-$100/tCO2 over the next decade to stimulate the emissions reductions from mitigation required to meet the Paris
Agreement’s goal of limiting global warming to well below 2°C. At present, only 3.76% of global emissions are subject to acarbon price above $40/tCO2, which is still below the recommended price levels.xi A significant rise in carbon prices will be
required over the next decade to ensure governments reach their commitments to achieve net-zero emissions and limit global
warming in accordance with the Paris Agreement.
5

OVERVIEW OF VOLUNTARY MARKETSVoluntary carbon markets (VCMs) allow carbon emitters to offset their unavoidable emissions by purchasing carbon credits
produced by projects targeted at removing or reducing CO2 from the atmosphere. Carbon trading in the VCM began in 1989
through deforestation avoidance. While VCMs have had a bumpy ride in the past 33 years, the carbon market has grown to alittle under $1bn today. The future looks even brighter with 1,535 companies across the globe committing to Net Zero targets. xii
There are several motivating factors for consumers to purchase removals. When buying removals, consumers are likely toconsider the multitude of effects of their purchase. Each of the technologies mentioned in this report is removing carbon fromthe atmosphere, but through different methods and with varying results. Consumers are aware of this differentiation and areoften discerning when choosing between different technologies.
Corporations voluntarily purchase removals primarily out of a sense of responsibility or interest in bolstering their reputation.
Removals consumers are considerate of the duration of the storage corresponding to their purchase and the risks involved withthat removal process. These two traits are the most influential in the effects of purchasing removals on a company’s reputation.
The company is most likely concerned with having to face the recourse for using a flawed technology. Durability is also influential
to the consumer because it ensures that the carbon is legitimately sequestered and there is no greenwashing. Finally, theenvironment co-benefits and connection to business allow the consumer to craft a compelling narrative for investing in projects
generating removals.
Each of the technological approaches mentioned in this report has a different macro demand-pull towards public acceptance.
This macro demand pull is caused by varying adoption and investment to support these technologies.

Figure 2: Current demand and potential for technical CDRs

6

PROJECTIONS FOR DEMAND IN 2030
While there is no comprehensive research that estimates the demand for technical CDRs at any future time, there are estimatesof the size of the voluntary carbon market in 2030, 2050 and beyond. Demand for technical CDRs will depend on the ‘projectrelated’ factors mentioned in the ‘Introduction’ above – nine considerations in determining CDR quality.

UPPER BOUND OF VOLUMETo predict market demand for technical CDRs, we estimated both the lower and upper bounds of technical removal quantities.
The upper bound was calculated based on the global residual emissions removal needed to achieve the 1.5°C reduction. A
commonly referenced estimate is a global reduction of 5-7 GtCO2 by 2050 and 1-2 GtCO2 by 2030.2 xiii This 1-2 GtCO2 includes
non-technical removals, such as Nature-Based Sequestration (NBS), afforestation, and CCS. In our model, we assume that thequantity of removals will reach 1 GtCO2 by 2030.

Figure 3 : McKinsey 1.5oC Scenario Analysis; IPCC; Le Quéré et al. 2018
As we are only interested technical CDRs, we relied on the following assumptions for nature-based removals. REDD+ and NBS,
had capacity of ~35 MtCO2 in 2020, and are expected to grow at 20% per annum in order to remove 216 MtCO2 by 2030. CCS
had a removal capacity of 40 MtCO2 in 2020 and is expected to grow at 15% per annum to 161 MtCO2 in 2030. These are
justified assumptions because technical CDRs cannot replace CCS, especially in oil and cement industries. We estimated theupper bound of technical CDRs to be 623 MtCO2.
We acknowledge that this bound can only be realized if the price and desirability of technical CDRs can be developed to thepoint that makes them attractive than other removal options. However, we believe this can be made possible through largescale integration of technical CDRs into compliance markets. With this demand signal, government budgets and philanthropic
capital would be required to subsidize such technological approaches until they can be proven at scale.

2

Trove Research contested this assumption for voluntary markets with a range between 0.5-1.5 GtCO2.

