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The Role of the VCM in Scaling CDR: Trends and Opportunities
What is the Current State of the VCM?
The VCM has grown significantly over the past decade, with buyers increasingly shifting from avoidance to removal credits. CDR purchases are trending up—Q2 2025 saw more tonnes contracted (15.48 million) than all prior quarters combined (13.6 million). Companies setting voluntary net zero targets, which require some CDR to achieve targets, nearly tripled (from 417 to 1,245) in the last year, demonstrating sustained ambition despite talk of a "net-zero recession".
The IPCC estimates 6 to 16 gigatonnes of removals are needed annually by mid-century; the market today delivers only a fraction of that. Scaling to this level would potentially create a $7-35 billion industry by 2030, a 3-15x multiple in the next 5 years, and a $1.2 trillion industry by 2050.
Despite significant growth, the reality drawn from the recent body of research is:
- Most companies have not set net-zero targets (although many have)
- There are growing concerns that companies with net zero targets are not on track to meet both near- and long-term targets
- Delivery of scope three targets is particularly challenging.
Barriers remain to widespread company buy-in. High prices, limited expertise, and a lack of standardised methodologies for assessing credit quality hinder widespread adoption of high-quality removal credits.
Buyer motivations and purchasing trends
Corporate participation in VCM is driven by various factors, primarily 1) making progress towards internal or externally committed climate goals or 2) demonstrating action across broader social and nature goals, linked to stakeholder pressure and brand value. These factors shape credit selection, pricing, and prioritisation of methods, but can also constrain how and when companies use carbon credits.
Most voluntary frameworks confine the use case of carbon credits to two areas: compensating for residual emissions (10%) with permanent removals, or beyond the value chain (BVCM) in the form of contributions that occur outside emissions accounting books. Neutralising residual emissions is likely to yield only 0.1-1.3 GtCO2e per year, yet it is the only case mandated by standards. BVCM could unlock millions in climate finance, but lacks the leverage to be a priority for many companies. While this doesn't reflect the entire picture of the VCM, without clear and significant incentives, current buyer behaviour is likely to be insufficient to scale CDR to be ready for future net zero.
Today’s corporate frameworks for net zero require two things: deep emission cuts (60-90%) and compensating residual emissions with CDR. However, no framework requires that companies scale the CDR sector in the near-term to meet 2050 needs, though SBTi is considering near-term scope 1 removal targets and has proposed a 'gold star' program for BVCM participants.
While frameworks recognise CDR as essential to net-zero, none incentivise building the sector now. This gap limits corporate climate finance and puts all target-setters at risk of missing their stated goal: limiting warming to 1.5-2°C.
Strategic opportunity: How the VCM can play a larger role in scaling CDR
The VCM is already playing a critical role in creating early demand for CDR. But, without near-term development of the market, net-zero progress is stalled. This is true for a broad spectrum of decarbonisation technologies and infrastructure beyond CDR. As mitigation outcomes stall, corporate climate leaders–and the standards that guide their actions–must incentivise scaling CDR in the near-term or risk missing net zero targets on a global and individual scale.
Further strategic buying behaviours can drive economies of scale and make CDR more affordable. This type of action not only scales CDR but actually helps companies meet interim climate targets, ensures companies stay on track while working to reduce their own emissions, and decarbonises in a cost-effective way in the long-run.
We’ll dive into these strategic CDR use-cases below, all of which have potential to create meaningful net-zero progress in the coming years 5, 10, or 15 years before residual emission compensation at 2050.
1. Closing the gap
Rather than and end-stage activity, CDR offers unique opportunities for companies to close the emissions gap between their internal reduction efforts and the necessary emissions removals. Many buyers have yet to fully leverage credits to fill near-term shortfalls in their decarbonisation path. Instead of considering CDR as a ‘maintenance’ activity at net zero, companies can create real decarbonisation progress, presenting strategic opportunity for participation in the VCM.
Using CDR to catch-up to commitments or statutory net zero targets would unlock massive financial potential for the market, and generate up to 5.9 GtCO2e of removals per year. More than unlocking finance, this effort would provide crucial, timely, climate mitigation to account for how internal decarbonisation has fallen short, noted in the significant gap between the dotted line and black line at the bottom of block 1.
2. Set & hit interim removal targets
Setting interim reduction and removal targets is a pragmatic approach to getting back on track to net-zero commitments. As noted above, an overly cautious approach to the sequence of reductions and then removals can result in stagnant years where no action happens at all. Setting, achieving, and clearly communicating interim targets every 5-10 years highlights ambition and accelerates global decarbonisation.
For example, let’s look at Company A’s journey to a 2050 net-zero target. Beginning in 2025, they measure a baseline of 100,000 tonnes CO2e annual emissions. A 2030 interim target could reduce emissions to 70,000 tonnes (a 30% reduction) and remove 5,000 tonnes through CDR credits. By 2035, they reduce emissions by 50% and remove 10,000 tonnes. This continues until 2050, when their reduction target equals their removal target—allowing them to neutralise remaining emissions with permanent removals. Setting these 5–10 year checkpoints keeps the company accountable, demonstrates continuous progress, and scales CDR purchasing gradually, giving the company experience with budgeting for carbon and effectively pricing their emissions.
3. Addressing ongoing emissions
A significant opportunity lies in addressing unabated emissions from sectors that continue to produce high carbon outputs despite best efforts at decarbonisation. For example, industries such as professional services, technology, and manufacturing are seeing large volumes of emissions in their Scope 3 categories. Taking responsibility for these is currently termed BVCM, or climate contribution, occurring outside emissions accounting.
Companies can address ongoing emissions by investing in contribution or removal credits that align with the yearly emission outputs–either with a 1 to 1 ratio, or a so-called money-for-tonne approach that covers a significant amount of a given company’s total tonnes while also directing finance into most critical areas. If companies quickly get back on track with their intended reductions, this lowers the cost of taking responsibility.
