Category: Blog Posts

Markets move at the speed of trust. Durable carbon removal needs to create more of it to attract new customers and accelerate the market. 

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Hey folks, glad you made it here!

I’m going to say a quiet part out loud: if a customer doesn’t buy from you, it’s because they don’t trust you to deliver value for them for the price, relative to other options.

As it is still a young industry, carbon removal struggles with finding new customers; in a new market, and new offering, to a new customer who has never purchased the class of product before, trust is crucial. “New” can generate attention, but “trust” makes business happen, and carbon removal project developers  – and the intermediaries they work with – have to overcome many, many barriers to earn that trust. 

This operates on three levels:

1. Enticing customers to trust the class of product or service 
2. Reaching mutual understanding of terms that the customer trusts under a contract
3. Demonstrating operational credibility to deliver based on that agreement

I want to talk about how the market for durable carbon removal can advance through reducing risks and making trust happen. 

Symptoms

The chart presented here at Carbon Unbound East Coast from Alexander Rink at CDR.FYI¹ shows the problem: a slowing rate of new customers entering the market to purchase credits, with more than 70% of the purchase volume from Microsoft alone.

Durable CDR is running out of early adopters and has not yet broken through to a different group of more mainstream customers – who have a lower risk tolerance and are less likely to trust novel methods to achieve their business goals.

Bluntly, this represents a failure to achieve trust among new customers who have never purchased durable carbon removal credits.

Digging deeper, the story is a bit more nuanced. Operational credibility (#3 above) is there: Microsoft purchases that are breaking through with large multimillion ton deals by large scale project developers, who have resources to execute well using carbon removal technologies that are well understood such as BECCS and biochar. Considering the agreements strictly within durable CDR, this is low risk / high trust.

For both Microsoft and non-Microsoft customers, volumes per purchase are increasing – showing that yes they trust that the carbon removal works well if they have purchased already.

Beyond Microsoft and the Frontier group of companies, customers who have never purchased carbon removal are not seeing value for the price required by suppliers, even when factoring in co-benefit narratives. “No sale” is more trustworthy than a purchase. Not that new customers necessarily believe that any particular project might fail – I don’t believe that trust is absent, there’s just not enough of it for a new customer to address their own business risks. For sustainability managers with limited internal political capital, their trust is best placed in projects outside of carbon removal, or even outside of offsets generally, or with inaction.

Even in setting a Net Zero target, the unknowns for any future technology are a challenge, as suggested in this chart from SBTi:

Though this data is from March of 2024, in 2025 placing trust for new technologies is even more difficult in a macroeconomic environment that today is rife with uncertainties.

For existing CDR customers: Continue to improve trust in CDR

Right now the remedy for a lack of trust are a host of diligence exercises at the project by project level. Registries, marketplaces, insurance, ratings agencies, and external consultants hired by purchasers all will look at a project before final signatures go on paper. To say nothing of legal teams who would review new types of contracts covering a new class of credit.

I’m *not* arguing that we should throw these diligence activities out the window at all: they are necessary to build trust for those who already want to pursue a carbon removal purchase. But as the current best practice for trustbuilding, their existence represents table stakes for transactions to occur for those who are interested in going forward, however aren’t inspiring more new customers to place their trust in durable CDR.

This establishes a good baseline of trust at the level of convincing those who are interested to begin with to trust that a project is credible.

Prospective customers: Increase trust to purchase 

My recommendation: look to higher systemic activities that fit into existing frameworks for new customers. We know from a survey of sustainability professionals by Verdantix that firms do not pay much of a financial penalty for missing net-zero targets, and that the chief risk is reputational.

So lean into ways that enable a customer to build reputational credibility in durable carbon removal as a class of product.

• First, gain acceptance of CDR methodologies among standards bodies who evaluate registries. Based on data from the Patch marketplace, the most influential is the Core Carbon Principles approval, from the Integrity Council for the Voluntary Carbon Market, which has started to apply the CCP label to millions of issued credits.

• Second: Encourage formal forums or informal peer-to-peer experience sharing among potential customers. Sustainability professionals speak with each other, yet networks of people who have made purchases of carbon removal represent an untapped resource. This would take place in the context of a broader offset conversation where durable carbon removals are a specific class of offset. Decision makers may or may not trust CDR suppliers, or if they do, it’s after many rounds of diligence. 

Fence sitters are more likely to become interested in durable CDR if a colleague can vouch for the practice in the first place. Formal or informal connections among sustainability offices can create social proof among trusted peer sets for best practices – building trust in durable carbon removal.

The need is especially acute for sharing how to work with corporate procurement teams, financial leadership, and legal departments surrounding contracting. Bespoke contracts lead to bespoke contracts; systematizing standard forms of contracting for durable carbon removal leads to trust.

• Third: Find a way to deliver business value beyond carbon removal. This opens up another avenue to build trust: yes the sustainability claim, but showing a return on investment more clearly. This came through clearly in the CDR.FYI / Sylvera market survey of potential purchasers:

Conclusion, and Prognosis

I believe that the problems behind carbon removal markets are solvable, by employing new methods of winning trust among new customers. Today, gaining trust takes a great deal of effort on behalf of carbon removal suppliers, such that fewer new purchaser organizations are coming to CDR relative to previous years. Third party standards, peer networks among fence-sitting purchasers, standard contracting, and greater publication of successes are ways to improve credibility of CDR and make markets expand.

 

Jason Grillo is the Principal of Earthlight Enterprises marketing consultancy, Co-Founded AirMiners, and is a voluntary contributor to CDR.FYI. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer or associated organization.

¹ Thanks to Alex Rink and my voluntary contributor colleagues at CDR.FYI for their work on the presentation. To request the full presentation, see this link here

Methane and Super Pollutants: A New Pillar to Support Carbon Markets

Controlling super pollutant emissions can have a rapid, outsized impact on climate change, while offering high quality carbon credits. Markets are taking notice.

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Hello once more, and thank you for reading!

Good things often come in fours – the ancient Greeks believed in four elements of earth, air, fire, and water; The Three Musketeers had Athos, Porthos, Aramis, and D’Artagnan; and the Beatles were a (Fab) Four.

