Carbon Removal Market Sees Increased Buyer Diversity Amid Challenges

Voluntary carbon removal market attracts 74 new buyers in 2025

The voluntary carbon market for removals has grown sharply in 2025. Seventy-four companies have purchased carbon dioxide removal credits so far this year. That compares to just 10 new buyers across the whole of 2024. The surge reflects widening corporate interest in carbon removal technologies, despite significant political shifts including the US administration’s recent deprioritization of renewable energy programmes.

Most of this activity centres on engineered removal methods. Bioenergy with carbon capture and storage accounts for 66% of all contracted removal volume to date. However, that share is falling as buyers diversify into biochar, direct air capture, and biomass-based removals. The shift signals growing confidence in a range of technologies, not reliance on a single approach.

For UK businesses working towards net zero targets, this matters commercially. Carbon removal credits now feature in tender requirements, supply chain expectations, and investor scrutiny. Moreover, prices for durable removals averaged £250 per tonne at the end of 2024, down from £385 the previous year. Falling costs and rising supplier competition may soon make engineered removals accessible to smaller firms, not just multinational corporations.

How carbon removal differs from emissions reduction

Carbon dioxide removal refers to technologies and methods that extract CO₂ directly from the atmosphere and store it durably. This differs from reducing emissions at source or avoiding them through renewable energy. Removal credits therefore represent actual atmospheric extraction, not emissions prevented elsewhere.

Several methods dominate the market. Bioenergy with carbon capture and storage burns biomass for energy, then captures and stores the resulting CO₂ underground. Direct air capture uses chemical processes to filter CO₂ from ambient air. Biochar converts agricultural waste into stable carbon, which is then buried in soil. Biomass-based removals involve injecting bio-oils deep underground for permanent storage. Enhanced weathering accelerates natural mineral reactions that absorb CO₂. Ocean-based solutions include techniques like alkalinity enhancement to increase seawater carbon absorption.

Initially, only technology firms and heavy industry bought removal credits. The market has since broadened considerably. Nevertheless, challenges remain. Prices still exceed what many businesses can afford. Supply remains limited relative to projected demand. Policy uncertainty complicates long-term planning, particularly for capital-intensive projects requiring multi-year investment horizons.

Consequently, many corporate buyers now blend nature-based removals with engineered methods. Meta described this approach as building a diverse portfolio offering different pathways to impact at scale on both immediate and longer-term timelines. This strategy balances cost, availability, and permanence across a company’s carbon removal commitments.

Record transaction volumes and technology shifts in 2025

The first quarter of 2025 saw 780,000 carbon removal credits contracted, a 122% increase on the same period in 2024. The first half of the year delivered 16 million credits sold, the strongest opening six months on record. In the third quarter alone, 23 companies purchased engineered removals for the first time. That single quarter exceeded the total number of new voluntary carbon market entrants across all of 2024.

Bioenergy with carbon capture and storage still leads by volume. However, its market share has declined from 74% to 66% as other technologies gain ground. Biochar accounted for 93% of durable removal purchases in the first quarter of 2025, followed by biomass-based removals. Direct air capture and enhanced weathering each represented around 1% of transactions during the same period.

Technology diversity is increasing rapidly. Thirty per cent of new projects now incorporate advanced soil carbon methods, bio-oil injection, or marine-based removal techniques. Furthermore, innovations in digital monitoring, reporting, and verification platforms are improving transparency across the sector. These systems provide near-real-time data on carbon capture and storage performance, addressing longstanding concerns about credit integrity.

Major transactions continue to shape the market. The third quarter of 2025 included the largest biomass-based geological sequestration deal to date, involving Vaulted Deep. Microsoft remains one of the most active buyers, targeting carbon negativity by 2030. JPMorgan Chase committed $200 million to carbon removal offtake agreements in 2023. Meta has purchased credits across multiple technology types to build a diversified removal portfolio.

Global carbon removal capacity currently stands at 41 million tonnes of CO₂ per year. Industry analysts estimate that capacity must grow between 25 and 100 times by 2030 to meet climate targets. If that trajectory continues, the sector could become a $1.2 trillion industry by 2050. Suppliers would capture between 73% and 82% of that value, representing revenues of $250 billion to $900 billion.

What this means for compliance and procurement

UK businesses face growing pressure to demonstrate credible carbon reduction strategies. Public sector suppliers must now address carbon in tender responses following Procurement Policy Note 06/21. Many private sector supply chains impose similar requirements. Carbon removal credits are increasingly part of that equation, particularly for residual emissions that cannot be eliminated through operational changes.

Scope 3 emissions present the biggest challenge for most companies. These indirect emissions from supply chains, business travel, and product use typically account for 70% to 90% of a company’s total carbon footprint. Removal credits offer one mechanism to address Scope 3 emissions while longer-term reduction measures take effect. However, businesses must demonstrate that credits supplement rather than replace emissions reductions.

Prices remain a significant barrier. Average costs for durable carbon removal stood at £250 per tonne at the end of 2024. That represents a 36% decline from the previous year, yet it still exceeds the cost of many nature-based offsets. For a mid-sized manufacturer with 5,000 tonnes of annual residual emissions, purchasing removal credits could cost £1.25 million per year. Consequently, most current buyers are large corporations with substantial sustainability budgets.