Depending on how quickly companies get back on track with their reduction targets, using credits to address ongoing emissions could unlock 0.27 to 3.2 GtCO2e of additional mitigation. But if corporate emissions reductions continue to lag, this figure could be much more. By deploying removal credits strategically in these sectors, companies can smooth the transition to net-zero while maintaining progress on their climate commitments.
4. Decarbonise within the value chain
Insetting is regarded as interventions within the value chain that result in a removal or permanent reduction. Methodologies and accounting for insetting programs are in development and vary across sector. However, this path offers an obvious win-win for decarbonisation and removal sector financing. Value chain removals could take the form of a grocery story investing in regenerative agriculture credits at one of their produce farms, or a construction company investing in and using mineralised concrete in a new build. By investing in credits or technologies that remove or permanently reduce the emissions of their own value chain, they can reduce their operational emissions, getting one step closer to net zero.
Tools, guardrails, and regulations
Beyond specific purchasing strategies, new procurement pathways are necessary to scale the VCM and make credits more accessible. Some examples include pooling smaller buyer demand, which can generate the volume needed to bring costs down, and bundling portfolios of credits to mitigate costs across different types of removals. Blended finance and other hybrid public-private mechanisms can reduce risks for emerging removal technologies. These tools improve affordability, enable portfolio diversification, and broaden market impact.
Linking voluntary credits to compliance systems, such as regulatory carve-outs for specific credit types, could make the market more liquid. Dual incentives for compliance and voluntary targets would amplify the VCM's role in global emissions reductions. Through a strengthened regulatory environment, standardised national approaches, and improved infrastructure, we build confidence in the market and remove barriers to exponential growth.
Ensuring a stronger role for the VCM in the future
The Voluntary Carbon Market is uniquely positioned to drive the scaling of CDR in the coming years. The voluntary market can catalyse removal scale not only by providing financial support, but also by deploying more sophisticated procurement tools, price signals, and buyer behaviours that strengthen market dynamics and reduce risk. If we wait for mandatory frameworks alone (e.g., compliance markets), we risk both missing key scaling opportunities for CDR and climate mitigation outcomes. This creates an interesting relationship: the VCM is important to help decarbonising technologies scale, but also these technologies in turn help VCM actors achieve cost-effective net zero.
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Building carbon removal portfolios and managing risk
Portfolios have been central to Klimate's advisory services from the beginning. In line with our mission to support the scaling and development of carbon removal projects and technologies, portfolios offer key benefits: They diversify impact, manage risk, and tailor investments to meet organisational goals. In a relatively young industry like CDR, new projects and technologies emerge constantly. So, it makes sense that climate leaders would "travel every road possible" to support climate solutions in our fight against climate change.
How does a CDR portfolio benefit your company's climate goals?
When approaching CDR investment, portfolios attract buyers for several reasons. Instead of picking one project, where buyers often need to sign long-term and large-scale agreements, portfolios offer a more flexible approach. Companies interested in CDR investment can also maximise impact, tailor their spending to meet specific goals, and balance risk. Ultimately, portfolios ensure that companies actually achieve their intended climate goals. Here's how:
1. Maximise and diversify impact
Most investment portfolios encourage diversification. In the case of CDR portfolios, diversification enables buyers to maximise their investment and provides a crucial balance between technologies and credit delivery timelines.
Carbon removal methods vary significantly in price, from €30 to €1,000 per tonne. And, ex-post credits, representing a tonne of already-removed carbon, are typically more costly than future deliveries from the same method or project. In terms of risk, some nascent technologies or up-and-coming projects—although essential to support—may not be a good fit for companies prioritising the certainty of delivery. This balancing act enables buyers to access projects they wouldn't otherwise be able to invest in, so that budget doesn't limit ambition.
2. Align with your organisation
Investing via a portfolio allows companies to make specific, tailored choices, regardless of their company size or budget. Deciding your own priorities and investing accordingly is a great way to boost the resonance of a CDR strategy in your organisation.
Some priorities may include how durably carbon is stored, catalysing nascent tech, or boosting specific co-benefits such as biodiversity. Companies can also consider the other vital areas beyond just 'carbon' to decide what makes a project 'good'.
Furthermore, some projects or locations may align perfectly with a company's story or industry. For example, Real Estate Company A is drawn to credits from a carbon mineralisation project where the carbon is actually injected into cement. Company A can support the development of an early-stage project that may benefit the carbon management of their industry in the long run, and at the same time, engage with nature-based solutions that contribute to biodiversity, another key metric of their ESG agenda. This choice balances cost, certainty, and impact.
3. Effectively manage risk and balance trade-offs
The CDR space is full of proven, scalable solutions and in this early stage of developing carbon markets, no single solution has emerged as the 'winner'. As new approaches and projects continue to emerge, there can be risks ranging from technological delays to failure to secure the necessary finance for business operations. The portfolio approach mitigates this risk, as it's easier to replace a portion of the investment, as opposed to the entire investment.
Additionally, all projects have strengths and weaknesses. A rigorous due diligence process is an essential step to gain awareness of both delivery risk and a given project’s trade-offs. Balancing a given solution’s trade-offs through a diverse portfolio further secures the positive impacts your investment can have.
The numerous impactful projects that exist are indeed worth supporting in their early stages, and they are all a part of the climate toolkit necessary for achieving net zero.
Portfolios designed to best-fit client needs
Part of CDR strategy 101 is understanding what motivates the purchase, so you can align a procurement pathway that looks and feels like your organisation. These questions can help determine the composition of the portfolio and where the decision-making process will go:
- Are you looking for a specific number of tonnes or need a particular delivery timeline to meet your net zero commitments?
- Are you interested in specific impacts (permanence, co-benefits like biodiversity, jobs), locations, or SDGs?
- To what degree would you like to support nascent technologies versus established NBS/hybrids?
Any given strategy can and should evolve. As buyers become more knowledgeable or find their organisational goals shift with changing goalposts, portfolio distributions can easily adjust along with them. By starting with and well-balanced portfolio, companies can effectively price their residual carbon emissions and prepare for a net-zero future.