7

LOWER BOUND OF VOLUME
The lower bound was calculated from net-zero targets of countries across the globe, known as the Nationally Determined
Contributions.xiv
We filtered countries based on their pursuit of
the following end targets: 1.5°C targets,carbon negative, carbon neutral(ity), climate
neutral, climate positive, net-zero and zerocarbon.3 This resulted in a sample set of 120
countries. The current total net CO2 emissions
from the sample set is 37.6 GtCO2 per annum.
On average, countries have an interim targetof abating4 38.8% of these emissions by 2030,
which translates to 14.6 GtCO2 per annum.
Based on the 1.5°C pathway data,approximately 5-10% of the total abatement
should come from negative carbon emissions(NET) in 2030. Therefore, 0.73-1.46 GtCO2 isa reasonable estimate for the total volume ofNETs by 2030, given technical removals
constitute 0.05% of the total NETs.
Figure 4: Lower bound estimation

We found the initial lower bound to be 730
ktCO2 per annum (in the range of 0.05-1% of
total CCS). An additional 30 MtCO2 was thenadded to that figure based on US’ commitment
to removals (mentioned in CCM Overview
above). Thus, our final lower bound prediction is30.7 MtCO2. 5 Assuming an average price of$300/t 6 , the voluntary market demand will be~342 ktCO2 per annum by 2030.
As shown in Figure 5, the demand for technical
CDRs will fall between the predicted upper andlower bounds. It will vary by price, supplier, andother project-related factors as mentioned
earlier in this report.
Figure 5: Upper and lower bound estimates for the technical CDR
demand in 2030

3

The following end targets were specified:1.5C target, absolute emissions target, carbon negative, carbon neutral, climate neutral, climate positive, emissions
intensity target, emissions reduction target, GHG Neutrality, net zero, science -based target, zero carbon, zero emissions.
4Here, ‘abating’ refers to both emission reduction and negative emissions (including removals).
5This number is validated by the predictions in Frontier’s latest announcement of an advanced market commitment of $925mm from 2022 to 2030.
6
Stripe hasn’t publicly promised the average price of CO2 or the number of tonnes. $300/t is an aggressive assumption based on internal analysis

8DEMAND CURVE PREDICTION
Having estimated the upper and lower bound volumes in the demand curve, we next predicted the prices at each of the twobounds. To estimate the lower bound price, we assumed that there will be no new technological investments that would
meaningfully depress price. However, we also assumed that pre-existing commitments in both the compliance and voluntary
markets will be fulfilled. In such a scenario, we predicted minimal or no change from today’s technical CDR prices. Anothermajor assumption was that the compliance market will make up the bulk of technical CDR purchases and influence the upperbound prediction. Demand will be driven primarily by price in both the voluntary and compliance carbon markets.

Figure 6: Estimated demand curve for technical CDRs in 20307

SUPPLYThe current technical removals industry is still young and there are many uncertainties around the direction of its growth. Our
first step in predicting the 2030 supply curve was understanding the state of the industry at present. We evaluated the current
capacity and pricing of each of the five technologies through an in-depth literature review and developed our modelingmethodology based on our findings. While the numbers we found in our literature reviews were impressive and exciting,technical CDR commitments have historically been optimistic. With that in mind, we chose a more conservative approach tobetter reflect the limitations on commercial viability and widespread adoption of these technologies over the coming years.
To predict the supply curve, we built two scenarios for estimating marginal abatement cost (MAC) curves for 2030. Below are
the assumptions that we made in our estimate:
General Assumption - Supply capacities and corresponding prices as stated and projected by companies andother institutions are likely to be optimistic. To date, the realization of removal facilities has fallen short of initialcommitments and projections. This trend of over-committing is likely to carry through into 2030. The precedent
for this assumption can be seen in the continual struggles that companies face in overcoming the significant
hurdles that accompany the implementation of such novel technologies at scale.xv

7

EU-ETS estimates a price of ~$90 by 2030.

9Mineralization

Details

Mineralization projects primarily provide a means of utilization and storage. They do not function as a distinct removal
technology in any significant capacity. Enhanced Weathering projects, while sometimes cited as mineralization
technology, are instead categorized here under Enhanced Weatherization. Additionally, there are mineralization projects
that focus on carbon utilization, and these projects must be discounted as a carbon removal additive. Operational
mineralization projects that function as carbon removal technology will likely advent post-2030.

BiocharCapacity

There is currently 0.3198 MtCO2/yr captured through certifiable biochar. xvi This is based on the current European
estimates of 0.135 MtCO2/yearxvii and North American estimates of 0.1848 MtCO2/year.xviii, xix, xx Biochar supply figures
assume a 1:3 biochar to carbon ratio and 4 cubic yards of biochar as equivalent to 1 tCO2.xxi Biochar production capacity
is assumed to grow at a 75% CAGR as the market for high-quality, certified biochar grows.

