Demand, finance, and corporate strategies in carbon removal markets

CDR Markets, Buyers & Offtake Deals

The carbon removal market in 2026 is advancing rapidly, evolving into a critical pillar of global climate mitigation efforts. This growth is underpinned by stronger policy frameworks, broadening institutional investments, and increasingly sophisticated corporate procurement strategies. Yet, as the market scales, new challenges—particularly mid-stage financing gaps, project hesitancy, and policy fragmentation—are becoming more apparent, underscoring the urgent need for coordinated ecosystem action.

Strengthened Policy and Regulatory Foundations Bolster Market Confidence

The operationalization and refinement of key policy instruments across major jurisdictions are providing a sturdier foundation for carbon removal investments:

EU Market Stability Reserve (MSR) Amendment Fully Operational
The EU’s revised MSR mechanism, which releases allowances when the carbon price surpasses €45/tonne under the EU ETS2, has been active since early 2026. Market analysts hail this as a “transformational enabler” that stabilizes carbon prices, reducing financing risks for engineered carbon removal projects. By dampening price volatility, the MSR is unlocking deeper capital flows and positioning Europe as a global leader in compliance-driven carbon removal investments.
Durable Carbon Removal Credits Now Fungible Within EU ETS
For the first time, verified durable removal credits can substitute directly for EU ETS allowances, increasing credit liquidity and investor confidence. This integration allows companies to monetize permanent sequestration as a credible compliance instrument, setting a global precedent for market design and enhancing the attractiveness of durable removal projects.
US EPA and Treasury Finalize Section 45Q Clarifications
The 2025 rulemakings have sharpened eligibility criteria around capture methods and permanence standards under the Inflation Reduction Act’s Section 45Q tax credit. These clarifications have accelerated CCUS and removal project deployment across the U.S., with several projects projecting upwards of $90 million in 45Q credit value. The improved policy certainty compresses investment risk premiums and broadens the investor base.
Registry and Standards Progress: NIST Consortium and Isometric Registry
The NIST Carbon Removal Consortium’s recent expansion to include Avantium—a leader in renewable chemistry—strengthens harmonized MRV protocols essential for cross-border credit fungibility. Concurrently, Isometric Registry’s extension of crediting periods for DAC and BECCS projects enhances project bankability by providing longer revenue certainty, directly addressing financing barriers in engineered removal technologies.
Policy Fragmentation Risks Persist
Despite policy progress, fragmentation within the EU remains a critical concern. A recent policy brief by Pahle, Sultani, and Zachmann (2026) highlights inconsistent carbon pricing and credit recognition across member states, which threaten investment incentives and market coherence. Coordinated action is urgently needed to harmonize MRV standards and preserve a unified carbon market conducive to scaling durable removal.

Finance Landscape: Institutional Capital Expands Amid Persistent Mid-Stage Funding Challenges

The finance ecosystem for carbon removal reflects a dual dynamic of growing large-scale capital commitments, tempered by caution and funding gaps at mid-stage project development:

Octopus Energy’s $1 Billion Commitment to California Carbon Removal and Clean Energy
This landmark investment signals growing commercial confidence in portfolios that blend nature-based and engineered removal with clean energy integration, demonstrating maturation of capital markets ready to deploy substantial, long-term resources.
Rothschild & Co’s Focus on Accelerated Carbonation Technologies
Institutional investors increasingly recognize mineralization pathways—such as accelerated carbonation—for their permanence and low counterparty risks. Rothschild & Co has boosted allocations to these technologies, cementing mineralization as a cornerstone durable removal approach attracting significant interest.
Söderenergi Freezes BECCS Plans Amid Market Uncertainty
Swedish district heating operator Söderenergi’s recent decision to pause its bioenergy with carbon capture and storage (BECCS) ambitions exemplifies capital hesitancy. The company cited market uncertainty and financing risks, reflecting broader challenges for projects lacking credible timelines or stable policy frameworks—highlighting the persistent “valley of death” in mid-stage funding.
Catalyst Fund Wind-Down Exposes Mid-Stage Financing Gaps
The cessation of Breakthrough Energy’s Catalyst Fund has intensified funding difficulties for projects transitioning from pilot to commercial scale. Industry leaders are calling for innovative blended finance instruments, credit guarantees, and revenue stabilization mechanisms to bridge this critical gap and maintain deployment momentum.
Revenue Stabilization and Risk Mitigation Instruments Gain Traction
Financial innovations such as price floors, insurance products, and structured contracts are increasingly seen as vital to reducing capital costs and enhancing bankability for nascent durable removal projects. These tools help broaden the investor base by mitigating delivery and technology risks.

