Growth of announced vs. operational carbon removal capacity FIGURE 1 Despite its importance, the scaling of CDR technologies faces significant barriers. Regulatory uncertainty – particularly around the eligibility of CDR credits for corporate Scope 3 emissions reductions under frameworks such as the Science Based Targets initiative (SBTi) – limits corporate adoption.3 For example, only 32 companies (0.5%) out of nearly 6,000 with science-based targets have purchased durable carbon removal credits. At the same time, many high-durability CDR technologies – such as DAC and BECCS – remain significantly more expensive than conventional abatement measures and lower-cost nature-based solutions. Current price levels, often several hundred dollars per tonne for engineered removals, make large-scale procurement difficult without policy support, long-term offtake commitments or risk- sharing mechanisms. Without robust policy incentives, clear market signals and increased investment, CDR technologies will struggle to achieve the scale needed to meet 2050 climate goals. High costs, regulatory uncertainty, limited long-term demand commitments and fragmented market structures remain critical bottlenecks to progress. CDR demand and role of carbon markets On the demand side, corporations and governments have started incorporating carbon removal into their net-zero strategies. Companies can purchase carbon credits to offset emissions via carbon markets directly from suppliers, through brokers. However, voluntary and compliance carbon markets face structural and operational challenges that hinder their ability to support the scaling of carbon removal technologies effectively. Voluntary markets are primarily used by companies to meet self-imposed net-zero goals. While they support a range of projects, including nature-based solutions and engineered technologies such as DAC, they remain largely unregulated. The lack of oversight and inconsistent standards for verifying credit quality (for example, permanence, additionality) creates distrust among buyers and stifles investment. Compliance markets, such as the EU Emissions Trading System (EU ETS), provide greater accountability but focus more on emissions reduction credits and offer limited support for carbon removal. As a result, smaller CDR projects struggle to secure funding, and the scaling of critical technologies is delayed. Another challenge is fragmentation between voluntary and compliance markets. A credit certified under one system may not qualify in another, limiting market liquidity and making it difficult for smaller projects to access buyers. For example, a DAC project certified under a voluntary system may fail to attract compliance market buyers, further stalling development. A unified market system that bridges voluntary and compliance mechanisms could improve standardization, attract more buyers and provide much-needed transparency.1.3 What are the challenges in unlocking CDR progress? 1,200 800 400 0 Announced captured Operational captured2017 2018 2019 2020 2021 2022 2030 Capture capacity in millions of tonnes of CO2CO2 captured in the NZE Source: IEA High costs, regulatory uncertainty, limited long-term demand commitments and fragmented market structures remain critical bottlenecks to progress. Carbon Dioxide Removal Technologies: Market Overview and Offtake 7

Carbon Dioxide Removal Technologies 2026