Guest post by: Daniel Pike, Principal, RMI’s CDR Initiative

Unless we do something about it, the world won’t be free of climate risk, even in the best-case scenarios of decarbonization: we’ve simply built up too much carbon in our atmosphere. To overcome decades of imbalance, we not only need to reduce current emissions, we need to embrace solutions that purify our atmosphere and help reset the clock.

This is where the field of carbon dioxide removal, or CDR, comes in. CDR is deliberate human activity that removes CO₂ from the atmosphere and durably stores it in ocean, land, or rock reservoirs, or in products. There are many ways to do CDR, and the field is constantly evolving; each pathway varies in its necessary feedstocks, cost, potential scale, maturity, and more. Climate models consistently show that limiting the planet’s warming to 1.5–2°C depends on scaling CDR to gigaton levels by mid-century, making it an urgent necessity.

But there’s a problem. While the CDR space has moved quickly, with researchers, entrepreneurs, and frontrunner buyers initiating research, forming companies, and backing projects, the field needs to move faster, and this speed requires additional demand.

Today’s demand signals are concentrated and uneven. So far, CDR demand has largely taken one form: voluntary corporate purchases of credits. These early buyers have been critical in getting the market off the ground, but this approach will not scale CDR to be a billion-ton industry on its own.

The good news is that the market is already starting to diversify. New demand pathways are emerging which complement, rather than replace this ongoing voluntary credit purchasing.

We see three promising trends already beginning to emerge.

1. Expanding policy-driven credit purchasing

Credit purchasing is the most established CDR demand signal, and it is evolving from voluntary to policy driven.

Governments are taking steps towards structuring the CDR credit market, through instruments like credit procurement programs designed to meet public-sector net-zero commitments and by integrating credits into emissions regulations like emissions trading systems. Corporations are moving from ad hoc purchasing to coordinated, standards-based purchasing.

In parallel, the market is grappling with how to account for wide differences among CDR projects in key dimensions of performance, such as removal speed, durability, measurement confidence, and price.

The takeaway for ESG leaders: CDR credit purchasing is evolving beyond individual corporate purchases and becoming more coordinated and policy driven. Now, we need to build the scaffolding to support these scaled purchasing regimes in a way that acknowledges and differentiates between credit types.

2. Differentiating CDR-embedded products and processes

Efforts to measure, regulate, and reduce the carbon intensity of products are intensifying, and, over time, credible product-level carbon accounting and standards could become an enabler of CDR demand.

Policies such as Buy Clean, product standards, and Carbon Border Adjustment Mechanisms are pushing industries to account for embodied emissions across supply chains. In this trend, buyers are not buying credits, they’re buying CDR-embedded products, which creates a demand pull from industrial actors that can integrate CDR into their products and processes. Product-level accounting, labeling, standards, and policies that define and incentivize the use of CDR can help unlock this emerging trend.

The takeaway for ESG leaders: Demand for CDR through product differentiation is still in early stages, but developing accounting frameworks, proving out CDR integration into products and processes, and expanding incentives for lower-emissions products can position this as a long-term lever for CDR demand.

3. Flipping the script on CDR demand

The third trend reverses the traditional monetization model. Instead of purchasing CDR directly, buyers purchase goods or services, with CDR generated as a co-product or by-product of those offerings.

Many examples are emerging where CDR is a co-product of activities that already have clear economic value, budgets, and buyers. CDR suppliers are already:

• using forest residues as a feedstock, leading to removals and wildfire risk mitigation
• disposing waste deep underground, leading to removals and waste management
• mineralizing mine tailings, leading to removals and environmental remediation
• spreading minerals on farmlands, leading to removals and soil pH management

The takeaway for ESG leaders: Flipping the script not only expands the universe of who is paying for CDR, it also strengthens project financing by layering revenue streams. The key now is to learn from and replicate this model across pathways, buyers, and geographies.

From Demand Creation to Market Building

The next phase of CDR demand will focus on building a broader, more resilient market. As demand expands beyond standalone voluntary credit purchases into coordinated buying programs, differentiated products, and integrated business models, the challenge is no longer simply creating demand—it is building the infrastructure, incentives, and financing mechanisms needed to scale it.

 

To learn more about these trends, including case studies for each, read RMI’s new piece “Not Just Voluntary Credits: Three CDR Demand Trends to Support and Scale.”