Global emissions hit 41.2 billion tons of CO₂ in 2024—up nearly 1% from the previous year—and the trajectory remains troubling. Companies are increasingly aware that reducing emissions isn’t just an ethical imperative; it’s a financial one. Governments worldwide are implementing tougher climate regulations, translating directly into higher penalties, tighter lending standards, and steeper borrowing costs for companies dragging their feet. Financial markets have noticed, with credit spreads widening between firms making substantial climate progress and those lagging behind. Major institutional investors, particularly pension funds managing trillions of dollars, have already started offloading assets that lack credible climate strategies.
Against this backdrop, carbon removal credits—projects that actively pull carbon dioxide out of the atmosphere—are gaining momentum as a crucial part of corporate climate strategy. But let’s be clear: The carbon removal market today is messy, complicated, and still evolving. Here are five concrete ways companies can engage effectively and avoid the pitfalls:
1. Start by Cutting Emissions Where You Can
Carbon removals is not as a replacement for emissions reduction, but as an essential supplement. Companies first need to be brutally honest about where they can and can’t feasibly cut emissions. For instance, while electricity consumption is increasingly straightforward to decarbonize, sectors like aviation, agriculture, shipping, and heavy industry face technological and economic barriers. Clearly quantify your residual emissions—the ones genuinely outside your control or too costly to address immediately.
In these stubborn areas, using carbon credits makes sense—but it needs to be strategic. Adopt rigorous guidelines such as the Oxford Principles for Net Zero Aligned Carbon Offsetting, which recommend gradually shifting your offsets toward longer-lived, verifiable storage methods. This is how companies avoid accusations of greenwashing and ensure alignment with robust climate targets.
2. Understand the Trade-offs: Nature vs. Tech
Not all carbon removal solutions are created equal, and the differences can be stark:
- Nature-Based Solutions (NBS), such as reforestation or soil carbon sequestration, are affordable—typically costing below $50 per ton of CO₂ removed. They also deliver multiple benefits like biodiversity enhancement and water conservation. But here’s the catch: they’re inherently fragile. When wildfires burned over 10 million acres in Canada in 2023 alone, millions of tons of stored carbon went back into the atmosphere. The reality is that natural systems are unpredictable, making precise measurement and long-term verification challenging.
- Technology-Based Solutions, like Direct Air Capture (DAC), biochar, and enhanced mineralization, can cost up to $600 and $1,000 per ton. These approaches often depend heavily on renewable energy, raising questions about scalability. Yet they’re more robust, offering near-permanent carbon removal with clear, measurable tracking down to every molecule captured. The cost of solar and wind plummeted when they got to mass manufacturing and scale, and the same will be true about solutions like DAC.
As scrutiny intensifies, corporates are gradually shifting toward these higher-quality, technology-driven credits, balancing cost and risk to build credible climate strategies.
3. Develop Internal Expertise, or Partner Strategically
Carbon removal purchasing isn’t straightforward. Transactions typically involve complex, multi-year contracts rather than simple spot purchases, making expertise critical. Building strong internal procurement capabilities and rigorous due diligence frameworks can significantly de-risk these investments.
Yet not every company has the bandwidth or resources to develop deep internal expertise from scratch. This gap is increasingly filled by buyer coalitions like Frontier and NextGen, carbon advisory firms like Carbon Direct, and intermediaries like Rubicon Carbon, ClimeFi, and Cur8. These entities simplify complexity by aggregating demand, vetting projects, and helping corporates craft balanced carbon removal portfolios.
Even small initial purchases can yield valuable insights into market dynamics, setting a foundation for future, more substantial deals.
4. Act Early to Shape the Market—and Secure Supply
The companies that move earliest gain critical advantages. Taking a proactive stance not only positions your business as a climate leader but also signals to the broader industry the urgency and feasibility of ambitious climate action.
The carbon removal market is nascent but evolving rapidly. Early movers don’t just earn reputational credit—they shape emerging standards, influence regulatory environments, and guide industry norms. Early engagement also guarantees access to future supply, increasingly crucial as demand begins to outpace available high-quality carbon credits.
Corporate carbon removal purchases require considerable internal advocacy. Getting approval from finance departments or boards can take months, sometimes longer. If companies wait too long to start, they might find themselves scrambling for credits in a supply-constrained environment, missing strategic opportunities altogether.
5. Build Strong Relationships with Proven Suppliers
As the demand for carbon removals rises sharply, securing reliable supply will become increasingly challenging. Build strategic, long-term relationships with trusted carbon removal suppliers now will help secure long-term supply for tomorrow.
Today, the tech-based carbon removal space is crowded with startups promising breakthroughs. But a shakeout is inevitable, and only a handful will scale effectively and consistently deliver on promises. In the coming years, consolidation will favour providers that demonstrate clear financing, reliable project execution, and a proven ability to scale.
Companies should carefully select suppliers with robust funding, established track records in project delivery, and operations based in politically stable regions with supportive climate policies. Such strategic relationships minimize risks of project delays or defaults and ensure reliable access to high-quality carbon removal credits as the market matures.
Why Acting Now Matters
The Intergovernmental Panel on Climate Change (IPCC) is clear: by 2050, we need to remove roughly 10 billion tons of CO₂ from the atmosphere annually to meet global climate goals. This isn’t hypothetical—it’s foundational for any credible climate strategy. Companies that engage proactively with carbon removal position themselves ahead of regulatory curves, meet investor expectations, and secure competitive advantages in a rapidly transforming economy.
These steps aren’t just good for the planet—they’re essential for long-term corporate viability. By thoughtfully integrating carbon removals into their climate strategies today, businesses can ensure they’re leading, not lagging, in tomorrow’s economy.
Disclaimer: I work at carbon removals project developer, Deep Sky