Nevertheless, price trends suggest broader accessibility ahead. Increased competition among suppliers and technology improvements are driving costs down. Some analysts project that biochar and biomass-based removals could fall below £150 per tonne within three years. Direct air capture costs have dropped from over £800 per tonne in 2020 to around £400 per tonne in 2025, with further reductions expected as deployment scales.

Quality and verification standards matter significantly. Not all removal credits offer the same permanence or environmental integrity. Biochar stored in agricultural soil may release some carbon over decades. Direct air capture with geological storage can sequester CO₂ for thousands of years. Additionally, some biomass projects carry deforestation risks if feedstock sourcing lacks proper safeguards. Businesses must therefore evaluate credits based on additionality, permanence, verification methodology, and broader environmental impacts.

Digital monitoring systems now provide greater transparency than traditional verification methods. Real-time data on CO₂ capture, transport, and storage reduces uncertainty about credit quality. For example, some biochar projects use sensors to track carbon content in soil over time. Direct air capture facilities measure atmospheric CO₂ concentrations before and after processing. These verification improvements help buyers demonstrate due diligence to stakeholders and auditors.

Key points for UK businesses

• Seventy-four companies purchased carbon removal credits for the first time in 2025, compared to 10 new buyers in all of 2024, indicating rapid market expansion.
• Bioenergy with carbon capture and storage represents 66% of engineered removal volume, though biochar and biomass-based methods are gaining market share quickly.
• Average prices for durable carbon removal fell from £385 per tonne in 2023 to £250 per tonne by late 2024, improving affordability for larger businesses.
• First-half 2025 sales reached 16 million removal credits, the strongest start to any year on record, driven by corporate net zero commitments and supply chain requirements.
• Digital monitoring and verification platforms now provide real-time performance data, addressing previous concerns about credit integrity and permanence.
• Global removal capacity must increase 25 to 100 times by 2030 to align with climate targets, creating potential opportunities for early adopters.
• UK businesses increasingly face carbon-related questions in public and private sector tenders, making credible removal strategies commercially relevant.

Planning for residual emissions and portfolio strategies

Most companies will retain some residual emissions even after implementing available reduction measures. Aviation fuel for essential business travel, process emissions from certain manufacturing activities, and embedded carbon in complex supply chains often resist elimination with current technology. Carbon removal credits provide one option for addressing these residual emissions while further solutions develop.

However, removal credits should complement rather than replace emissions reductions. Leading corporate buyers like Microsoft and Meta use removal portfolios alongside aggressive operational decarbonisation programmes. They prioritize reductions first, then apply removals to emissions they cannot yet eliminate. This approach aligns with Science Based Targets initiative guidance and strengthens credibility with investors and customers.

Portfolio diversification reduces risk across multiple dimensions. Biochar offers relatively low costs and biodiversity co-benefits through soil health improvements. Direct air capture provides maximum permanence but at higher prices. Biomass-based removals balance cost and durability while supporting agricultural waste management. Enhanced weathering delivers additional benefits for soil nutrients. Blending these methods helps manage price volatility, technology risk, and delivery timelines.

For businesses just beginning to consider carbon removal, several practical steps can help. First, quantify residual emissions after planned reductions. Second, evaluate which removal methods align with company values and stakeholder expectations. Third, assess budget capacity against current and projected credit prices. Fourth, investigate supplier verification standards and permanence claims. Finally, consider starting with a small pilot purchase to understand market dynamics before committing to larger volumes.

Procurement teams should also monitor policy developments. The UK government has indicated potential support for carbon removal technologies through contracts for difference and other mechanisms. These policy tools could significantly affect future credit prices and availability. Similarly, international developments including EU carbon border adjustment mechanisms may create additional demand for removal credits, influencing market dynamics.

Businesses supplying public sector customers should pay particular attention. Procurement Policy Note 06/21 requires suppliers to report carbon reduction plans and demonstrate progress. While the note does not mandate carbon removal credits, it creates commercial pressure to show credible decarbonisation strategies. For companies with difficult-to-eliminate emissions, removal credits may become a competitive differentiator in tender evaluations.

Training and capability building will likely prove important as this market matures. Understanding carbon removal technologies, verification methodologies, and portfolio strategies requires specialist knowledge. Our colleagues at SBS Academy provide training on carbon reporting and net zero planning that covers these topics for businesses at different stages of their sustainability journey.

Independent resources for further information

The UK government provides guidance on carbon accounting and net zero planning through the Department for Energy Security and Net Zero. Their published documents cover emissions reporting methodologies and policy developments relevant to businesses of all sizes. You can access these resources at www.gov.uk.

The Science Based Targets initiative offers detailed standards for corporate climate commitments, including guidance on carbon removals and neutrality claims. Their technical criteria help businesses distinguish between credible and questionable removal strategies. Visit sciencebasedtargets.org for their latest publications and sector-specific guidance.

For information on Procurement Policy Note 06/21 and carbon reduction plan requirements for public sector suppliers, the Cabinet Office maintains updated guidance and templates. These materials explain reporting expectations and provide practical examples. The resources are available at www.gov.uk.

We support businesses with carbon reporting and net zero planning, including strategies for residual emissions and carbon removal portfolios. Our approach focuses on practical, cost-effective solutions that meet compliance requirements while supporting your broader business objectives.