How portfolios help meet climate goals and create a functioning, mature CDR market
By developing a global marketplace that balances established projects and emerging technologies, we can scale important climate pathways and build the necessary market infrastructure. In the end, the climate doesn’t care where in the world a tonne of carbon is removed. Exploring and supporting diverse locations opens up the possibility of creating greater impacts. Looking beyond carbon helps address the multiple interconnected environmental crises, while the portfolio approach lowers barriers to entry, ultimately contributing to creating the robust market we need to achieve net zero goals. Supporting a diverse portfolio of projects with balanced costs and co-benefits across the globe is the most effective way to reach our shared climate goals.
Scaling carbon dioxide removal now to meet future net-zero targets
The 2030 and 2050 milestones outlined by the Intergovernmental Panel on Climate Change (IPCC) are fast approaching: a 45% emissions reduction by 2030 and net zero by 2050. Today, almost no country is on track to meet them. To stay within 1.5°C warming and avoid the most severe impacts of climate change, we must accelerate emissions reductions and the deployment of CDR. Estimates suggest that we will need between 6 and 16 gigatonnes of removals annually by mid-century; yet, the market today delivers only a fraction of that capacity. Bridging this gap requires urgent investment and deployment now.
Why is CDR an essential, near-term, climate solution?
Decarbonisation, or the reduction and eventual elimination of fossil-fuel-based emissions, is essential to fighting climate change. The science is clear—reductions alone cannot deliver a 1.5°C future. To some degree, on the order of a few to ten billion tonnes each year, negative emission technologies will be necessary to bring climate mitigation back on track and reach a final state of net zero. CDR directly addresses both historical and residual emissions: those already in the atmosphere and those that are extremely difficult or costly to reduce in sectors like heavy industry. Governments, companies, and organisations of all types must take ambitious action to reduce and remove in tandem.
Most net zero frameworks have treated CDR as a final-stage activity, reserved for hard-to-abate emissions closer to 2050. Delayed CDR deployment is ill-advised for climate mitigation and overlooks its immediate value. Scaling removals today achieves three things:
- Climate imperative: The pace of warming is accelerating, and mitigation pathways already assume large volumes of removals. Deploying CDR now helps close the gap between current trajectories and the 1.5°C goal.
- Lower long-term costs: Early investment sends market signals. By growing supply chains, infrastructure, and financing mechanisms today, we avoid the cost spikes that would come from a last-minute scramble in the 2040s.
- Climate credibility: Companies and governments are under pressure to deliver on climate promises. Integrating CDR now strengthens the credibility of net-zero pathways, backing ambitions with action.
We'll dive into each pillar below.
Why we can't wait: the climate imperative
CDR can close the near-term emissions gap and help address ongoing emissions. The 'emissions gap' is a term that notes the disparity between climate pledges and actual emissions levels. While emissions rise, the ambition and actual implementation of net-zero strategies lag. Paris Agreement signatories need to cut an astounding 42% of emissions by 2030 to get back on track with 1.5°C.
Deploying the entire suite of CDR pathways can play a significant role in helping to close this gap and get back on track with net-zero goals before it's too late.
Investing today lowers long-term costs.
Like renewable energy, the cost of CDR will fall as deployment scales. Projects today receive investment from diverse sources, primarily credit sales in the voluntary carbon market (VCM). Early demand signals, even from smaller investments today, contribute to broader market-building and boost trust in the viability of the CDR ecosystem. Building long-term offtake agreements now also de-risks technology growth and signals seriousness to stakeholders.
These are important mechanisms to help projects secure pre-finance, covering costs of operations and ultimately lowering the long-term purchasing price. On the individual buyer level, companies that commit early can secure access to scarce supply at predictable prices, rather than facing inflated costs in the 2040s. And those that price emissions today are more likely to decarbonise faster, saving money in the long-run.
Upholding climate credibility
In an era of widespread net-zero targets, stated climate ambitions often differ from expected or actual implementation. With climate credibility in question, organisations can leverage CDR to take responsibility for any ongoing emissions and offer tangible proof that their goals are more than hot air.
Stakeholders, from regulators to customers, want proof that pledges translate into measurable action. Companies that incorporate removals today demonstrate leadership, safeguard their brand reputation, and build trust by showing they are not waiting until the last minute.
Aligning internally to take action now
It is essential to build a strong internal business case for immediate CDR engagement. The strategic opportunity for CDR today lies in anticipating future risks and fostering genuine climate leadership. Here's why:
- Manage future risks. Supply is scarce today and will only continue to crunch as the thousands of net-zero target setters approach their target years and need to purchase offsets.
- Get in line with upcoming regulations. Whether voluntary or codified, climate legislation is around the corner, and ESG agendas are here to stay.
- Social license to operate. Taking action today boosts brand reputation and trust. Climate leadership is essential for stakeholder and employee satisfaction, and can even impact a company's valuation.
How we stay on track for our common climate goals
The role of CDR in 2030 is about scaling up: proving pathways, establishing standards, and building the infrastructure that enables exponential growth. By 2050, it must be delivering gigatonnes annually. That trajectory cannot be achieved without today's corporate and policy leadership.
For companies, the question is no longer whether to include removals, but when to do so. Early movers will secure lower costs, influence market design, and establish climate credibility. Governments, investors, and corporations all share responsibility, but businesses in particular have the chance to shape the market through procurement, partnerships, and long-term commitments. Net zero is not possible without CDR—and the time to scale it is now.
The business case for climate investments │ What goes up must come down, Episode 9
Introduction
In a world of shifting geopolitics and growing climate uncertainty, sustainability professionals are under pressure to keep climate action both relevant and impactful. The conversation is evolving. It is no longer just about ambition, but also embedding sustainability into core business strategies to drive resilience, manage risk, and ensure long-term profitability.
In this episode, Sophie Bruusgaard Jewett, CEO and Co-Founder of Morescrope, and Simon Bager, CIO and Co-Founder of Klimate, explore how climate leadership is adapting to this new reality. Drawing on insights from industry experts and real-world examples, they unpack what it takes to keep climate investments strategic, even in uncertain times.