The same can be true for carbon markets. To date voluntary and compliance sectors have stood on three major pillars of credit classes: avoidance (including RECs and REDD+), nature based solutions, and durable carbon dioxide removal.

Today I’m going to provide an overview on what I believe to be the fourth ‘pillar’ of carbon markets: methane and super pollutant elimination credits. Controlling emissions of these non-CO₂ gases are crucially important for shaving off near-term temperature increases as they have an outsized impact on global warming relative to CO₂. While I’m going to synthesize from a wide variety of sources, most of my focus will be on methane as the super pollutant most responsible for warming to date.

This is not to say that we don’t need crediting for CO₂ – rather that a portfolio approach that includes the all important “e” in CO₂e for ‘equivalent’, which can change the shape of carbon markets and provide an important tool for supporting climate action.

Here’s three questions I’m going to address briefly:

1. 1. Why are Super Pollutants so important?
   2. How are solutions for them created today?
   3. What makes this new category ‘real’ in carbon markets?

Why are Methane and Super Pollutants so important?

Methane, nitrous oxide, and ozone depleting fluorocarbons account for a significant portion of climate change forcing that we are experiencing today. Methane emissions are responsible for about 30% of recent warming , and nitrous oxide has caused about 10% of warming.

Even though super pollutant concentrations are much lower than CO₂ in the atmosphere (e.g. methane is at around ~2ppm vs CO2’s 420ppm), super pollutant gases have a high global warming potential as measured over a 100 year time period relative to CO₂:

Eliminating these emissions are a huge opportunity for impactful climate action to manage as outlined in the US National Academy of Science Engineering and Math report in 2024. Targeting non-CO₂ greenhouse gases can shave off significant risks from climate change before 2050:

The speed of change by managing methane emissions is striking. Because the CH₄ molecule is active and unstable, it breaks down within 15 years – so stopping emissions now could lead to a rapid decline in atmospheric concentrations. To use the famous ‘bathtub’ metaphor, it’s not just that stopping water entering the tub means that the water doesn’t rise anymore: it means that the excess water (i.e. ambient atmospheric methane) will disappear in a fraction of the time relative to CO₂.

The result, per Dr. Gabriel Dreyfus et al:

“non-CO₂ targeted measures when combined with decarbonization can provide net cooling by 2030 and reduce the rate of warming from 2030 to 2050 by about 50%, roughly half of which comes from methane”

In other words, we can slow down global warming by focusing activity on methane and other non-CO₂ super pollutants.

How do we create solutions for Super Pollutants?

To start, the atmospheric science community is advancing rapidly to pinpoint hotspots now visible through satellite imagery or other detection solutions. Turning off these excess emission sources at the metaphorical spigot enables businesses to generate emissions avoidance credits. Destroying these gases as well is a credit generating project.

Considering methane, major emission sources include but are not exclusively:

• • Oil and Gas extraction, transport, and distribution
  • Livestock enteric methane emissions
  • Landfill emissions
  • Wastewater processing emissions
  • Agricultural emissions, particularly rice farming
  • Permafrost emissions
  • Wetland emissions

Businesses are springing up to develop solutions for reducing Super Pollutant emissions, building revenue streams on emissions mitigation or destruction credits. Crediting mechanisms for these activities are coming online as well, especially as new projects deploy to manage the different classes of super pollutants.

Note: Methane credits today are emission avoidance credits. While the prospect of ambient methane removal is quite exciting, the technology may be many years away from field deployment and commercialization at the time of this writing.

In the voluntary carbon market, several crediting methodologies are in place already, and their registries have been issuing credits. Projects for landfill methane emissions have been in existence for several years, using Climate Action Reserve and Verra for methane management crediting based on activities with landfills, livestock, and coal mines.

Other registries and registry endorsing bodies are taking notice as well, with American Carbon Registry and the International Carbon Registry (ICR) creating methodologies for capping orphaned, abandoned, or marginally producing oil and gas wells – noting that ICROA granted unconditional endorsement to ICR in January 2025. Furthermore, in June 2024, the Integrity Council for Voluntary Carbon Markets approved using the Core Carbon Principle label on 27 million issued methane and ozone-depleting substance destruction credits. These quality labels are crucial for establishing trust in the credits and projects that they issue from.

For nitrous oxide, 40% of emissions are from human activities, primarily from agriculture, per the IPCC, so efforts at stopping emissions in that economic sector would be a path forward – enough to warrant a methodology for crediting nitrous oxide photocatalysis.

Ozone Depleting Substances (ODS) such as CFCs and HCFCs typically come from leaking older refrigerant systems. Collecting and destroying these containers to create carbon credits is painstaking project work, but which offers financial incentives to build a business.

Beyond voluntary markets, compliance markets have protocols as well for projects that collect and destroy Ozone Depleting Substances, with projects generating credits that have been traded systems in California and Washington State. Based on voluntary market price points for non-CO2 credits (more on this shortly), these credits trade at or below Washington and California compliance market clearing prices¹, as well as below UK and EU ETS prices at the time of this writing.²

What makes the Super Pollutant opportunity real for carbon markets?

Several factors are key drivers, including price, co-benefits profile, and third-party rated quality measures.

Price points. These projects are coming into the market at a price that is within the range conducive to adoption in voluntary and compliance markets. The table below that summarizes the four major pillars, with price points, supplied by Robert Cheesewright and Tom Fallows at Pinwheel:

The price point of the ‘second generation avoidance’ credits stands out, sitting between first generation avoidance and higher priced durable carbon removal, and roughly at the same level as Nature-based solutions. Considering strictly price and quantity of credits, this price point would suggest that methane and super pollutant projects would be able to command the same transaction volume as large quantity nature based projects. In fact, there are some hints at this already with Guacolda Energia retiring 2.3 million methane credits in February 2025.

Co-Benefits. The co-benefits narrative behind methane and super pollutant credits are more challenging to tell in comparison to more compelling stories surrounding other types of credit projects. Put bluntly, nature-based, carbon removal, REDD+ or REC credit projects have found an easier time to weave their story into ESG reporting and speak to the community story behind projects. Qualitatively, as noted by Calyx Global ratings, methane and Super Pollutant credits are not as ‘charismatic’ as many other classes of credits, and as such may be undervalued by carbon markets.