Corporate Demand and Procurement Strategies Signal Market Maturity

Corporate buyers are evolving their strategies, enhancing market depth, quality, and reliability:

TotalEnergies Boosts Carbon Credit Purchases by 49% in 2025 to $73 Million
This substantial increase reflects durable removal’s growing role in offsetting emissions from hard-to-abate sectors like heavy industry and transportation, underscoring corporate demand as a critical market driver.
Exomad Green and Senken Secure $30 Million Multi-Year Offtake Agreement
Anchored in aviation and transportation sectors, this deal covers 105,000 tonnes of removal credits and exemplifies durable removal’s increasing importance in meeting stringent sustainability targets via reliable supply chains.
Tapestry, Inc. Invests in Climeworks’ Engineered Removal Portfolio
This strategic investment highlights a maturing corporate approach that balances nature-based and engineered solutions, emphasizing durability, additionality, and risk diversification.
Trellis Buyers’ Guidance Platform Enhances Transparency and Risk Management
Platforms like Trellis empower buyers by promoting transparency and adherence to durability and additionality standards, reducing reputational and delivery risks in an increasingly complex market environment.

International Partnerships and Regional Deployment Hubs Expand Technology Reach

Global collaboration is intensifying to diversify technology pathways and regional scaling:

Saudi Arabia Emerges as a Regional Direct Air Capture (DAC) Hub
The Royal Commission for Jubail and Yanbu (RCJY) has deepened its collaboration with Climeworks through joint test campaigns and feasibility studies started in late 2024. Additional agreements with other DAC developers position Saudi Arabia's industrial cities as key deployment centers, aligning carbon removal capabilities with heavy industry decarbonization and economic diversification ambitions.
Australia-Germany MoU Advances DAC-Industrial Cluster Integration
The ongoing Memorandum of Understanding fosters integration of DAC within industrial clusters, aiming to alleviate supply chain constraints and accelerate technology deployment.
Pilot Energy Leads New Carbon Capture Era in Western Australia
Building on regional momentum, Pilot Energy has launched pioneering carbon capture initiatives in Western Australia, expanding the market’s geographic and technological scope. This development supports Australia’s growing role as a durable removal deployment hub, particularly in mineralization and engineered capture.
EU Funds Dutch Start-Up Developing Direct Ocean Capture (DOC)
The EU’s investment in a Dutch start-up pioneering DOC technology—extracting CO₂ from seawater with co-benefits for ocean acidification mitigation—adds valuable diversification to the carbon removal portfolio.

Measurement, Reporting, and Verification (MRV) and Market Infrastructure: Digital Innovation Accelerates Market Trust

Digital MRV advancements and market platforms are enhancing transparency, reducing transaction costs, and improving liquidity:

Verra Pilots High-Frequency Digital MRV (dMRV) Credit Issuance
Leveraging AI, satellite imagery, and blockchain, Verra’s pilot enables monthly carbon credit issuance, dramatically shortening turnaround times and boosting market transparency—reducing delivery risk and improving credit liquidity.
ClimeFi Launches Comprehensive Due Diligence Platform
By integrating technical, financial, and delivery risk assessments, ClimeFi lowers due diligence costs and encourages broader investor participation.
Releaf Earth Achieves Verified Credit Milestone
Delivering 190 tonnes of rigorously verified permanent removal credits, Releaf Earth sets a new market benchmark for credit quality and credibility.
Emerging Digital Platforms Gain Momentum
Tools such as Mangrove and Super6 further enhance transparency and institutional investor confidence, essential for efficient scaling of projects.
NIST Consortium Advances Unified Standards with Avantium Participation
The consortium accelerates development of harmonized MRV protocols, crucial for cross-jurisdictional credit acceptance and market integration.
Technical R&D Breakthroughs Lower DAC Costs
Innovations in moisture swing adsorbents have improved sorbent efficiency and reduced operating expenses, helping to lower techno-economic barriers for DAC scale-up.