TL;DR
- The business case for climate investments is evolving; companies need to demonstrate tangible returns.
- Sustainability professionals are increasingly collaborating with CFOs to align climate goals with financial strategy.
- Risk management, resilience, reputation, and relevance are essential frameworks for climate leadership.
- Data-driven approaches and adaptable reporting systems help sustain momentum despite regulatory shifts.
- Small and medium-sized enterprises face unique challenges but can benefit from simplified frameworks (e.g., the EU’s VSME).
Adapting to Uncertainty: A New Era for Climate Leadership
Over the past few years, sustainability was a dominant theme in corporate agendas, fuelled by global movements and supportive legislation. However, recent geopolitical events and political shifts in the EU have altered this landscape. This has led to a “pendulum swing” where climate initiatives are no longer the unquestioned priority they once were.
The role of the sustainability officer is changing from being on the sidelines to working closely with the CFO, presenting a clear business case aligned with company operations. This shift demands that sustainability professionals develop skills in finance and strategic business communication to remain influential within their organisations.
The Four Rs of Climate Strategy: A Framework for Long-Term Impact
A fundamental insight from the discussion is the practical framework built around the “four Rs”: Risk management, Resilience, Reputation, and Relevance. These pillars help translate climate initiatives into strategic imperatives that resonate with leadership and stakeholders.
- Risk management involves identifying and mitigating supply chain vulnerabilities and regulatory risks.
- Resilience relates to preparing the business to thrive in a low-carbon economy.
- Reputation ensures the company remains relevant and trusted to customers, investors, and the public.
- Relevance ties sustainability directly to the company’s core operations and long-term competitiveness.
“Putting your climate work on the shelf right now is a classic sign of short-term thinking. A resilient and robust strategy requires long-term thinking about risk management, resilience, and reputation.”
– Sophie Bruusgaard Jewett
The Power of Data and Strategic Integration
Data-driven decision-making is now central to effective climate leadership. Transparent, high-integrity data serves as a reliable anchor, which enables companies to measure impact, build credible business cases, and secure financing. Moreover, companies are increasingly using climate data to create value for customers and investors, leading to more strategic business applications.
Insights for Small and Medium Enterprises (SMEs)
While much attention focuses on large corporations, SMEs face similar challenges with fewer resources. Sophie points to the EU’s voluntary reporting framework (VSME) as a practical tool to help smaller companies prepare for future regulatory demands without excessive burden. Though some SMEs may delay action due to uncertainty, the growing expectations from larger supply chain partners mean climate accountability is increasingly unavoidable.
“Companies that dare to invest in climate performance and investments in uncertain times will be the ones that profit the most.”
– Sophie Bruusgaard Jewett
Summing up
Although today’s climate investment landscape is more challenging and unpredictable, it also offers a valuable chance for sustainability professionals to make climate action a core part of business strategy. To succeed, they need to adapt their skills, focus on long-term goals, and use data to show the real business benefits of their efforts. Companies that stay committed to climate investments, even during uncertain times, will be better positioned to gain a competitive edge in a future where sustainability is closely tied to resilience and long-term value.
How intermediaries drive growth for essential carbon removal pathways.
How can we manage costs while developing diverse removal solutions?
Emerging solutions are essential for a diversified and resilient CDR portfolio. There is no single 'silver bullet' method for carbon removal – each has its own capabilities and limitations that factor into its scaling potential. We must pursue a suite of pathways to fight climate change, including emerging solutions. However, these are often nascent technologies, operating within a broader supporting ecosystem that is still under development. This is evident in the limited pool of entities capable of executing third-party validation and verification audits, as well as the implementation of measuring, reporting, and verification (MRV) systems. While improving quickly, these factors can hinder the roll-out of a project or technology.
It's a real chicken-and-egg problem: early-stage solutions need funding to mature, but high price and limited supporting infrastructure make widespread investment seem both costly and risky. On the other hand, organisations with net-zero targets know they need to purchase diversified CDR to reach net zero, but can pause due to these barriers. As a result, many projects struggle to secure off-takes or investment due to their early-stage status and high price per tonne.
The power of aggregation and intermediation: how 'regular' companies can help scale the market.
While tech giants or large banks can financially support record-breaking CDR purchases on their own and even handle their due diligence and contracting, most companies need alternative approaches. Most entities understand best practices when it comes to carbon removal in Net Zero strategies, but they need support in mitigating price of credits, understanding the broader market complexity, and engaging meaningfully with suppliers.
By working with clients over long-term, multi-year commitments, we can support stronger planning for individual clients. At the same time, we also aggregate their demand with that of other clients, creating a buyer pool to take advantage of particular market opportunities that arise from our dialogue with key project partners, such as InPlanet. This coordinated approach enables us to provide greater certainty to projects and then pass that value back to our clients through risk-mitigated contracting approaches.
For sustainability teams and leads managing complex decarbonisation strategies among many other objectives, procuring a diversified and cost-effective CDR portfolio alone is simply not feasible. Klimate simplifies this process. We help clients build balanced portfolios of vetted projects while selectively providing pre-financing to suppliers, reducing a project’s costs per tonne. Through bulk purchasing, we create direct savings for clients while fostering both a more supportive ecosystem for CDR innovation and price reduction.
A case study in Klimate InPlanet Partnership: innovative Financing & Structuring
Our collaboration with best-in-class carbon removal projects enables us to demonstrate year-on-year how innovative financing structures facilitate scaling. One notable example is our partners at InPlanet, a project developer specializing in Enhanced Rock Weathering (ERW).
Enhanced rock weathering, in general, faces several challenges, including:
- High baseline price per ton, especially for near-term credits.
- MRV and certification infrastructure are still in the process of maturing.
- Low availability of spot credits excludes ERW from many "same year" credit portfolios.
Still, ERW is a highly permanent and scalable solution, with broader co-benefits — an essential piece of the climate toolkit.
