Global Carbon Dioxide Removal Market Could Reach $100 Billion Between 2030-35 With Targeted Interventions

London, 27 June 2024 – A report by Oliver Wyman, a global management consultancy and a business of Marsh McLennan (NYSE: MMC), together with the City of London Corporation and the UK Carbon Markets Forum, reveals that the global carbon dioxide removal (CDR) market may reach up to $100 billion a year between 2030 and 2035, if barriers to scale are addressed. Without targeted intervention, the CDR market may only reach 10% of its potential size.

CDR projects aim to remove and durably store carbon dioxide from the atmosphere. They are gaining interest from corporate purchasers, investors, and project developers due to their potential to address hard-to-abate greenhouse gas emissions. Climate authorities emphasise the need for substantial scaling of CDR projects to limit global warming, with over $30 billion already invested globally in anticipation of this growth. Currently, while demand for CDR credits is growing, it is not yet at a scale to support the level of investment being made in underlying carbon removal projects, and far below the level experts say is required to achieve net zero.

With discussions with over 30 companies in the carbon removal space, the research highlights promising developments and significant challenges that must be addressed for the market to scale.

Globally, $32 billion has been invested in CDR projects, with approximately $21 billion in engineered solutions and $11 billion in nature-based ones. Public spending accounts for $15 billion, while private investors, mainly venture capital funds and corporate entities, contribute $17 billion. However, current demand needs to scale 3-5 times to support the existing level of investment.

The report identifies major barriers to CDR demand, including the lack of guidance on removals in decarbonisation targets and the absence of universally agreed standards on quality. It highlights key actions that the industry can take, such as articulating the role of removals in the UK's net zero strategy, providing guidance to companies on their appropriate role, establishing clear thresholds for monitoring, verification, and reporting, including removals in compliance markets, detailing subsidy and support mechanisms, and supporting the development of the CDR financial market ecosystem.

The report also outlines key supply-side constraints, such as uncertainty over future demand for CDR credits and unclear public sector policies to scale CDR projects. There is also ambiguity around the extent of removals in transition plans and whether high price points will hinder large-scale purchasing.

James Davis, Partner, Co-head of Climate and Sustainability, Europe, Oliver Wyman, said: “We are witnessing a significant increase in attention and investment towards CDR projects, highlighting the growing recognition of their role in the transition. However, the demand for carbon credits generated by these removal projects is not yet sufficient to support even current levels of investment, let alone the level required to meet climate goals. The UK is well positioned to establish itself as a major hub for carbon removal activities, creating new job opportunities and driving economic growth, both in London and key industrial regions. But action will be needed to overcome the barriers to scaling and accelerate progress.”

Chris Hayward, Policy Chairman for the City of London Corporation, said: “The role of green technologies in powering the net zero transition cannot be understated. CDR technologies are at the heart of this push as evidenced in these findings and therefore we must continue to highlight their significance in climate strategy. With the UK positioned as a trailblazer in green finance expertise, we can supercharge the implementation of CDR projects and advance the push to keep 1.5C alive.”

Dame Clara Furse, Chair of the UK Carbon Markets Forum, added: "CDR technologies play a critical role in net zero transition. With the right interventions, the UK can leverage its technical expertise and financial infrastructure to channel funding to CDR projects to deliver much-needed climate impact. We need all sources of finance working together to achieve the goals of the Paris Agreement.”

Read the full report here.

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has 7,000 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC].  

For more information, visit www.oliverwyman.com. Follow Oliver Wyman on X @OliverWyman.

About City of London

The City of London Corporation (CoLC) is the governing body of the Square Mile dedicated to a vibrant and thriving City, supporting a diverse and sustainable London within a globally successful UK. We provide the secretariat to the UK Carbon Markets Forum, and we are also a founding sponsor of the Integrity Council for the Voluntary Carbon Market (IC-VCM). Beyond this policy work, we operate a Carbon Removals and Land Management Project to protect the existing carbon stored by our open spaces and to increase their carbon sequestration capacity. Our open spaces currently remove over 16,000 tonnes of carbon from the atmosphere every year.

About the UK Carbon Markets Forum

The UK Carbon Markets Forum was established in April 2021 to support the growth of a high-integrity scaled carbon market in the UK and to support and amplify common international frameworks. The Forum is chaired by Dame Clara Furse, with City of London Corporation providing secretariat support.