The Rise of Carbon Removal Credits: A $100 Billion Market by 2030
In a groundbreaking analysis, experts predict that the global market for carbon removal credits could soar to $100 billion annually between 2030 and 2035, a massive increase from last year’s $2.7 billion. This surge is being fueled by a growing interest from corporate buyers looking to offset their carbon footprints.
Investment Trends in Carbon Dioxide Removal Projects
Oliver Wyman, a US-based consultancy firm, reveals that currently $32 billion is invested in carbon dioxide removal projects. Of this, $21 billion is allocated to engineered solutions, while $11 billion is directed towards nature-based initiatives. The report highlights the need for a three to five-fold increase in carbon dioxide removal project demand to align with current investment levels.
Unlocking the Potential of Carbon Credits
Carbon credits play a vital role in the transition to cleaner energy and help countries meet their Paris Agreement targets. These credits allow companies to offset a specific amount of carbon dioxide emissions, with one credit equivalent to 1 tonne of emissions. However, the demand for carbon credits generated by removal projects must increase significantly to support the necessary investment levels to combat climate change.
Challenges and Opportunities in the Carbon Removal Market
The report notes that barriers such as the lack of guidance on removals in decarbonization targets and the absence of universally agreed standards on quality hinder the growth of the carbon dioxide removal market. Without targeted interventions, the market may only realize 10% of its full potential.
Saudi Arabia’s Contribution to Carbon Market Growth
Saudi Arabia is playing a significant role in the market’s expansion by launching initiatives like the Regional Voluntary Carbon Market Co., which has already sold 3.6 million tonnes of carbon credits to domestic companies. Carbon trading is seen as crucial for mitigating climate change risks and providing financial resources to support global development efforts.
Insurance and Investment Trends in Carbon Removal
Carbon removal insurance services are gaining momentum as enablers for project financing, while sustainable investment funds are emerging to focus on the carbon market. These developments, along with the growth of carbon markets, are expected to play a pivotal role in achieving climate goals and supporting the transition to clean energy.