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The voluntary carbon market is oversupplied — but high-quality removals remain scarce, report finds

Demand for carbon removal lags far behind the levels needed to meet the goals of the Paris Agreement. Read More

A photograph of people planting trees in a forest
The overwhelming majority of carbon removal credits come from nature-based projects, like reforestation. Source: VesnaArt via Shutterstock

Today, Carbon Direct, which helps companies measure, reduce, and remove carbon emissions, is releasing its third annual report on the state of the voluntary carbon market. The report underscores three underappreciated trends: 

The market is oversupplied, but high-quality carbon removals remain scarce

Carbon projects have issued twice as many credits as have been retired over the last four years, resulting in a heavily oversupplied market. But this belies the scarcity of credits from high-quality carbon removal projects. Only 4 percent of credits on the voluntary carbon market today come from projects that remove carbon from the atmosphere. Of these, the overwhelming majority — some 98 percent — are from nature-based projects, such as ecosystem restoration and improved forest management.

Demand for nature-based carbon removal will grow by 50 percent this year

The report projects a 50-percent increase in retirement of nature-based carbon removal credits this year compared with 2023. Several high-profile deals for purchase of nature-based carbon removal were announced in 2024, including from Microsoft, Meta and TotalEnergies. The researchers anticipate demand for nature-based carbon removal will grow to over 40 million tons per year by 2030, more than five times current levels. To meet that demand, nature-based carbon removal projects will need much more funding in the near future.

But demand for carbon removal lags leagues behind the Paris Agreement

The report estimates that by 2030, buyers will retire 30 to 50 million tons of carbon removal each year from the voluntary market. That estimate is based on current growth trends and corporate public commitments. But it represents less than 5 percent of the new carbon removal needed by 2030 to meet scenarios consistent with the Intergovernmental Panel on Climate Change goal of limiting global temperature increases to less than 1.5 degrees Celsius.

Even if the Science Based Targets initiative (SBTi) added interim carbon removal requirements to its net-zero framework, this would only modestly boost 2030 demand for carbon removal, by around 5 million tons per year. SBTi is not expected to finalize its guidance on this until late 2025. 

If we’re to have any hope of getting close to the climate future settled on in the Paris Agreement, demand for carbon removal will have to make a giant leap forward in 2025. 

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