Credit Quality. Building on the co-benefits stories, Calyx notes that these ‘uncharismatic’ super pollutant projects tend to have a higher credit rating than their more ‘charismatic’ counterparts:

This is not to say that ‘charismatic’ projects are bad – far from it – or that their quality ratings won’t improve – they likely will over time with more rigorous methodologies and enhanced project management practices and technologies. That said, in the current carbon market environment which is seeing a preference to quality measures, credit purchasers are demanding more Super Pollutant credits.

Market results. In light of the trends above, the methane and super pollutant credit purchases and retirements are expanding rapidly. To wit, 2024 methane credit retirement volume increased 70% over 2023. Reaching nearly 4.4 million credits in that calendar year³, methane alone representing about 2.5% of the 175 million voluntary carbon market retirements in 2024.⁴

This trend is continuing in 2025 as well, with Q1 non-CO₂ retirements seeing the largest number of non-CO₂ gas credit retirements on record per MSCI.⁵

The market conditions for this growth are making for a methane and super pollutant moment. The growth of retirements in voluntary markets suggests that corporates prefer highly rated quality credits at a price point approximately akin to nature-based ARR, IFM, or soil carbon credits. The advent of new technologies, new projects, new crediting methodologies and (most importantly) the endorsement of registries themselves by quality monitoring bodies is a key driver of this trend. These are reasonably priced, high quality credits, though project co-benefits outside of emissions reduction is a hindrance.

Conclusion

Methane and Super Pollutant Elimination credits are an unheralded and rapidly growing segment of the market. These projects offer clear and direct climate benefit in the near term, and are settling in at prices and volumes that suit the needs of voluntary and compliance markets. As such, they slot in nicely to a portfolio as a fourth ‘pillar’ alongside traditional avoidance offsets, nature based credits, and durable carbon removal.

My take:

• • Super pollutant emissions represent a clear and actionable, though overlooked, focus area in climate.
  • Action to reduce methane emissions in particular can lead to significant climate impact in short order.
  • Several solution pathways are in place already with more under development.
  • Carbon credit markets are expanding rapidly for these emission reducing or destroying activities.

What do you think?

Jason Grillo is the Principal of Earthlight Enterprises marketing consultancy, Co-Founded AirMiners, and is a voluntary contributor to CDR.FYI. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer or associated organization.

¹Washington State March 2025 auction settled at $50 per allowance, California + Quebec combined markets auction in February 2025 settled at $29.27 USD.

²65 EUR/ton for the EU ETS, $47 USD/ton for UK ETS. Source: https://carboncredits.com/carbon-prices-today/ accessed April 19, 2025

³Thanks to ClimateWells for posting this data on their blog and their CEO Reid Calhoon for placing Q1 charts on LinkedIn. 

⁴Sylvera, The State of Carbon Credits 2024

⁵Posted on LinkedIn by ClimateWells CEO, Reid Calhoon, here

Getting to a mainstream market is possible in carbon removal; here’s some thoughts on how

“A bit of advice given to a young Native American at the time of his initiation: 

‘As you go the way of life, you will see a great chasm. 

Jump. 

It is not as wide as you think.”

― Joseph Campbell

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Welcome back! I’m writing this as a companion post to Part 1 where I proposed that CDR is at a ‘chasm’ point between an early market and a more mainstream class of customer. In this post (Part 2 of 2), I will offer some suggestions on how a carbon removal project developer might make that transition. Once again, I’ll adapt key principles from Geoffrey Moore’s Crossing the Chasm to durable carbon removal, this time talking about specific actions which early stage companies can take that might yield success.

As a reminder, here is a graphic of Moore’s technology adoption lifecycle curve:

And a shorthand reminder of the three segments most in play for CDR now: 

1. 1. 1. Enthusiasts (AKA Innovators) who are most interested in technology for technology’s sake.
      2. Visionary customers who want to be the first to implement new solutions as the start of revolutionizing the way businesses operate.
      3. Pragmatists who are Mainstream customers less interested in being the first to lead, desiring lower risk products at higher volume, with more sensitivity on price.

Because these Mainstream customers are qualitatively quite different in their needs from Early Adopters, succeeding with that group is akin to bridging a marketing Chasm.

Achieving product adoption in this third, Pragmatist group requires a different set of tools compared to the first two. To that end, based on my reading of Moore’s principles here are some strategies that I have adapted to durable CDR.

A: Target a segment of customers, not a whole market. 

Moore talks a bit about finding a market larger enough to be A) financially meaningful but B) small enough that a company can achieve at least 50% of market share among those customers. Pragmatist customers are seeking ‘the market leader’ no matter what that market might be – this group might be geographically defined, or psychographically defined, but the critical point is to define a small enough segment that you can dominate while still making meaningful financial gains. 

Many companies fail by trying to define their market too broadly: “We’ll target all of forestry with our innovative CDR solution!” is, for a startup, an impossible task. Venture investors do like a 10-year ‘hockey stick’ growth curve showing how the company (and its investors) could be zillionaires…in 2037; but they also really like a startup who shows how the initial, well-defined, smaller market segment will get the company through the next 2-3 years. Defining and dominating a tiny segment of the market and getting your business started among mainstream customers in that group is a way to win.

Examples: Carbicrete is manufacturing cast concrete pieces using CO2 as a feedstock. It would be one thing if they were to target “all concrete producers” – a daunting task. Rather, they fixate on a specific starting point that would likely yield success, and then build from that initial group of customers in which the solution you provide is the dominant one.  Example 2: Goal300 is targeting Christmas Tree farms in the Pacific Northwest as customers who would apply enhanced rock weathering to soils. It’s a specific type of customer, who has a customized set of needs, but large enough to get the business started to bridge later to a more mainstream market.

Generating reference customers through word of mouth is the goal here. One mainstream Pragmatist customer will talk to other Pragmatist customers about their product experience: as they are more risk averse relative to Visionary customers, they value the assurance of having another person’s opinion on a product before buying it. Cast concrete purchasers who speak to other cast concrete purchasers. Christmas Tree farmers who talk to other Christmas Tree farmers in a particular region. 

Talk to a variety of customers in different segments when thinking through which one to target. And also listen for the needs of various internal stakeholders within that customer company (more on this coming up in Part ‘B’ below!).