Price

The ranges in empirical literature likely contain lower quality, uncertified biochar that skews the price. Therefore, we
assume that the prices of high-quality certifiable biochar today are the upper bound of most empirical literature at~$120/tCO2.xxii Due to advances in kiln technology and increased biomass feedstock availability, we expect these prices
in 2030 to decrease to ~$85t/CO2, the approximate mean of the empirical price range. In the optimistic case, we assume
that advances in technology have reduced the cost to produce to $65t/CO2.

Enhanced
Weathering
Capacity

Research has projected 150 MtCO2 capacity for Enhanced Weathering. Based on the low number and small scale ofcurrent Enhanced Weathering projects, we assume that only 1/5 of that projection will be available by 2030 in the basecase and 1/3 of the projected capacity will be available in the optimal case.xxiii

Price

We assume that today’s prices for enhanced weathering are at the upper bound of empirical estimates, ($50-$200). We
assume that advances in technology allow the price to be reduced to ~$150 by 2030. In the optimistic case, thetechnology advances faster than anticipated and prices drop to the lower middle quartile of the empirical range.

BiCRS

Capacity

Today BiCRS production facilities remove 2.5 MtCO2/year.xxiv Planned facilities will provide an additional 25 MtCO2/yearof capacity by 2025, bringing the global total to 27 MtCO2/year.xxv BiCRS may attract significant investment throughout
this decade as it offers a ready method of deep carbon sequestration which may support a significant CAGR. We canuse the current and 2025 estimates to assume a ~58% CAGR from 2025 to 2030 and suggest that BiCRS could becapable of producing 250 MtCO2/yr. by 2030. This is an optimistic assumption, however, and it is likely BiCRS technology
will either lack the available biomass or appropriate funding to grow at such a rate. So, in the base case, we will instead
use a slower rate of ~35% post-2025, which results in 100 MtCO2/year.

Price

We assume a rough median value of ~$175 from an empirical price range based on the model given on Page 13 of ($88
- $288).xxvi The optimistic case assumes that increased availability of biomass would drive prices down slightly to ~$150.

DACCS

Capacity

Currently DACCS facilities capture 0.117 MtCO2e/yr. We know that additional capacity of 1 MtCO2e/yr., 0.0075
MtCO2e/yr., and 1 MtCO2e/yr., will become operational in 2024, 2025, and 2026 respectively. This established a global
DACCS capacity of 2.12450 MtCO2/yr. in 2026.xxvii, xxviii DACCS is likely to be the focal point of major carbon removals
investing throughout this decade and into 2030. Upcoming designs have been proposed by DACCS industry leadersalongside commitments to 500 MtCO2/yr. by 2040. This gave us some trends for future industry growth. Looking backto our general assumption about supply it is reasonable to assume that a proposal of this sort may encounter significant
hurdles in meeting this commitment, and resultantly produce on a more limited scale of 250 MtCO2/yr.by 2040. We used
this industry data to estimate an industry CAGR of 120% through 2030, slowing to a 60% CAGR from 2030 to 2040
when it reached 250 MtCO2/yr. Using industry leaders for a benchmark, we can apply this 120% CAGR to the projected2026 supply of 2.12450 MtCO2/yr. and reasonably assume that there will be 50 MtCO2e/yr. available in 2030.
The optimistic assumption for DACCS capacity assumes that the industry grows 20-30% faster than our industry
benchmark and results in a global capacity of 100 MtCO2/yr.

Price

The 2030 DACCS price of $250 is another interpolation of a published range ($100-$300).xxix, xxx We assume that today’s
price is the upper bound and that increases in technology and availability drive from the peak into the upper quartile.
The optimistic case assumes that the technology advances at an increased rate to a price of $175.

10MARGINAL ABATEMENT COST CURVES

Figure 7: Projected base case and optimistic case MAC curves for 2030

Figure 8: Our base case MAC curve compared to AirMiners’ MAC curve constructed from Stripe’s proposal data 8
In our base case, the total supply of technical CDRs is predicted to be ~210 MtCO2/yr by 2030 (58% less than projected in acomparable analysis by AirMiners),9 while in our optimistic case, we would expect a capacity of ~450 MtCO2/yr would beachieved (10% less than projected in a comparable analysis by AirMiners). At base case capacity, the average price fortechnical CDRs should be ~$165/tonne to meet demand, - about 50% higher than the ~$110/tonne predicted in both the
optimistic case and AirMiners’ model.xxxi It is important to note that the numbers above do not account for buyer preferences
around technical CDRs.

8

Note: Mineralization projects do not yet function as a distinct removal technology in any significant capacity. There are operational mineralization projects, butthey focus on carbon utilization, and these projects must be discounted as a removal additive. Operational mineralization projects that function as removals will
likely advent post-2030.
9500MtCO2 is the capacity from AirMiners’ prediction adjusted for omission of mineralization.