InPlanet, in particular, is a key leader in the ERW category, with an emphasis on tangible co-benefits for local farmers, high project transparency, and, importantly, certified MRV standards via Isometric. Their approach reinforces trust and integrity in ERW as a carbon removal method.
By aggregating demand from clients with forward-looking net-zero strategies, Klimate can sign multi-year agreements with InPlanet with later delivery timelines, looking forward to 2030. And, pre-financing helps cover the gap between some of the upfront operational costs and the ensuing sequestration timeline, inherent to ERW. The equation of later delivery plus pre-financing results in a lower purchasing price per tonne, lowering barriers to entry and thus strengthening the incentive to act now.
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Why does this financing structure matter to a CDR buyer?
Many companies seek to meet net-zero and SBTi targets by 2030. When purchasing CDR, these goals align with the later delivery timeline of our multi-year commitments. Buyers benefit from a balanced portfolio of carbon removal solutions, featuring both short-term and long-term deliveries while mitigating risk and achieving annual targets in the short term.
That InPlanet has already successfully issued third-party certified credits via Isometric adds to the credibility of the project and also instills confidence that clients can utilise these credits with confidence for neutralisation purposes in their strategy.
How we sustainably scale the market.
When Klimate aggregates demand across various clients, we also identify the right opportunities that strike a balance between risk and benefits. These could be a combination of different delivery timelines, project or technology preferences, voluntary or mandatory frameworks, risk appetites, or connections to broader sustainability objectives.
Mitigating risk across diversified pathways and project developers can also help build confidence across the market, as portfolios and client investments are more stable and secure. One project or pathway that underdelivers or struggles will not mean the entire market suffers. It benefits market health as a whole and allows for prioritising different pathways for different purposes. This is particularly apparent across permanence and delivery timelines, allowing companies to depend on more mature technologies for short-term deliveries while still supporting the growth of others in the long term.
A model that meets the mission
Klimate's model unlocks long-term viability for enhanced weathering, contributing to our mission of accelerating and developing essential pathways while also bringing tangible impacts to the climate and communities. InPlanet has already demonstrated project-level success and has particular credibility from its previous successful issuance of certified credits via Isometric. Partnering with projects like InPlanet enables our clients to benefit from strategic alignment, cost savings, and progress towards decarbonisation. And this growing support signals a mature, scalable pathway for permanent carbon removal — essential for achieving net zero.
The net zero toolkit with Tobias Sørensen | What goes up must come down, Episode 8
TL;DR - key points from the episode.
- Captured CO₂ has multiple uses and multiple pathways worth considering.
- Comparing two pathways, e-fuels and permanent storage (like BECCs & DAC), storage is likely more cost competitive and brings greater benefits.
- Storage breakthroughs in the Nordics build a strong foundation for a cost-competitive future.
- The voluntary market can help build out the infrastructure alongside state-tenders. Still, policy intervention is necessary to scale.
Comparing optimal technology pathways: e-fuels, storage, and aviation
What’s the smartest way to use CO₂ to reach net zero? Tobias shares insights from a recent analysis showing that storing CO₂ is more cost-effective and scalable than converting it into e-fuels. E-fuels, made from green hydrogen and captured CO₂, are promoted as sustainable aviation fuel (SAF). But according to the report, Direct Air Capture with Storage (DACCS) delivers the same climate benefit with lower energy use and cost. Since CO₂ is a limited resource, prioritising long-term storage leads to greater system-wide impact. Simon and Tobias discuss the implications of SAF blending–the current EU aviation mandate–and alternatives that deliver equal climate benefit.
“We suggest... that this should be allowed as part of the toolbox when aviation and airline companies are obligated to blend in e-fuel. Let them achieve the same climate benefit by capturing CO₂ from the atmosphere and storing it permanently underground—at a much lower cost.”
— Tobias Sørensen, Concito
Challenges and trade-offs for decarbonisation
Public funding is a limited resource. Considering recent public tenders, Simon and Tobias discuss which pathways to prioritise for a cost-effective toolkit. Important factors considered for effectiveness include operating hours, infrastructure life span, and decarbonisation alternatives. A few stand-outs for optimal carbon capture and permanent storage include cement, waste-to-energy using non-fossil sources (BECCS), and biogas. But, considering the reliance on voluntary purchases today, Simon addresses one challenge of private support: companies choosing certifiable credits over technically-efficient ones.
Another challenge lies in sustainable biomass scaling. With demand across multiple sectors (CDR, materials, hydrogen, biodiversity, food), land reallocation becomes crucial. Tobias suggests reducing meat consumption could support strategies like biochar and reforestation.
Nordic CO₂ Storage Developments
With a few notable storage plants online in the Nordics, more are being explored. These early projects are expensive but essential for de-risking value chains and learning-by-doing. Simon and Tobias highlight the role that onshore storage in Denmark could play, as a cost-effective option when compared to todays price ranges.
Voluntary buyers play a crucial early role but are not sufficient to sustain market growth alone. Wide-spread recognition for carbon storage solutions, whether captured at source or removal, as a highly beneficial and effective solution must continue.
“It’s a tool we have in our climate solutions toolbox. And when we do modelling around the scarce resources we have—the limited economic resources—the cost-effectiveness proves that for certain sectors, even something as expensive as DAC is part of the solution.”
—Simon Bager, Co-founder of Klimate
Implications and Recommendations
Beyond increased traction to removal and storage in voluntary markets, stronger policies are needed to funnel climate finance. Today’s EU ETS and it’s potential inclusion of negative emissions is a step forward to drive adoption. But, current price-levels of removal and storage are misaligned with ETS cost-per-tonne. The market needs contracts for addressing this difference, public-private co-investment, and coordinated procurement strategies.
CDR is not a license to delay reductions but a vital climate tool for hard-to-abate sectors like aviation. Decisions today—on policy, investment, and market design—will shape the effectiveness and equity of future carbon strategies.
Klimate’s Carbon Asset Manager (CAM): the portfolio software for a tech-enabled net zero.
A new category of software.