A great way for such customer discovery is to attend the industry conference for that particular customer segment! Learn who they talk to, and how they relate to each other, and what their common needs are. Because insofar as a market exists, it moves at the speed of word of mouth from reference customer to reference customer, building momentum for success among the first mainstream segment to target, so that the product can get adopted by other segments after establishing itself as the market leader in that initial ‘beachhead’ segment.

B: Figure out how to satisfy three crucial stakeholder roles in your target customer. 

Those influencers within the customer entity, per Moore, are:

1. 1. 1. The end-user: who uses the product you sell
      2. The technical buyer: who evaluates the qualifications of your product
      3. The economic buyer: who provides the financial resource to pay for the product

To illustrate, I’ll use the best non-climate example from my professional experience in pharmaceuticals:

• • • The end-user is the patient, who uses the product to combat a disease
    • The technical buyer would be the physician prescribing the pharmaceutical, based on their expert evaluation of the attributes of the product
    • The economic buyer is the private or government insurance company – a ‘Payer’ in pharma industry terms – or in some cases the patient themself who pays for the pharmaceutical intervention.

For durable CDR companies in a voluntary carbon market, the end user could be the corporate sustainability professional who uses the carbon removal credit to report on the Net Zero goal achieved through offsetting (or insetting). The carbon removal purchase itself serves a useful purpose to that individual.

The technical evaluator could be an outside consultancy or internal group of technical people hired for the purpose of understanding the project(s) in play. Unlike pharmaceuticals, there’s no state-mandated licensure for prescribing CDR tonnage! A select few companies have large numbers of in-house technical staff who evaluate CDR projects as they come in. Most mainstream companies will not have these resources, and as such would rely on an intermediary, such as a marketplace, broker, or consultancy to provide that technical diligence. 

The economic buyer is typically the Finance department, where price for tonnage would be paramount relative to other projects that are recommended by the sustainability department – and external or internal evaluation teams. As I wrote previously, one way to convince a CFO is to demonstrate tangible economic value by pursuing the carbon removal project. Bundling the CDR credit through insetting with a physical product, or otherwise selling the physical product of carbon removing activity alongside a separate unbundled offset represents a revenue-generating prospect for the CDR company who can sell a physical product while removing excess atmospheric greenhouse gas. Note that there are many different types of projects, and not just offset projects, that the end-users and technical buyers would recommend. So valorizing the ROI is a pathway to be persuasive to the economic buyer audience, per CDR.FYI’s 2025 Market Survey.¹

C. Market the whole product, not just the core product

An early stage Visionary buyer typically has performance expectations for the core product itself, and is willing to forego the supportive services that would make the purchase easier to handle. Pragmatist customers’ view is the opposite: they need surrounding product or service offerings that make the purchase easy to integrate into their existing business. 

For a Pragmatic class of CDR customers this could mean: insurance services, credit ratings, or even marketing materials that enable the sustainability office to feature the project in an ESG report. 

In particular, one big concern among Pragmatist customers is that the CDR supplier will go out of business, leaving them with an unsupported amount of CDR tons that they would have to answer questions about. Demonstrating post-sale customer support and contingencies would address this risk. 

Selling a ‘whole product’ could also mean working with a broker or other intermediary who would package the durable CDR credit with other credit types, such as lower priced nature-based carbon removal, avoidance/REDD+/Renewable Energy offsets, or industrial waste gas destruction credits. That would lower the average price per ton of the entire ‘market basket’ while providing different qualities of offset to the buyer. Rather than competing for a vanishingly small attention span for CDR, the offset would be considered alongside other types of projects on offer for a Sustainability office.

So how can a CDR project developer start to make the leap?

While these three tactical suggestions could be useful for durable CDR companies to make inroads into a market of Pragmatists, the greater issue could be making the internal leap of faith required to adjust to these market forces.

The thinking surrounding pursuit of an early stage customer – heaving a technically less polished, core product over a RFP Visionary transom and, well, praying – is not a strategy that would work to gain market traction among Pragmatists. Adjusting one’s own approach to understand the mindset of the mainstream customer, respect their needs and motivations, and meeting them where they are at will be the way to success. That’s why identifying that one small niche of a Pragmatist market is so important.

Oftentimes in other industries this has meant that the visionary startup founder does not have the skills or interest to speak on equal terms to an otherwise risk-averse customer. Visionaries are great at speaking with other visionaries; pragmatists with pragmatists. So it follows that bringing in new talent to meet broader mainstream needs might have the uncomfortable task of replacing a founder for the sake of company survival.

Getting across a Chasm is not an easy task. But, a necessary one in order for an early stage company to achieve its potential. In carbon removal the results can be worldchanging, provided the durable CDR company has the right tools and, more importantly, internal mindset to adjust and make the leap. It’s a challenge to be sure but one that is possible to achieve.

Jason Grillo is the Principal of Earthlight Enterprises marketing consultancy, Co-Founded AirMiners, and is a voluntary contributor to CDR.FYI. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer or associated organization.

¹Disclosure: I was a voluntary contributor to help that effort.

“No man is an island, entire of itself; every man is a piece of the continent, a part of the main.” – John Donne

Hey everyone! It’s January and that means year-end data is now available – and lots of it! – from a wide variety of sources covering the previous 12 months of activity in carbon credit markets.  My goal in writing this post is to unearth some insights from the broader voluntary carbon market; my hope is for folks in carbon removal to consider how a broader landscape may affect their activities to durably remove CO2 from the atmosphere. To take John Donne’s quote a step further: CDR credits are not islands entire to themselves, but a piece of a broader carbon credits ‘continent’, a part of the main VCM. 

In that light, I’m going to totally nerd out analyze some year end data from 2024 about price and quality expectations and in the end suggest some integration strategies. I’ll use a market segmentation (alluded to by Robert Hoglund here) of three sub-markets of the VCM: traditional avoidance credits, Nature-Based removals, and novel/durable CDR. 

Traditional avoidance/renewables credits

Quality, quality, quality. For the bulk of credits retired in the VCM, one trend in 2024 is a flight to quality. Several sources noted this, in particular market analytics company MSCI, as measured by an increased the percentage of retired credits achieving MSCI’s rating of “A” or “AA” (6% to 12%), and significant decrease of retired credits rated “CCC” (29% to 15%), comparing Q2 2024 values to Q2 2022. Increased scrutiny as required by new regulations such as CSRD or California’s climate disclosure law may be a reason for this, in addition to media reports critical of carbon credits in this segment or lawsuits for greenwashing against major companies. 

