When the World Resources Institute tasked American researcher Marx Trexler with overseeing the world’s first CO₂ offsetting project, carbon credits were seen as little more than a philanthropic exercise. Trexler didn’t anticipate that, decades later, they would become one of the most important and widely discussed tools for financing global climate mitigation. After all, it was 1988, and there was no voluntary market for carbon credits yet.
As reported in an interview with Carbon Brief, Trexler says that the programme run by the energy utility Applied Energy Services, which supported Guatemalan farmers in making their land more productive without deforesting other areas, seemed just an “interim measure”, before green policies became popular.
Today, however, the outlook has changed: in addition to carbon capture and storage projects and initiatives like REDD+ (Reducing Emissions from Deforestation and Forest Degradation in Developing Countries), which are sometimes controversial, carbon removal technologies are also playing a leading role in global climate policies, especially for hard-to-abate sectors. So much so that the IPCC, the UN body tasked with assessing the scientific evidence on climate change, considers them essential tools for achieving Net Zero targets and limiting global warming to 1.5°C.
“Achieving climate stability therefore depends not only on cutting new emissions but on removing existing ones – at scale and with durability,” said Noam Boussidan, who leads the First Movers Coalition initiative on behalf of the World Resources Institute (WRI). The First Movers Coalition is a global group of companies committed to accelerating the adoption of emerging climate technologies. Boussidan co-authored a report published by WRI last March that assesses the costs, scalability, and environmental risks of various technologies. It reveals that the global removal capacity is far from meeting the 2030 target of around one billion tonnes of CO₂.
Prospects and uncertainties of permanent storage technologies
Processes that absorb CO₂ from the atmosphere can be natural (reforestation, afforestation, and soil management), engineered, or hybrid. Examples of the latter include biochar production or enhanced rock weathering, which involves finely crushing silicate rocks and spreading them on agricultural land to accelerate the natural geological process of CO₂ absorption.
While the essentially natural processes known as carbon farming are not considered permanent, as the stored carbon can be released back into the atmosphere due to natural disasters, changes in land use, or shifts in agricultural practices, engineered processes ensure longer-term storage. Direct Air Capture (DAC), for example, captures carbon dioxide directly from the air using liquid solvents and solid sorbents. It’s a relatively new process that’s very energy-intensive and expensive (ranging from $500 to $1,200 per tonne of CO₂), and therefore heavily subsidised, if almost exclusively in the United States.
Bioenergy with Carbon Capture and Storage (BECCS), on the other hand, combines the energy use of biomass with carbon capture and storage. Put simply, plants absorb CO₂ as they grow, biomass (agricultural residues, wood pellets, energy crops) is burned or converted into biofuels, and the CO₂ released from the combustion process is captured, compressed, and stored geologically. If biomass doesn’t impact biodiversity or water supply, and doesn’t compete with the food chain, then net-negative emissions can be achieved sustainably. Until August 2024, the Danish energy company Ørsted was the world’s leading provider of these credits, following an agreement with Microsoft to remove 3.67 million tonnes of CO₂.
However, the most established technology globally, both in terms of volume and number of projects, is biochar. This is a charcoal produced by decomposing plants at high temperatures and in the absence of oxygen, which prevents the organic material from burning. When applied to soil, biochar stores carbon for decades and can improve water retention and fertility.
The natural weathering of silicate rocks is expected to outpace biochar by 2028, thanks to its advantages in terms of scalability, the abundance of natural resources, integration with agricultural supply chains, and fewer constraints on raw materials. It’s a technique that harnesses natural geochemical processes and is potentially scalable, but it relies on mining logistics and thorough environmental assessments.
The market response to carbon removals
According to data from the WRI paper, to date, only 32 companies out of nearly 6,000 with science-based targets (that is, just 0.5%) have purchased durable carbon removal credits. High prices, a lack of oversight, and inconsistent standards for verifying credit quality are among the biggest challenges, as they create mistrust among buyers and stifle investment.
In the United States, for example, there is no real market. “DAC is mainly supported by tax credits and public funding,” said Noah Deich, a member of the Kleinman Centre for Energy Policy at the University of Pennsylvania, during the 4th International Conference on Carbon Dioxide Removal in Milan. “But the path to scalability for carbon removal projects takes time – just look at how long it took for solar photovoltaics to become competitive.”
According to a new study presented at the conference, around 40,000 carbon credit transactions took place in the voluntary market between 2010 and 2024. Many of these transactions have funded reforestation and afforestation projects, while biochar is the most appealing technology in the “permanent removal” category.
The research team then set out to investigate how the financial markets reacted to each transaction carried out by listed companies. “For the approximately 2,000 purchase transactions, we observed that, on average, stocks react negatively,” Roberta Terranova, a scientist affiliated with the European Institute on Economics and the Environment and co-author of the study, explains to Renewable Matter. “Stock markets primarily favour nature-based credits, whereas technological removals are often more expensive and are perceived as less credible.” Market sentiment only improves if the listed company has a credible and ambitious decarbonisation strategy, backed by strong ESG scores.
Criticism from Carbon Market Watch
In February, the European Commission adopted the first set of certification methodologies under the Carbon Removals and Carbon Farming (CRCF) regulation. For now, the rules only cover three technologies – DAC, BECCS, and biochar – and will help make the market clearer and more reliable. The EU Buyers’ Club platform will coordinate transactions. According to European officials, it will help mobilise public and private capital, thereby boosting demand for credits.
However, Carbon Market Watch, an independent think-tank that meticulously analyses carbon credit market policies, urges caution. According to an analysis published in April 2026, countries are not considering the risks associated with these technologies as they should. “We analysed the climate strategies and underlying assessments of six European countries − Austria, Finland, France, Ireland, Italy, and Norway − and the European Commission,” the report states. “Across all reviewed jurisdictions, consistent patterns emerge: heavy reliance on industrial removals while critical feasibility assessments are missing, land sinks are treated as reliable assets but are not protected by consistent policies, and CDR plans are highly fragmented and lack transparency”. The risk is that governments (and many companies) are focusing too much on CO₂ removals, while the main effort should remain on decarbonisation.
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