🚀 📈 Can the carbon dioxide removal (#CDR) market grow to $135b by 2040?📈🚀

The Boston Consulting Group (BCG) has produced yet another amazing piece on CDR. This time they dive deep into the potential scale of the CDR market over the next decades and what what will drive that growth.

Here are my key takeaways:

💵 Price will determine scale: if CDR can get to $150/t, the market could grow to a staggering $135b by 2040. At $200/t it could scale to $45b, and at $250/t to $20b. Bottom line: the market is set to scale significantly. Just how much will depend on the cost reductions we can achieve.

⚖️ Demand outstrips supply: the study estimates demand of 40 million to 200 million tons of durable CDR by 2030. This demand, over 90% from the voluntary carbon market (VCM), will not be met by the forecasted supply of 15-32 million tons.

💎 Quality Matters: buyers are willing to pay a substantial premium for high-quality removals. Quality, including permanence, verifiability, and additionality, is the primary driver of these investments. By 2030, companies are ready to pay up to 3.5 times the standard price for top-quality removal credits.

💼 Growing share of CDR in portfolios: to meet global decarbonization goals, companies are adopting a portfolio approach. They're diversifying their CDR investments across multiple methods, aiming to allocate around 34% of their carbon credit portfolio to durable CDR in 2030, rising to approximately 48% by 2040, provided the pricing aligns with expectations.

🤝 Investor Opportunity: historical investments in durable CDR amounted to around $1.7 billion by 2023, which is less than 10% of investments in other climate technologies at a similar stage. Given the significant expected growth over the coming decade, this presents a unique business opportunity for investors.

There is so much more to unpack - so do dig into it. I was particularly surprised by the forecasted strength and scale of the voluntary carbon market (#VCM). While compliance markets and public procurement pick up pace over time, the vast majority of the forecasted growth (79-95%) in this report will come from the VCM.

A big shoutout to the authors Karan Mistry, PhD, Bahar Carroll (Alipour), Thomas Baker, Paulina Ponce de Leon Barido, Alex Dewar, and Amy Sims at BCG for this insightful study! Do these takeaways resonate? Do you think CDR can scale to these levels by 2040?

Read the full report here.

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