11

Factors that drive the purchase of technical CDRs in the VCM include price, additionality, permanence, social and environmental
benefits, and risk, amongst others.xxxii To account for these preferences, we rated each of these factors on a 1-5 scale acrossthe four technologies. Then, we multiplied the scores with a weighted significance corresponding to each factor.xxxiii The ‘Total’row below is the resulting estimate of the preference for the technology by buyers in the voluntary carbon markets. Based on
our analysis, DACCS, BiCRS, and Biochar will drive demand in the technical CDR market moving forward. BiCRS and Biochar
are dependent on the availability of high-quality biomass, therefore out of these three technologies, DACCS has the highest
potential for widespread adoption.
DACCS

BiCRS

Biochar

Weight4.00

E.
Weathering
4.00

Durability

5.00

5.00

Additionality

5.00

4.00

4.00

5.00

11%

Innovation

5.00

3.00

2.00

4.00

7%

Risk

4.00

4.00

4.00

2.00

14%

Social

3.00

3.00

5.00

3.00

9%

Environmental

3.00

4.00

5.00

3.00

11%

Location

2.00

3.00

5.00

4.00

11%

Connection

4.00

3.00

4.00

3.00

9%

Price

2.00

4.00

3.00

2.00

11%

Total

3.68

3.80

4.05

3.30

100%

16%

Table 1: Estimating technology prioritization for buys in voluntary carbon markets 10

10These are performance metrics where a score of 5 is preferred i.e., low price, high additionality, and high durability.

12

EMPIRICAL MODELING OF PROJECTRELATED FACTORSCONCLUSIONSTo determine the relationship amongst a few of these factorsthat drive purchases, we performed empirical analysis on the219 projects split across those purchased by Stripe andproposals received by Microsoft RFP.xxxiv

1.

2.

We performed linear regression on 55 projects that had data
across parameters of negativity, price, additionality, andpermanence. The description and estimation of each of theseparameters are as below:xxxv
3.
1. Negativity: Negativity reflects the emissions
intensity of different carbon removal solutions, andwe define it as 1 minus the ratio of gross projectemissions to gross climate benefits, including
carbon removal and storage. Calculating negativity
depends on a life cycle assessment that quantifies
project emissions and climate benefits. If emissions
are low relative to the climate benefits, this metricwill approach 1.
2. Price: These are per tonne CO2 prices are taken
directly from public project offerings.
3. Additionality: Additionality refers to the causal
relationship between the funds a climate projectseeks, and the climate benefits it claims. The
categorical variable of additionality is valued using
the metric given in Appendix.
4. Permanence: Permanence of the project is theduration over which carbon storage can bereasonably assured, in years.
Regression results:log(price)=0.46144+0.02515×negativity+0.44737×log(permanence)+0.31766×add_mild+0.83457×add_high +∈VariableIntercept
Negativity
Log (permanence)
Add_mild
Add_high
R2
p-value
Residual std error

Estimate
0.461440.025150.447370.31766
0.83457
0.48249.22e-07
0.5755

Pr(>|t|)0.35806
0.953110.00514**0.320070.02066*

4.

5.

6.

7.

8.

9.

The demand for technical CDRs is projected to lie
between 30.7 MtCO2 to 623 MtCO2 per year, resulting
in total market size of $3.6 billion - $56 billion by 2030.
Compliance carbon markets may contribute ~600
MtCO2 to technical CDR demand. The extent ofdemand depends on the acceptance of technical CDRs
by compliance markets across the globe, and thefulfillment of net-zero targets by countries.
Given the purchases this year, we estimate that the
total transaction volume needs to increase by ~200%
YoY to reach the upper limit of 623 MtCO2 by 2030
The supply of technical CDRs is projected to lie
between 210 MtCO2 to 450 MtCO2 per year by 2030,
resulting in a shortfall of supply in an upper bounddemand scenario of 623 MtCO2.
Other research studies may have overestimatedsupply, resulting in projected prices for CDRs being
underestimated.
Demand and supply in 2030 would clear at 50 MtCO2
to 180 MtCO2 with an average price ranging between$180-$220 per tonne of CO2.
DACCS, BiCRS, and Biochar should drive the demandin the technical CDR market until 2030, with DACCS
CDRs having the highest potential for generating
demand.
The current price in the technical CDR market depends
significantly more on factors such as permanence(durability) and additionality than traditional VCM
factors such as negative effects on the environment.
We believe such a trend will continue for the next
decade in the CDR market.
At an average price of $90-$100 per tonne for highly
additional and permanent technology, corporations
would be indifferent between nature-based or technical
CDRs. The adoption of CDRs by compliance markets
will accelerate the innovation and development in thetechnical CDR market and would be a significant
catalyst in achieving this price drop.

