Carbon Dioxide Removal (CDR) is set to become a linchpin in global decarbonization efforts with an expected increase in demand and a decline in prices in the period 2030–2040, playing a pivotal role in curbing net global emissions in the short term and erasing historical emissions in the long run, according to a recently released report by Boston Consulting Group (BCG).
The report called The Time for Carbon Removal Has Come points to the particularly important role of durable CDR solutions, which can reliably capture and sequester emissions for extended periods, ranging from 100 to over 1,000 years.
Prominent methods of durable CDR encompass Direct Air Carbon Capture and Storage (DACCS), Biomass with Carbon Removal and Storage (BiCRS), Enhanced Weathering/Carbon Dioxide Mineralization, and Ocean Alkalinity Enhancement.
BCG offers a perspective on the 2030–2040 demand for these technologies, based on the existing regulatory landscape and anticipated policy shifts coupled with the current preferences of CDR credit buyers, without being tied to specific climate targets, including those outlined by the Intergovernmental Panel on Climate Change (IPCC) or the International Energy Agency (IEA).
Anticipating robust demand for durable CDR, both voluntary and non-voluntary carbon markets are expected to thrive.
The BCG carbon removal report provides three main scenarios for the period 2030-2040:
- low scenario with an annual demand of ~40–80 million tons (Mt) of carbon dioxide (CO2) and a market size of ~$10 billion–$20 billion;
- medium scenario with demand at ~70–230 Mt CO2 per year and a market size of ~$15 billion–$45 billion;
- high scenario pointing to a demand of ~200–870 Mt CO2 annually and a market size of ~$40 billion–$135 billion.
Relevant: Citibank Publishes VCM Report, Says Market Needs To Close $1.7T Climate Investment Gap
It is worth noting that even in the low scenario demand may outstrip projected supply by 2030 since currently announced projects total just ~33 Mt CO2.
The composition of carbon portfolios is set to shift to durable removals over time, according to the report. While today they are made up of 26% durable CDR, 25% low durability CDR and 49% avoidance/reduction credits on average, by 2040 the mix is expected to be 48% durable, 26% low durability and 26% avoidance, according to the report.
In the near term, voluntary markets are poised to dominate, with approximately 90% of demand stemming from early adopters, particularly industries with a higher willingness to invest, such as professional services and software.
Increased commitment from policymakers may transform the market between 2030 and 2040, possibly shifting demand from voluntary to non-voluntary carbon markets.
Read more: New Report Finds Carbon Capture And Storage Far Too Expensive
