Voluntary carbon markets, while essential for early-stage carbon removal efforts, fall far short of the scale needed to meet global climate targets. The recent pause by Microsoft on purchasing carbon removal credits highlights a critical issue: corporate demand alone cannot propel the durable carbon removal industry to a multibillion-ton scale.
Experts agree that carbon dioxide removal (CDR) must play a central role in offsetting emissions for decades, with estimates of necessary removals reaching up to 10 billion metric tons annually. This demand could increase further with expanding energy needs driven by rapid technological growth, such as artificial intelligence. The challenge is not the value of voluntary purchases themselves—these are vital to developing initial markets and testing new technologies—but rather their limited capacity to create an economic foundation sufficient for large-scale deployment.
The voluntary carbon market (VCM) is a fragmented sector involving transactions primarily between corporate buyers and project developers. At its peak in 2021, it generated roughly $2 billion, a significant increase compared to prior years, yet this represents only a small fraction of the $100 billion annual climate finance goal set by governments globally. Despite over $10 billion in announced forward contracts for durable carbon removal, most remain as commitments rather than actual expenditures, with Microsoft accounting for a large portion of these deals.
Scaling carbon removal to gigaton levels demands far greater involvement from public institutions. Voluntary markets were never designed to achieve climate-relevant deployment but to stimulate early innovation and market formation. Governments must now step in to create comprehensive frameworks that provide market certainty, support research through commercialization, and fund the full innovation pipeline.
The positive aspect is that this policy groundwork is already underway at federal and state levels, aiming to address the long-term challenges of carbon removal deployment. Advocates call for increased effort to advance these public policy measures, stressing that climate ambitions require more than corporate enthusiasm—they require sustained government leadership and investment.