The Rocky Mountain Institute (RMI) has released a new brief, pointing to three demand trends for carbon dioxide removal (CDR) that have the potential to drive scale for this sector of climate solutions.
This decade so far has brought carbon removal growth, as scientists, entrepreneurs, and major buyers embarked on projects that pull atmospheric CO2 and store it in terrestrial, geologic, or ocean reservoirs or in products.
However, to reach the multi-gigaton level of deployment needed to effectively constrain climate change by 2050, the CDR sector needs further accelerated expansion, which is conditioned by market demand.
The RMI brief highlights that moving faster requires more project-level investment now, whether through bankable offtake contracts, pre-purchases, or direct in-value chain investments from more buyers. Without additional offtake and financial commitments, over 80% of planned high-durability CDR capacity is at risk of not coming to fruition.
To unlock CDR demand, the RMI brief points to three current trends, which, if supported, could create the financial backbone for scaling removals. These include credit purchasing, demand for differentiated products, and demand for products and services for which CDR is a by-product or co-product.
Just as the market is still uncertain on which technologies will prove most scalable, in the same way it still can’t be said what business model will work best for those technologies, the publication notes. This is why all creative business approaches, financing mechanisms, and demand drivers should be on the table right now.
To explore the potential ways for increasing CDR demand, the RMI team focused on three key questions: who is spending, why are they spending, and what are they spending on?
This method determined that the current CDR buyers are governments, the private sector, and individual consumers, who make both emissions- and non-emissions-related voluntary purchases or are motivated by emissions or non-emissions laws and regulations. What these buyers purchase are credits, practices, services, and lower-emission products.
Relevant: New Whitepaper Outlines Major CDR Scaling Opportunities Via Industrial Mineralization
Stemming from this knowledge, the brief states that efforts should be concentrated on credit purchasing through voluntary and policy-driven demand, differentiated products with lower CO2 intensity due to CDR being embedded in the value chain, and creating demand for processes where CDR is a by-product or co-product.
“CDR demand is emerging in more forms than just credits — and that diversity is a strength,” the RMI brief highlights. The detailed work and observations on this topic can be foundhere.
Read more: World Economic Forum Proposes Key Steps To Build The Financial Architecture For Scaling CDR