Companies rely on software when business needs to outgrow a simple Excel sheet. Since our inception, we’ve helped companies access vetted carbon removal credits, create diversified investment portfolios, and strategise procurement to meet any goal. Carbon removal strategy has moved beyond a transactional, one-time purchase. Our carbon portfolio manager eliminates the manual labour and potential errors of multiple sheets while setting climate leaders up for what’s coming.
Why sustainability professionals need The CAM.
Sustainability professionals are pressed for time and budget to manage all the moving pieces of a good net zero strategy. Between balancing progress on overarching decarbonisation targets, procuring renewables, and making purchases from multiple vendors, meeting targets is already tricky. Moreover, companies that want to invest in a diversified portfolio face increasingly complicated procurement, management, and reporting for their carbon credits to comply with voluntary or regulatory standards. Bottom line: A solid net-zero strategy with carbon removal credits creates significant administrative challenges for companies, including the need for endless spreadsheets, coordination with individual registries, and manual retirement.
Without a proper tool to centralise data, information quickly becomes fragmented and prone to error. Even businesses just getting started in procuring carbon credits face multiple, manual integrations, creating extra administrative work and room for error.
We’re entering a new era of carbon compliance where the need for removals and the complexity that comes with it creates massive challenges for corporates working toward net zero. Spreadsheets may be the origin of all software. But companies must consolidate their data if they want a real chance at achieving their targets efficiently and without creating unnecessary, avoidable risks. We’re equipping sustainability teams with a critical net zero tool before they’re forced to have it, helping them stay ahead of coming requirements and build confidence in their strategies today.
-Erik Wihlborg, CCO
How can The CAM simplify your carbon removal strategy?
With growing activity comes growing scrutiny. The last financial year alone has brought several regulatory changes, i.e., EU Green Claims, CSRD, multiple EU-state CDR policies, and an updated SBTi Net Zero Standard. To stay ahead of changing regulations and the rapidly evolving carbon market, we’re unveiling a new portfolio manager called The CAM. This portfolio manager is built with climate leaders in mind. Klimate’s portfolio management software allows you to centralise all your credit data from different sources, track goal status, and confidently report on your accomplishments.
- Centralise data to avoid unnecessary error: Instead of managing multiple sheets, import all credit purchases to one source with automated overviews in your personalised dashboard. Save time (and stress) of procurement by accessing vetted projects, data from a 301 point due diligence, and consolidate all your carbon credit purchases–even across vendors.
- Flexible asset grouping for changing targets: Was Scope 2 higher in 2024 than anticipated? No problem. Organise your credits to reflect any strategy and simply re-allocate to keep yourself on track. Monitor your progress even with changing goalposts, integrate with multiple registries, and retire all assets with a single click to make meeting your target clear and simple.
- Confidently report on your progress: Whether voluntary or compliance-based, transparent and auditable communications are critical to protect your brand from greenwashing. Our modular reporting tool and single-click export enable you to report and comply with any modern requirement from CSRD, SBTi, and other relevant frameworks. Access communication guidance, project metrics, and visual content to make your investment tangible for your audience.
Tech infrastructure is crucial for market growth.
Carbon removal is growing and evolving rapidly. An essential piece of net zero, the current supply trajectory still isn’t efficient enough to reach these global goals alongside ambitious reductions. Today’s projections call for upwards of 10 gigatonnes of carbon removed year-on-year by 2050. This demands a massive degree of public and private effort to contribute enough resources, especially financial. We need to collectively invest in the order of millions or even billions of dollars to achieve net zero. In addition to sustainable, justly scaled land use and resource allocation for this massive physical undertaking, we need the right digital infrastructure to scale efficiently and securely. For companies and organisations with net zero targets, doing their part of global net zero must build dynamic strategies and streamlining of once-complicated procurement efforts, backed by digital assurance like The CAM, to be successful.
Exploring the State of CDR with Tank Chen | What goes up must come down, Episode 7
TL;DR: Key Takeaways
- 2024 saw a 78% growth in the voluntary carbon removal market, with delivery of carbon removal credits increasing by 120%.
- Microsoft remains a dominant buyer, but new players and innovative purchasing models are emerging in 2025.
- Asia, particularly Taiwan, Japan, and South Korea, is beginning to engage seriously in CDR, mainly on the demand side, with potential to expand supply through industrial capabilities.
- The Nordics leverage abundant renewable energy and geological storage to position themselves as a global hub for CDR technologies and deployment. In tandem, the newly launched Nordic Carbon Removal Association provides a path for broader corporate inclusion.
- Trust, financing, and buyer diversification remain critical challenges for scaling CDR globally.
Insights on overall market growth.
The voluntary carbon removal market experienced significant growth in 2024, with contracted volumes rising from 4.5 million to 8 million tonnes of CO₂ removed, marking a 78% increase year-on-year. Delivery also grew impressively by 120%, signalling that the market is beginning to move beyond promises to actual carbon removal on the ground.
However, the first quarter of 2025 showed a dip in contracted volumes. This pause is seen not as a setback but as a preparatory phase for the market’s next ascent. Following the quarter’s close, major deals by Microsoft with various suppliers effectively doubled the market overnight, signalling renewed momentum. Both emphasise the importance of buyer diversification beyond tech giants, noting how the middle players are important as well. Yet, there is growing interest from mid-sized companies eager to integrate CDR into their sustainability strategies. Excitingly, new buyers are doing more than just dipping their toes, making large purchases from a range of methods and projects in Q1 '25.
“The market grew 78% in 2024, but 2025’s first quarter was a back to base came moment—preparing for the big climb ahead.” – Tank Chen
Catching up with Asia's CDR scene.
Asia's CDR scene is gaining traction, particularly in Taiwan, Japan, and South Korea. While the region currently has limited supply-side capacity — with Taiwan hosting just one biochar facility — demand is growing, supported by corporate interest and government initiatives. Japan’s integration of CDR into its Green Transformation (GX) League exemplifies this shift, combining government, private sector, and academic collaboration to craft forward-looking policies. Tank highlights the multifaceted roles Asian corporations play, not just as buyers but also as financiers, component manufacturers, and potential competitors in the space.
