Carbon Direct released on Thursday its 2024 State of the Voluntary Carbon Market report, which outlines key trends shaping the voluntary carbon market (VCM), with a critical focus on carbon dioxide removal (CDR).
The report reveals that while CDR is gaining momentum, it still only represents 4% of the $1 billion VCM, underscoring the urgent need to expand CDR capacity to meet global climate goals.
Carbon Direct identifies a demand-supply imbalance in high-quality CDR credits, driven by a few pioneering buyers.
With global climate targets requiring 5-10 billion tons of carbon dioxide (CO2) removal annually by 2050, scaling up CDR solutions will demand substantial capital and policy support.
Current project financing falls short of anticipated 2030 needs, as Carbon Direct projects demand for around 50 million tons annually by then.
This demand represents less than 5% of the CO2 removal required to align with the 1.5°C climate goal.
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Matthew Potts, Carbon Direct’s Chief Science Officer, emphasized the critical state of the CDR market, pointing out that while both high-durability and nature-based CDR projects show ambitious plans for growth, these efforts require significantly more funding and buyer support.
Notably, forward purchases of high-durability CDR solutions remain concentrated among a small group of high-profile buyers.
The report concludes that to meet climate targets, the VCM must scale rapidly, attract more investors, and secure transparent, quality-driven market structures.
Nature-based solutions offer a near-term pathway, but they remain underfunded despite strong potential to meet demand.
As Potts highlights, accelerating both nature-based and high-durability CDR solutions through forward investment is crucial for climate progress.
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