Market Structure and Ecosystem Consolidation Strengthen Deployment Readiness

Strategic moves within the ecosystem are enhancing supply chains and technology portfolios:

Terradot Acquires Eion to Expand Enhanced Rock Weathering Portfolio
This acquisition diversifies mineralization pathways within durable removal portfolios, reflecting growing financial and policy attention on accelerated rock weathering technologies.
International Industrial Collaborations Address DAC Hardware Bottlenecks
Partnerships involving Australian, German, and Japanese industrial players—including Nikkiso Clean Energy & Industrial Systems—are tackling supply chain constraints and reducing technical risks, enabling lower deployment costs.
Saudi Arabia’s Industrial Cities Cement Role as Carbon Removal Anchors
Strategic collaborations with DAC developers underscore the kingdom’s growing importance as a regional deployment hub.

Emerging Demand Dynamics and Market Risks: Compliance Market Growth and Fragmentation Threats

Shifting demand patterns and market integrity challenges are reshaping the landscape:

Compliance Demand Expected to Surpass Voluntary Markets Before 2030
National regulatory mandates are driving intensified competition for high-quality removal credits, likely pushing prices higher and limiting voluntary market availability.
Fragmentation Risks Jeopardize Market Coherence
Without harmonized international standards, credit recognition protocols, and cross-border trading frameworks, fragmentation could cause inefficiencies and stranded assets, undermining investor confidence.
Ecosystem Call to Action
Coordinated efforts among regulators, investors, buyers, and technology providers are critical to align incentives, standardize certifications, and develop innovative finance and risk mitigation mechanisms.

Strategic Mineralization and ARR Project Selection Gain Sophistication

Mineralization remains a durable removal cornerstone, requiring rigorous design and financing approaches:

MORFO’s 2026 Guidance Emphasizes Capital Deployment and Pricing Integrity
The framework mandates ARR projects to clearly articulate capital plans and demonstrate how integrity improvements translate into credit pricing to secure offtake agreements. Projects failing this standard face exclusion, reflecting heightened market expectations.
Stable, Policy-Backed Revenue Streams Are Critical
Mineralization projects depend on predictable, policy-supported revenues to attract investment, highlighting the need for long-term, policy-conditioned contracts.
Pricing Frameworks Must Integrate Policy and Market Incentives
Sustainable demand and capital flows require pricing models that incorporate policy incentives reflecting mineralization’s unique cost and time characteristics.

Conclusion

As 2026 progresses, the carbon removal market stands at a pivotal inflection point marked by heightened maturity, strategic sophistication, and expanding global collaboration. The full operationalization of enabling policies such as the EU MSR and the integration of durable removal into compliance markets, alongside US 45Q clarifications and registry innovations, provide a robust regulatory foundation.

Institutional capital flows remain strong but discerning, favoring projects with credible timelines, bankable structures, and stable revenue streams. The freeze of Söderenergi’s BECCS plans highlights persistent caution amid financing uncertainties.

Corporate procurement strategies, characterized by multi-year offtakes and diversified portfolios, are deepening market stability. International partnerships—especially Saudi Arabia’s emergence as a DAC hub, the Australia-Germany industrial cluster integration, and Pilot Energy’s initiatives in Western Australia—are expanding technology deployment and regional diversification.

Digital MRV advances, standards harmonization via the NIST consortium, and ecosystem consolidations enhance transparency, liquidity, and readiness. Yet rising compliance demand and unresolved policy fragmentation risks present significant challenges demanding urgent, coordinated ecosystem action.

Unlocking durable carbon removal’s full potential requires stable, harmonized policies; innovative financing mechanisms; strategic international partnerships; and transparent, trustworthy market infrastructure. Through integrated ecosystem efforts, carbon removal is poised to transition from a promising climate opportunity into a cornerstone solution capable of gigatonne-scale impact and a sustainable future.

This update integrates the latest 2026 policy, financial, technological, and strategic developments shaping the carbon removal market, charting a path toward scalable, credible climate solutions.

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