Regarding China, both hosts agree that its entry into the CDR market is inevitable. The nation is likely to leverage its industrial capacity to rapidly scale technology deployment both domestically and internationally. The comparison with China’s rapid rise in electric vehicles and solar technology underscores the potential speed and scale of its involvement.
Zooming in on the Nordic CDR advantage.
The Nordic region stands out as a promising CDR powerhouse, combining strong government subsidies, advanced energy infrastructures, and vast geological storage potential. Countries like Norway, Iceland, and Denmark have the capacity to store billions of tonnes of CO₂, making them ideal locations for a range of CDR suppliers. The new Nordic Carbon Removal Association aims to elevate the region to become a key player in both demand and supply.
Simon notes, “The Nordics have a comparative advantage... it seems difficult to find many other locations in the world with these combined assets.”
In addition to the regional comparative advantage, competition is a key element to bring Nordic-based large companies onboard. Support systems like the Nordic Carbon Removal Association are needed to shift paradigms.
Looking ahead.
Despite these encouraging developments, challenges remain. The market is still dominated by a small number of large buyers. Some innovative technologies face financial risks if demand does not scale quickly enough.
Both hosts also touch on cultural perceptions of carbon credits, with Asia and the Nordics showing differing attitudes shaped by their unique policy and market histories. But, there are threads between Northeast Asia and the Nordic countries, including historical collaboration on wind and other green sectors. This creates a strong foundation to combine their respective strengths to accelerate global carbon removal efforts.
Latest from SBTi - removals vs reductions with Alexander Schmidt │ What goes up must come down, Episode 6
Introduction
In the face of escalating climate risks, businesses worldwide are under increasing pressure to align their operations with global climate goals. As the urgency for meaningful climate action grows, the Science Based Targets initiative (SBTi) has emerged as a critical authority, providing companies with a structured pathway to set credible, science-aligned emissions reduction targets. Recently, the SBTi released a draft of its updated Corporate Net-Zero Standard, outlining significant revisions intended to strengthen corporate commitments and drive more transparent, effective climate action. Together with Alexander Schmidt, an expert in the field of policy and net-zero standards, our latest podcast episode explores the key proposed changes, their implications for businesses, and the challenges that lie ahead as companies strive to deliver on their net-zero ambitions.
TL;DR
- SBTi is raising the bar for corporate climate targets with a newly revised standard.
- Version 2.0 emphasizes separating Scope 1 and 2 emissions for clearer accountability.
- Companies must now publicly disclose transition plans—not just targets.
- Scope 3 emissions require better data and supplier collaboration.
- Beyond Value Chain Mitigation (BVCM) gains traction as a key climate lever.
- Early investment in carbon removals is no longer optional—it's essential.
The Role of SBTi in Climate Action
The SBTi serves as the de facto framework guiding businesses in setting science-based targets for emission reductions. Its primary goal is to keep global temperature rises below 1.5 degrees Celsius, with a commitment to achieving net-zero emissions by 2050. In March, the SBTi published a comprehensive 130-page document detailing proposed revisions to the corporate net-zero standard, which has sparked significant interest among thousands of companies committed to sustainability.
Key Changes in the Revised Standard
The proposed version 2.0 introduces several critical changes aimed at enhancing the effectiveness of corporate climate commitments:
1. Separation of Scope 1 and Scope 2 Targets
One of the notable changes is the separation of Scope 1 and Scope 2 targets. This allows companies to have a more granular view of their emissions and provides greater control over their reduction strategies. By distinguishing between these scopes, businesses can better manage their emissions and hold themselves accountable for their progress.
2. Public Commitment Requirements
Another significant update is the requirement for companies to publicly disclose their emissions targets and transition plans. This shift aims to create greater transparency and accountability in the corporate sector.
"It is easy (for companies) to set targets, and then it is hard to follow through if there is no transition plan behind them."
– Alexander Schmidt, expert advisor on climate policy of Normative
By mandating public commitments, the SBTi seeks to ensure that companies are not only setting ambitious goals but are also actively working towards achieving them.
3. New Metrics for Scope 3 Targets
The revised standard introduces new metrics for Scope 3 targets, including revenue alignment targets and incentives for improving data quality. This is vital for companies that often struggle with the complexity of their supply chain emissions. Enhanced data quality will enable businesses to make informed decisions and develop effective strategies for reducing their overall carbon footprint.
4. Beyond Value Chain Mitigation (BVCM)
BVCM refers to actions that take place outside a company's immediate value chain but can still contribute to climate change mitigation. The SBTi has recognised the importance of these activities and is encouraging companies to invest in climate finance. This could include funding projects that promote sustainable practices or support carbon removal technologies.
"We will need removals by 2050, and it's crucial that companies start investing in these technologies now."
– Simon Bager, co-founder and CIO of Klimate
Challenges Ahead
While the proposed revisions are a step in the right direction, challenges remain. Companies must navigate the complexities of Scope 3 emissions, which often account for a significant portion of their overall carbon footprint. The SBTi has acknowledged that many companies struggle to obtain primary data across their value chains, making it difficult to set accurate targets.
Furthermore, the requirement for companies to exert direct influence over their tier-one suppliers highlights the need for collaboration across the supply chain. Larger corporations, particularly those in sectors like technology and pharmaceuticals, have the potential to drive significant change by encouraging their suppliers to adopt net-zero targets.
Conclusion
The revisions to the SBTi standards represent a critical evolution in corporate climate action. By enhancing accountability through public commitments, separating emissions targets, and recognising the importance of BVCM, the SBTi is setting the stage for more effective climate strategies. However, as companies move forward, they must also address the challenges associated with Scope 3 emissions and ensure that their commitments translate into tangible actions. The journey towards net-zero is complex, but with the right frameworks and collaboration, it is achievable.
BVCM & SBTi: an essential strategy to address ongoing emissions
What is a BVCM strategy & how does it contribute to climate mitigation?
