Carbon Removal Industry: From $13 Billion in 2023 to $16 Trillion

Carbon removal is emerging as a new gigaton-scale industry, with projections indicating that achieving net zero by 2050 will require a cumulative investment in CDR technologies ranging from $6 trillion to $16 trillion. However, current investment trajectories risk falling significantly short, with an estimated gap of $400 billion to $1.6 trillion needed by 2030 to align CDR capabilities with 2050 targets, underscoring the critical need for enhanced funding and innovation.

Source: McKinsey

The 2023 Year in Review analysis by indicates the carbon dioxide removal (CDR) industry is on course to achieve 3 gigatons per year in cumulative removals by 2040, with CAGR of deliveries at 140% from 2020 to 2023. The sector, driven by significant deals such as Microsoft's with Ørsted for BECCS and various agreements for DAC, shows a market trend of rapid growth, with carbon removal purchases increasing at a CAGR of ~500% from 2020 to 2023. However, despite the current trajectory suggesting the feasibility of meeting midcentury durable CDR targets, the industry must sustain exponential growth in both technology and buyer base to align with the IPCC's recommendation of 6-10 gigatonnes of CDR by the second half of the century, focusing on durable solutions to achieve net zero and limit global warming to 1.5°C.