∈ represents all other factors such as (i) technology’s
connection to the business, (ii) technology’s innovativeness, (iii)
location, (iv) social co-benefits, (v) risks associated withtechnology, (vi) reputation/publicity, and (vii) company factors

13

MONITORING, REPORTING, AND VERIFICATION
The future market for removals will need to define by two primary drivers: production capacity and certification. Production
capacity will need to expand on an exponential scale to meet the growing demand, and the capacity satisfying demand will need
to be certifiable through consolidated regulating bodies. Certification will be key in supporting the growth of the market for two
reasons. First, MRV ensures that the quantity and quality of the carbon being removed are accurate and can be measured
against standardized benchmarks, which must be a requirement for regulated schemes. Second, it ensures that the additionalityof a removal justifies the payment for that activity, providing the market signal and incentive to generate negative emissions.
Currently, there are no globally recognized regulatory bodies that monitor the removals market. For any efforts in the removals
space to grow and corporations to feel more comfortable making greater purchases of carbon removals, there needs to bestronger monitoring, reporting, and verification (MRV).xxxvi In recent reporting, a survey across all stakeholders in the carbon
removals market found that 76% of respondents, buyers, and suppliers desired more guidance and increased protocols
surrounding technical removals. The same survey also shows that out of the respondents with technical removal inventories,
only 3% accounted for the GHG removed through the technologies mentioned in this report – due to a lack of guidance anddata, not a lack of demand.xxxvii
Based on our analysis, most of the technical removal credits are sold through private players including Puro, Patch, Climacrux,
and Carbonfuture. The major challenge with the carbon credits industry – which seems to persist in the case of removals too –is that there is double claiming of the same mitigation outcome towards both the private sector’s carbon neutrality outcome andthe host country’s NDC. This illustrates the need to have a standardized framework, supported by a regulatory agency forremovals, to scale in voluntary markets as they ensure that the carbon removed remains additional.
Independent certifying institutions are currently making standardization attempts. Organizations such as Verra, the Gold
Standard Foundation, and Plan Vivo all issue carbon credits based on removal approaches supported by their proprietary
verification systems. The issued credits, while certified, offer the purchaser varying degrees of certainty across different
measured attributes. These institutions offer certified credits, but the attributes of the actual credits may vary significantly without
any unified regulatory oversight.xxxviii
In addition to independent standard-setting organizations, voluntary market platforms such as Puro.earth, Nori, andMoorFutures offer carbon credits with varying approaches to categorizing their product offerings. Puro.earth offers credits
primarily generated by biochar and carbonated building materials, Nori offers credits from agricultural sources, and MoorFutures
focuses on nature-based solutions. These voluntary marketplaces offer a variety of products with assorted certification claims.
This patchwork approach to certification may result in a lack of confidence and uncertainty that could stifle investment to support
technical removals. Guidance from institutions that are critical to the net-zero agenda such as the Science Based Targets
initiative (SBTi) should help the market by providing greater direction on certification needs and requirements that can assist
companies looking to invest in the short term to secure the eligible removals they need to meet future obligations.

14

APPENDIX
1. Metric for Additionality in empirical modelingIn the empirical modelling of project-related factors, additionality is calculated using the metric below, followed byactual categorical values assumed

Low Additionality

MediumAdditionality

High Additionality

Add_mild
Add_high

Climate benefits claimed by the project are unlikely to be additional
because they are likely to occur independently from the proposed
investment. This could be because the proposed activity is alreadycommonplace or required by law. In other words, climate benefits thatproject claims are logically implied by pre-existing commitments.
Climate benefits claimed by the project might be additional, but wecannot validate them with confidence. This is used when the evidence ofadditionality is mixed, without a clear balance establishing the finding ofadditionality or non-additionality.
Climate benefits claimed by the project are likely to be additional. This
could be because the project proposes an unconventional action, hasrelatively high costs or has no inherent commercial value outside of its
climate benefits.
Low Additional
00Medium Additional
10High Additional
0
1

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https://doi.org/10.2172/1763937.
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https://deepblue.lib.umich.edu/bitstream/handle/2027.42/136610/315_CarbonDioxideRemovalOptions.pdf?sequence=1&isAllowed=y.
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