Carbon Removal Certificate Market: An Outlook

Carbon Removal Certificates present new possibilities in sustainability and could be an opportunity in supporting companies to achieve climate neutrality.

A new form of carbon emission trading

Companies are setting ambitious emission reduction targets to meet stakeholder expectations. Carbon Removal Certificates (CRCs) are emerging as a key opportunity. The CRC mechanism starts with capturing of CO2 from e.g., industrial sources or directly from the air using specialized technologies. The captured CO₂ is compressed, transported and typically injected deep into bedrock, ensuring permanent storage. For each ton of CO2 removed, a certificate is issued and placed on the market, allowing companies to purchase it to offset their reported emissions.

Growing interest in carbon removal

In April 2024, the Carbon Removal and Carbon Farming (CRCF) framework was adopted by the EU Parliament, setting broad standards and facilitating CRC trade. Recent news further highlight growing attention towards carbon removal technologies. The Swedish Energy Agency is allocating 36 BSEK towards carbon removal, including 20 BSEK allocated towards Stockholm Exergi's CO₂ storage project, between 2025 and 2040. Meanwhile, the U.S. Department of Energy is investing 3.5 B$ in carbon capture technologies between 2022 and 2026.

“The science is clear. Ambitious action is needed”      

- Microsoft

On the purchasing side, Microsoft has emerged as a clear leader, purchasing 70% of so far available CRCs. By 2030, Microsoft aims to be carbon neutral and in 2050 the company aims to have compensated for all its historical emissions, which explains their CRC investments.​

Supply cannot catch up to rising demands

Despite recent investments, studies forecast that demand for CRCs is expected to be over twice the supply by 2030. Taking into consideration that European companies are aligning with EU’s ambition to become Net Zero in 2050 as part of the EU Green Deal, more companies are likely to start purchasing CRCs. Meanwhile, new carbon removal projects require large infrastructure investments and take years to be implemented. The increasing gap between supply and demand could limit the potential of CRCs as a sustainability mechanism for many potential buyers.

The road ahead

Companies should assess whether Carbon Removal Certificates align with their sustainability strategy as well as needs and explore how they can be effectively integrated into a broader decarbonization plan. Most businesses should view them as complementary, alongside other carbon reduction mechanisms, rather than relying on CRCs as a standalone solution.