In a BVCM strategy, companies provide finance for scalable solutions, including activities that avoid, reduce, or remove GHGs but do not count as reductions in a company’s emissions inventory. These activities can range from high-integrity natural or technical removal credits, financing of permanent reductions, or conservation on natural carbon sinks. Beyond broader climate goals, these strategies enable companies to take responsibility in the near term, as advised by corporate target setting standards such as SBTi’s recent Corporate Net Zero Standard.
Integrated into the world of CO2 credits, a BVCM pledge may look closer to a contribution strategy, compared below:
- Compensation: a strategy in which carbon credits offset specific emissions in a company’s value chain (e.g., addressing residual emissions in Net Zero goals).
- Contribution: a strategy where corporations purchase units to support the development of essential solutions. This allows them to take meaningful action on their ongoing emissions, even though these activities do not directly reduce or offset their own Scope 1, 2, or 3 emissions.
Overall, BVCM helps close the gap between ambitions and actual implementation, catalyses immediate mitigation, and accelerates global climate efforts by securing finance for emerging solutions. Without additional financing of mitigation measures today, climate action lags–risking even a 2°C target. In the long-term, solutions including technologies or natural ecosystems that enable permanent reductions and removals may lack the necessary gigatonne scale for a 2050 net zero deadline.
For further reading on creating and implementing a BVCM pledge: https://www.klimate.co/insight/science-based-targets-releases-guidance-on-beyond-value-chain-mitigation
Who engages with BVCM and why?
Organisations with net-zero targets and those seeking to take immediate responsibility for emissions beyond their value chains are the primary groups engaging with BVCM. Companies engage with BVCM for several reasons:
- Urgency of climate action: BVCM allows companies to act on ongoing emissions even when direct reductions are not yet possible.
- Demonstrating climate leadership: For net-zero target setters and early adopters of climate strategies, BVCM provides a strategic way to show commitment to long-term emissions reductions.
- Credibility and responsibility: Organisations want to take responsibility for their ongoing emissions, building credibility in their climate actions.
- Mitigating greenwashing risks: Separating contribution strategies from core emissions inventories enables clearer reporting and more credible climate commitments.
- Scalability of solutions: BVCM offers a flexible approach, making it suitable for both organisations just starting their climate journey and those with ambitious, long-term sustainability goals.
For many, the tangible benefits of contribution strategies are already becoming clear, reinforcing BVCM as a critical element of a comprehensive corporate climate strategy.
”Our customers are striving to reduce emissions within the value chain. In addition to that, they also make an effort to remove emissions outside their value chain as a supplement to the reduction journey. Because we work with afforestation, which is both a measurable AND noticeable climate action, the investment is not only tied to the sustainability or finance department, but also often in HR, Marketing and Sales.” says Poul Erik Lauridsen, CEO Klimaskovfonden
Still, clear incentives and mechanisms for a wide-spread BVCM adoption are needed now. To this end, SBTi’s latest guidance may address adoption delays by providing clear instructions and recognition for organisations going above and beyond with BVCM.
Case Study: national climate commitments and local benefits in Denmark
BVCM strategies align with broader climate goals by supporting local afforestation projects in Denmark. With the Danish government aiming to plant 250k hectares of forest by 2045, companies can contribute to national climate commitments while enhancing local ecosystems. Klimaskovfonden’s tree planting projects offer tangible benefits, from carbon storage to improved biodiversity and water quality, making them a prime example of a high-quality BVCM project.
Supported by science-based frameworks like SBTi and Gold Standard, these initiatives show how BVCM can drive both global and local impact.
How will SBTi incentivise widespread adoption of BVCM?
Negative emissions pathways are increasingly central to corporate climate strategies, and SBTi’s latest guidance reinforces this by highlighting the need for removals, alongside other near-term mitigation actions, to ensure the 'net' in net zero. The guidance urges companies to act now to integrate removals into their near- and long-term strategies, in particular through use of Scope 1 neutralisation and beyond value chain mitigation.
This draft standard clarifies multiple aspects regarding corporate near-term action:
- This draft acknowledges the urgency of addressing emissions released into the atmosphere today and the critical role that companies can play in mobilising finance for mitigation activities beyond their value chain.
- Since ongoing emissions are a primary driver of negative climate impact, it is crucial for companies’ credibility to take responsibility for them.
- The SBTi aims to incentivise companies to take responsibility for the impact of ongoing emissions by providing optional recognition for these actions.
This degree of recognition has the potential to create wide-spread BVCM adoption from both SBTi target-setters and beyond by standardising science-backed best practices for investment. With this increased visibility of contribution actions and products, we anticipate that contribution products will increasingly gain a footing and recognition in the voluntary CO2 market in the coming years.
Still, without broader requirements for BVCM or removals across all industries, demand generation could stall. This could work against the noted ambition gap recognised by the scientific community. The question remains if companies are both knowledgeable of the need and ready to act, otherwise the demand levers of a ‘gold star system’ to recognise leadership may not be strong enough. To combat this, a stronger clarification of the link between BVCM strategies and corporate responsibility is essential from frameworks such as SBTi.
Driving value through climate action.
As further climate regulations change, BVCM will become increasingly relevant in demonstrating commitment to real, impactful climate mitigation while mitigating greenwashing risk. Already today, contribution approaches that follow leading frameworks remain popular to boost company reputation and climate leadership.
The characteristics of a strategic contribution strategy include:
- Support scaling of both nature-based and engineered carbon removal solutions with synergies across biodiversity and local communities.
- Provide flexible investment opportunities outside the direct scope of emissions, broadening the scope of corporate engagement.
- Separate reporting inventories of overall decarbonisation and other financial contributions allow clear communication of progress with key stakeholders and audiences.
The growing importance of BVCM in bridging the climate action gap is made clear by it’s rise in climate reporting frameworks such as SBTi. This strategy unlocks massive potential for companies to drive both immediate and long-term mitigation outcomes through strategic BVCM investments–and speed up action even while other levers may slow down. One thing is certain–deploying climate finance to help reach our broader goals is possible today and an essential element of corporate climate action.
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