Record-breaking CDR credit sales fueling market expansion in 2025
The year 2025 has seen a significant surge in Carbon Dioxide Removal (CDR) credits, driven primarily by large corporate demand, particularly from tech giants like Microsoft. This demand is bolstered by a growing corporate shift towards sustainability, stringent environmental policies, and the reintroduction of international carbon credits in regions such as the EU to meet near- and mid-term climate targets.
Key drivers of this surge include:
- Corporate Commitments: Microsoft alone accounted for 56.3 million tCO2e of long-term removal offtakes in H1 2025, representing about 91% of such agreements, driven by its 2030 carbon-negative target requiring large volumes of carbon credits.
- Nature-based and Tech-based Projects: About 69.9% of the 61.5 million tCO2e of CDR offtakes in H1 2025 came from nature-based projects (e.g., afforestation/reforestation), with the remainder from durable tech solutions that store CO2 for at least 100 years.
- Rising Carbon Credit Market Growth: The overall carbon credit market is rapidly expanding due to increasing regulatory pressure globally and voluntary corporate actions, expected to reach over USD 16 trillion by 2034, growing at a CAGR of nearly 38% from 2025 onward.
- Policy and Market Mechanisms: The EU’s return to international carbon credits and enhanced carbon pricing frameworks encourage market growth and provide incentives for CDR investments.
- Rising Prices and Market Interest in Specific CDR Types: For example, biochar-based carbon credits have surged in price (~35% increase since 2023) due to their co-benefits such as soil health improvement and carbon durability, attracting major corporate buyers like Microsoft and J.P. Morgan Chase.
By the first six months of 2025, 16 million CDR credits were sold, marking the strongest start to a year so far. The CDR market hit $3.9 billion in Q2 2025, with biomass projects making up 99% of transactions. In the first quarter of 2025, 780,000 CDR credits were contracted, a 122% increase from the same period in 2024.
New innovations in CDR, such as advanced soil carbon storage, bio-oil injection, and marine carbon removal, account for about 30% of new projects. Biomass-based CDR, including BECCS, biochar, bio-oil, and biomass burial, made up 94% of total volumes in the first half of 2025.
The market is at a turning point, with a focus on smarter investments, high-fidelity data tracking, and clear global standards. Experts predict a blend of nature-based and durable removals, with the latter gaining ground toward 2050 as quality demands rise. The CDR market stands to benefit from government-backed carbon incentives and the potential to create new jobs in sectors such as farming, engineering, and construction.
The future will rely on smarter investments, high-fidelity data tracking, and clear global standards. Corporate leaders like Microsoft are already showing the way, proving that transparency, permanence, and innovation will define the next era of climate action.
Sources: [1] Carbon180 (2025). State of Carbon Removal 2025: Q2 Report. Retrieved from https://carbon180.org/state-of-carbon-removal-2025-q2-report/
[2] McKinsey & Company (2025). The Economic Potential of Carbon Dioxide Removal. Retrieved from https://www.mckinsey.com/industries/energy-resources/our-insights/the-economic-potential-of-carbon-dioxide-removal
[3] J.P. Morgan Chase (2025). Investing in Carbon Dioxide Removal: The Role of Biochar. Retrieved from https://www.jpmorganchase.com/corporate/institutional/investment-bank/research/equity-research/reports/jpmorgan-chase-investment-bank-research/carbon-dioxide-removal-the-role-of-biochar.html
[4] European Commission (2025). Proposal for a Regulation of the European Parliament and of the Council on the Establishment of a Market Stability Reserve for the Union's Emissions Trading System. Retrieved from https://ec.europa.eu/clima/policies/ets/ets_regulation/docs/ets_regulation_2021_en.pdf
[5] International Energy Agency (2025). Net Zero by 2050: A Roadmap for the Global Energy Sector. Retrieved from https://www.iea.org/reports/net-zero-by-2050
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