As the market for carbon credits of any variety matures, the type of rating employed by MSCI and many others may allow a shorthand for sustainability professionals to evaluate projects and price accordingly by rating. If this trend to favor quality continues, then projects that remove CO2 from the atmosphere would get more attention – assuming CDR projects are able to obtain such high ratings.

Volume is flat. Purchasers’ flight to quality is affecting VCM volume as well: credits retired is plateauing in recent years (by some accounts slightly declining) at around 170 to 175 million tons retired annually, per Sylvera’s 2024 Year-end report.  That said, the market is demonstrating much greater volume relative to 2018 to 2020 totals.

Increased demand for high quality has led to more Nature Based Solution (NBS) carbon removal project tonnage retirements, totaling 16% (blue + purple in the Sylvera chart): Afforestation/Reforestation/Revegetation (ARR),  Improved Forest Management (IFM), or Soil/Agricultural removal credits. The REDD and ‘Avoidance’ (i.e. Renewable Energy Credit) categories listed here are declining in volume, from 73% in 2021 to 58% in 2024 in a market of roughly the same size year-over-year. Carbon removal developers please note that for all the increases in volume in durable CDR, the entire market (for now) is only a sliver of the picture: 200k credits retired out of ~175 million in 2024.

Purchasers are retiring credits. Despite the quality concerns and headwinds, the number of buyers who are retiring credits continues to grow. By this data, the number of organizations retiring credits has more than tripled since 2020.

So to recap the traditional market segment – and overall picture – there are:

1) more buyers than ever in global offset markets, who are 

2) retiring just about the same amount of credits, 

3) of higher quality, with 

4) a greater percentage of carbon removal, including NBS, in recent years.

Nature Based Solutions

The flight to quality led to Nature-Based carbon removal credits getting to 1 of 6 retirements in 2024, compared to 1 in 10 in 2020. Registries for NBS credits adhering to ICVCM Core Carbon Principles, and CORSIA standards are a key factor driving this trend. That said, project issuances of NBS removal credits declined while NBS retirements remained steady in 2024 relative to previous years, with NBS offtake credit price at just over $20/ton per Allied Offsets 2024 VCM report. 

So – there’s a possibility of an NBS crunch if this trend and preference for quality continues in 2025. The question is whether corporate buyers will continue to nature based removals or instead select durable CDR as a credit of choice going forward. And one factor influencing a more mainstream credit purchaser is price.

Durable CDR

Pricing will be a critical factor, with estimates of potential purchaser preference outlined in the CDR.FYI and OPIS price estimate survey, organized by CDR method, for both 2025 and predicted 2030 prices. (Disclosure: This week I joined the CDR.FYI team of collaborating volunteers)

One interesting cut on the data, noted in the report, is how ‘veteran’ carbon removal buyers would have different price expectations from prospective buyers of CDR credits. 

Specifically looking at their price expectations for “Good Value”, the team noticed that previous purchasers of durable CDR credits were willing to pay (usually) higher prices than those respondents who had not yet purchased credits. 

Given these price sensitivities for a new prospective purchaser, any carbon removal method will not be able to compete strictly on price, especially if sustainability offices face budgeting issues in future years. Instead, encouraging a portfolio approach that combines NBS removal with a small amount of durable CDR might be a way to establish a new market. Then, as the novice durable CDR purchaser gets more familiar, the price expectations would rise and possibly purchase a greater volume of durable CDR credits. 

In 2025, SBTi guidance on how to fit durable carbon removal offsets into a Net Zero pathway could improve the prospects for all durable carbon removal credits. That said, if credit customers believe they can get enough of the durability, additionality, and verifiability from Nature based solutions, then that would suggest a world where lower priced carbon removal credits in 2030 are favored.

Conclusions

Durable carbon removal is still in its early stages as an option in carbon credit markets. As the larger voluntary carbon market moves to a more quality-focused stage of development, registries, standards, and ratings will play an increasing role as purchasers evaluate projects that are ready to provide credits. Rather than competing strictly against other classes of carbon credits, durable carbon removal project developers who are keen to find purchasers would do well to consider how their credits integrate with trends shaping the sub-markets for Nature Based Solutions and traditional offsets. For as those markets shift, durable CDR could find opportunity for future credit purchasing to finance industry growth.

Jason Grillo Co-Founded AirMiners and is a voluntary contributor to CDR.FYI. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer or associated organization.

How reframing carbon removal can be a throughline to a prosperous industry

“Knowing others is intelligence; knowing yourself is true wisdom” – Lao Tzu

Writing this in December as indeed winter is upon us, I’ve noticed a different kind of winter that may be coming to carbon removal: a general decline of interest in sustainability and climate among corporations who would be voluntary carbon market purchasers. In this post, I’ll explore the nature of this problem, recap how corporate rollback has happened before, and offer some potential paths forward. 

First, some context. While the last 5 weeks since the US election has seen climate scrambling to understand what the implications of Donald Trump’s victory might mean for policy, evidence has been piling up for approximately 18 months prior to that.  ESG hiring growth is down after a crescendo from 2019-2021, and very recently large corporations such as Coca Cola and Goldman Sachs are changing course on how to deliver on sustainability targets.

Declining corporate sustainability budgets may constrict sales opportunities among more mainstream voluntary carbon market purchasers.Indeed, it appears that while targets are being set, corporations are falling short of resourcing efforts to meet those lofty goals. Additional macroeconomic changes – real or projected – such as inflation, high tariffs, or the end of Zero Interest Rate Policy may cause customers and investors to withdraw support. 

For a case study in how a generation of startups might grapple with this, let’s consider lessons from “Cleantech 1.0” from approximately the mid-2000s to early 2010s. In that time period, a wave of startups created a myriad of carbon-free energy solutions – for example, solar, wind, EVs, batteries, or energy efficiency software. A scarcity of patient capital, low-priced competition from abroad, particularly China, and inconsistent government tax credit support consistently challenged companies working on solutions in these sectors.

