Surging demand from major technology firms for high-quality carbon removal credits is contributing to a supply shortage, Reuters reported on Tuesday, citing experts who say the tight market is encouraging new investments in the emerging sector.
Companies, including Microsoft and Google, have been heavy buyers over the past two years. As a result, durable carbon removal credits became nearly four times more expensive in 2024 than lower-priced credits tied to forest-preservation projects.
Carbon removal credits represent verified units of carbon dioxide taken out of the atmosphere and stored for a defined period. Buyers use these credits to offset emissions that cannot yet be eliminated from their operations.
According to market tracker CDR.fyi, Big Tech has collectively spent hundreds of millions of dollars since 2019 on durable removals, much of it through long-term offtake agreements. Around 10 billion dollars has been committed in both spot purchases and future contracts combined. Scientists view carbon removal as a necessary tool to help counter emissions from sectors that still rely on fossil fuels.
Projects such as biochar production or direct air capture are valued for offering more secure, long-term storage of carbon. Credits linked to restoring degraded land also command strong interest.