The solar, wind, and battery startups were clear: they were not in the “alternative energy” business, they were in the energy business with the all-important Levelized Cost of Electricity (LCOE) as their benchmark. Demand for clean energy persisted and grew among energy customers, particularly due to Germany’s Feed-In-Tariff policy for solar, wind and geothermal. Support by Germany’s leadership, and experiential learning by deploying led to solar cost declines outpacing their forecasts by decades:

This enabled renewable energy companies in the early 2010s to survive – and thrive –  during the ‘long winter’ for climate investment between 2011 and 2019.

Two more examples from outside climate on the practice of business re-definition, one a failure, one a success:

1. 1. 1. Railroads. In the early years of the twentieth century, railroads were a significant player in the United States’ and world economy, moving huge volumes of goods and passengers. Today railroads occupy a fraction of the economy since automobiles, trucks, and air transportation of goods and people appeared on the scene, taking away significant market share such that many railroads had to declare bankruptcy. The railroads’ failure: defining themselves too narrowly as railroad companies, not more broadly as transportation companies (For more on this see Theodore Levitt, “Marketing Myopia”).
      2. Professional wrestling. Yes, I watched my fair share of the spectacle on TV during my (awkward) junior high school years. What I didn’t realize then was that I was witnessing a redefinition of a business that decades later has thrived and grown. How? A philosophical shift in how they defined their business: specifically, the owner of the then-World Wrestling Federation quipped once that they are in the “sports entertainment” business rather than the wrestling business – that is, oriented to the customer rather than the process of wrestling itself. Nearly forty years later, World Wrestling Entertainment had revenue of over $1.3 billion.

To be clear, I am NOT suggesting that CDR startups become ‘climate entertainment’ companies! However I believe that companies who are developing solutions intended primarily to help the climate struggle to define their business in a broader industrial context to that frame them well for success with future customers in the event of a climate tech ‘winter’.

In short, consider the thought that ‘climate’ is not an industry: it’s an umbrella term for technology and business innovations spanning a wide variety of industrial sectors, that happen to yield low or negative emissions. 

For many carbon removal project developers, defining along industrial lines means redefining what business they are in, and figuring out who their customer is, so they can craft a solution in a time that may be challenging in the short term. Doing so could lead to solutions that are able to penetrate existing industries with better/faster/cheaper products and improve climate health as a secondary – and still very important – benefit. 

Finding a customer who can utilize the physical product or by-product of carbon removal would integrate carbon removal processes into a larger economy beyond credit sales alone. Deploying the technology for an end-use would generate customer revenue and also lead to cost improvements with experience, per Wright’s Law. 

Internally CDR businesses should talk about themselves in terms beyond what they can do for climate. This can happen in founders meetings, with investors, with marketing partners and others who they deal with to bring their solutions to market. And in doing so develop solutions that, for example:

…produce a soil amendment or improve soil health =  “we’re in the business of helping farmers deliver high quality food cheaply to consumers”

…generate energy in rural areas = “generating heat or electricity to places that may suffer energy scarcity”

…combine with building materials = “make it easier for homes or roadways to be built”

…use agricultural waste as a feedstock “ease the burden of disposal owners of agricultural land”

…create gases for fuel or specialty chemicals “enabling the new energy and materials economy”

Carbon removal business leaders can see beyond a purely technical definition of their product, retaining personal motivations to do well for the climate while seeking commercial markets that may not have climate as top-of-mind. Key question: In the possible absence of policy interventions or without carbon credits, how would a bottom-line motivated customer buy a solution to help their own business needs? 

What about carbon removal crediting? Offset crediting is still an option if there is sufficient interest among voluntary purchasers – this is still a relevant pathway to viability. That said, companies could decrease unit cost curves by pursuing insetting to deploy more projects, and in doing so lower their internal costs to enable creating offset credits for sale in the voluntary market.

Ultimately, compliance markets will be where carbon removal will see its greatest impact on climate, offering a dynamic quite different from motivations of voluntary carbon market customers. Redefining the business along a utilization pathway is a way of seeing a generation of carbon removal startups through to that time. Figuring out the fundamental business that a CDR company is pursuing could safeguard against market uncertainties as corporate sustainability interest waxes and wanes. 

Jason Grillo is a Co-Founder of AirMiners. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer.

Paths to focus on for carbon removal policy in the wake of a US election

“When we are no longer able to change a situation, we are challenged to change ourselves” – Viktor Frankl

I wrote at the start of this Substack that it would be a series about carbon removal covering insights about carbon markets, workforce and policy. Today in the wake of the US election outcome, I am going to take on that third topic – policy – with some quick takes on what the US election in November 2024 might mean for CDR Federal and State policy efforts. As much as I’ll write about policy in this post, I can’t avoid the politics of the moment. My instinct is that while US Federal climate policy per se will likely take a step back or two (or three…) in the incoming administration, a reframing of policies that advance carbon removal specifically as an economic driver would be a path forward.

First, some first impressions of what’s possible at the Federal level in the United States. I’ll keep this as specific as I can to carbon removal since there are many, many platforms better equipped than I am to speak to broader policy impacts.

The clearest risk to support for carbon removal comes in how the Trump administration might restructure the Department of Energy, specifically the office of Fossil Energy and Carbon Management (FECM) which has been administering the DAC Hubs and other carbon removal programs. Notably, the DAC Hubs in particular were authorized and funded by the Bipartisan Infrastructure Law (BIL), rather than the Inflation Reduction Act (IRA) which passed on a partisan vote. So it is possible that the bipartisan nature of the BIL funding would insulate programs it supports from being scaled down. The tax provisions of the IRA – in particular 45Q – might be subject to repeal, under a scenario of unified Republican Presidency, House, and Senate.

Beyond the Direct Air Capture programs at FECM efforts the department has recently taken action on marine carbon removal (mCDR), enhanced rock weathering (ERW), and biochar might be subject to change as well. Look additionally to new appointments at USDA – which administers US Forest Service and Natural Resources Conservation Service, as well as Commerce – NOAA and National Institutes for Standards and Technology – which impact these methods of CDR as well.

For Congressional action, the upcoming Congress at the time of this writing (November 11th 2024), appears to have a thin Republican majority in the House, while Republicans will take control of the Senate. While a comprehensive climate bill (‘IRA2’) is off the table, other policy avenues are open which would require bipartisan support. For instance, the 2018 Farm Bill will be up for renewal, with US Congressman Don Bacon (R-Nebraska) having supported bipartisan climate friendly agriculture legislation in the past likely playing a key role. Biochar, ERW, and soil carbon sequestration advocates would take note. 

For DAC advocates, permitting and the intersection of DAC and energy policy would be areas to watch. Any efforts to reform carbon dioxide pipeline permitting (more on this below) would be a start. Also, the re-election of Michelle Steel (R-California), who has supported bipartisan geothermal energy legislation, suggests that advancing projects using a geothermal Fervo Energy’s new project will harness the earth’s heat to capture…energy source for DAC could have support.

Since Federal CDR policy may have to be meted out piecemeal, carbon removal policy advocates could then look to state governments as areas to advance policy ideas. I will recap some of the election results here, outlining particular actions to take in specific cases.

Washington State: Ballot Initiative 2117 failed resoundingly, with 62% voting “No”, thus preserving the state’s Cap-and-invest system for selling emissions allowances and reinvesting the proceeds into the State’s economy. A wide variety of organizations contributed to the “No on 2117” campaign, including corporations such as Amazon, Microsoft, REI, and British Petroleum (!) aligned with several unions and climate affiliated civic organizations. Key to the messaging was the economic benefit to the state in retaining the cap-and-invest system; additionally, there is evidence that the fiscal impact of the state losing $3.8 billion in revenue from 2025 to 2029 was persuasive to voters.

What it means: Revenues from the cap-and-invest system will continue apace to flow to the state’s accounts, which are set up to collect and disburse auction proceeds to advance the clean energy economy. For Carbon removal, this includes state grants that CDR companies are eligible for under the Clean Energy Fund.

Going forward, Washington can now pursue linkage in its Cap-and-invest system with California and Quebec’s cap-and-trade systems, as directed by the state legislature in the spring of 2024. How carbon removal credits integrate into this remains to be seen, however. First steps include the Department of Ecology writing a study – slated for completion and release in June 2025 – covering “the extent to which carbon dioxide removal is needed to meet Washington’s emissions reduction targets”.

South Dakota: Carbon removal pipeline enabling Referendum 21 failed, with 60% of South Dakota voters rejecting a measure that would have made constructing carbon dioxide pipelines easier in the state. Opponents had argued that passing the referendum would have canceled local governance and removed protections for landowners. 

What it means: Envisioned as a CO2 transportation pipeline for ethanol-based CO2 capture, DAC developers should take heed to consider local community concerns surrounding possible similar CO2 pipeline efforts.

California: California voters approved Proposition 4: a $10B state bond to be distributed to counties, local governments, and Native American tribes to support a wide variety of projects,including clean water security, reducing risk of flood and wildfires, and also improving marine ecosystem regeneration in aid of climate resilience.

CDR angle: With $1.5B slated for wildfire risk reduction, including forest thinning, California biochar producers could see a greater abundance of feedstock for pyrolyzing operations. It might also improve offtake for the biochar itself, which has uses for wastewater remediation. For marine CDR companies, $890M of the $10B is marked for coastal projects; a project that improves water quality and promotes coastal resilience that also removes atmospheric carbon dioxide might benefit. 

Louisiana: 73% of voters approved a constitutional amendment that revenue from state renewable energy projects, such as wind power, can be diverted to coastal resilience measures

Implication: Similar to California, to the degree that marine CDR projects – particularly in a coastal location – can add to the state’s ability to buffet against hurricanes, floods, and sea level rise, this would be a benefit.

Massachusetts: This is not directly election related, but noting that the state legislature will consider an Economic Development package in a special session, which contains many climate and clean energy provisions which would be important for CDR. The House and Senate had each separately passed their own bill and to agree on a common bill to send to Governor Healy for signature before the current session ends on December 31st. 

So what kind of pathways are best for policies to support carbon removal?

In my view, reframing the discussion of carbon removal policy in the United States as an economic development measure and not a climate measure could lead the way to successful growth of the industry.

Why? For one thing there is motivation to do something about climate. Voters – and surprisingly a high percentage (~40%) of Trump voters – at least somewhat agree that climate change is a problem:

But – even among some Harris supporters (~35%) – American voters are not willing to pay for measures to counteract its effects:

Carbon removal projects that show an economic benefit beyond the action of removing excess atmospheric greenhouse gas will be a winner in the policy environment that will likely emerge from the 2024 US election season. The ability to show tangible benefits to people in communities, in the form of providing valuable products or services, or well paying careers – not just project-based jobs – for people who are struggling in an economy that they (fairly or unfairly) perceive to be still ridden with inflation or unemployment. And that might affect how C-suite and corporate sustainability managers perceive the need for climate action, and by extension carbon removal, as investor Susan Su mentions here. The perception of the state of the US economy among Americans has diverged from how the actual economy is performing since the COVID pandemic. This suggests that policies that underscore the economic benefit to voters would find a favorable reception among government leaders at any level.

While there may be limited pathways forward at the Federal level, State and local efforts at CDR policy offer a potentially meaningful way to support the industry. Even if policies are not specifically titled ‘carbon removal’, policymakers can include CDR alongside general economic development efforts – and make a difference in their state, county, or municipality. Respecting the interests of those communities – particularly at a local level – is paramount, as evidenced by the South Dakota measure above. Project developers who are in touch with the communities where they operate can consider how to meet the needs of those where they operate. And that’s important: especially in this environment, building political support starts at the local level. 

This can move the conversation away from carbon removal being perceived as an expense imposed from outsiders, and rather as a source of revenue generating activities integrated into the economy and society, and coincidentally happen to draw excess greenhouse gasses out of the atmosphere. 

Venture capitalist Vinod Khosla wrote over a decade ago that for ‘cleantech’ to succeed it has to be perceived as ‘maintech’ – that it integrates within the industrial base as a natural progression of technology in the minds of customers. Reframing the conversation about carbon removal from a climate technology dependent on specific climate policy to a ‘maintech’ solution that integrates with economic policy is a step forward in an otherwise daunting national political environment for climate in the United States.

Jason Grillo is a Co-Founder of AirMiners. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer.

Carbon removal prices are going to reflect value to the customer rather than cost of production. Here’s how.

 

“The purpose of a business is to create a customer … The customer never buys a product. By definition the customer buys the satisfaction of a want. He buys value. … But price is only part of value. There is a whole range of quality considerations which are not expressed in price” 

– Peter Drucker, Management: Tasks, Responsibilities, Practices

 

One of the questions I hear (frequently!) is “what’s a good price per ton for carbon removal?” Or a variant “What price is carbon removal converging on?” While it sounds like a shrewd question to ask, this assumes that all carbon removal tons are equal – that this is a commoditized market in 2024. Nothing could be further from the case. 

My argument in this post is not only that the attributes of projects and methods of carbon removal are highly variable, but that different customer segments perceive different benefits from carbon removal credits. I’m going to suggest a pricing analysis tool below which addresses these customer segment needs from a couple different angles – stay tuned! 

But before addressing these customer segments, let’s level-set with some terminology points.

 

First, Cost vs Price: These are different terms. A ‘Cost’ usually refers to the internal expenses needed for a supplier of a good or service to produce a unit for sale – in this case a voluntary market credit representing one ton of CO2 removed. (FOOTNOTE: Not talking about methane or nitrous oxide equivalents). These take into account labor, cost of the physical resources for production, energy, transportation, and cost of capital.

A ‘Price’ refers to what a producer of a good or service charges to a customer at exchange. The difference between Price charged to the customer, and Cost to the supplier is the Profit margin.

To illustrate, here’s a chart from a conference presentation I recently gave:

 

Second, Price vs Value: What a supplier charges to a customer for one carbon removal ton is NOT the sum total of the entire value that the customer derives from the purchase. The buyer of a carbon removal ton realizes a value beyond what the market price is that the seller charged for that ton – otherwise they would not have purchased it to begin with.

State of pricing today: A wide variety of value propositions to a customer lead to a wide variation of prices, especially since customers are in 2024 starting to figure out what the value to their organization is of the durable CDR credits purchased. 

Indeed, this is exactly what we are seeing in the 2023 State of CDR report (2nd Ed.) prices based on 2023 market conditions:

What price is the “right” price? They all are! Customers are not irrational, even though there is a high degree of variability in these CDR prices. For example, a customer believed that for Direct Ocean Capture CDR $1,402 per ton is a valuable ton to buy: they wanted to see the exchange happen. Another customer believed that for biochar a $131 ton of CDR is a valuable ton to buy. For each of these customers the price was justified by what they used the durable CDR ton to achieve.

Different customers had different rationales underlying their purchasing decision, value propositions, and thus different price points. The reason for purchasing could have been to neutralize Scope 1, 2, or Scope 3 emissions directly, could have been for branding purposes of being perceived as good stewards of the earth, or perhaps to lock in relationships with suppliers for future credits, or simply to signal support for early stage innovation. SBTi’s Beyond Value Chain Mitigation work offers examples of these reasons. 

 

My takeaway: the rationale for purchasing credits drives the perception of value, and thus the price a supplier is able to charge to cover their costs of supporting their business.

Evidence: These self-reported motivational customer segments are evident in the NASDAQ Global Net Zero Pulse report chart below (Sept 2024):

Granted these are for carbon credit markets writ large – i.e. traditional offsets and less durable nature-based solutions, not only for durable carbon removal – but I would offer that the structure stands, regardless of the type of carbon credit, be it avoidance, less durable CDR (<100 years), or higher durability CDR (>100 years). There is no monolithic rationale for buying durable carbon removal today. When a potential buyer reports that “prices of credits are too high”, the lesson is not that buyers think “you should find a way to lower your costs”, rather “prices are too high for what you are offering to meet what the customer views as valuable now”. The options for a startup to take, therefore, are either:

A) figure out a way to improve the value of the durable CDR credit delivered to the type of customer you are trying to address or 

B) Find a different customer who will find what you are delivering to be valuable.

Which leaves carbon removal suppliers at a standstill: if all prices are valid, then what should I charge?

One answer lies in a powerful survey tool that may be helpful: a Van Westendorp model. This technique can yield an acceptable price range for a given set of potential customers.

The four very specific questions asked in Van Westendorp analysis are:

• • • At what price would you consider the product to be so inexpensive that you would feel the quality couldn’t be very good?

• • • At what price would you consider the product to be priced so low that you would feel it’s a bargain?

• • • At what price would you say the product is starting to get expensive, but you still might consider it?

• • • At what price would you consider the product to be so expensive that you would not consider buying it?

The result, a chart that looks something like this example, with one line tracking each of the four questions, price points on the X-axis, and % of respondents who accept the price for that line description on the Y-axis (e.g. 80% of respondents consider $20 ‘Acceptably cheap’):

And there are several ways of segmenting the data, assuming a large enough set of respondents. For instance, a survey team could segment by industry and see the different ranges represented there. Or ask intake questions (like in the NASDAQ survey example above) to divide up the respondent pool by motivations. Or conduct two sets of questions and change the delivery to be in 2025 vs 2030.

Additionally, you can ask these sets of questions twice, once for lower durability carbon removal, and another time for high durability carbon removal. Charts like the one above would have different price ranges for different purchase types. 

This would yield price ranges that offer a quantitative look at how much the value that a customer feels derives into a specific price that a supplier would charge. Then, suppliers would be able to focus on cost targets to become profitable and support their growth – and ability to satisfy the wants of new customers for their products.

The move from cost-based pricing to value-based pricing for CDR credits is just in its infancy, as many early stage technologies are just now starting to move down the internal cost curve. As internal costs decline in future years, startups can drive value by discovering a price point in line with what the customer’s willingness to pay will be, rather than purely to break even on operational costs. Even in the current market, CDR credit supply companies can learn a wealth of knowledge about building a value proposition story that unlocks a customer through offering additional benefits or driving home the message about the quality of carbon removal credits. And in doing so build sustainable businesses that use voluntary carbon markets to drive impact for the customers they serve as well as for the climate.

What do you think? Let me know here

Jason Grillo is a Co-Founder of AirMiners. The opinions expressed in this writing are the author’s own and do not reflect the position of any employer.