Biden administration and Congress have wisely moved to encourage engineered carbon removal in the U.S. Demand for technologies that take carbon out of the atmosphere and store it away is rapidly growing — the market grew by 1,400 percent between 2022 and 2023 — and clever policy design directed a lot of this expansion into the U.S.
Today, engineered carbon removal projects are creating jobs across the country, incentivizing innovators to find new, effective ways to capture and store carbon dioxide, and helping the U.S. to meet ambitious climate targets. However, other countries are not far behind, and the race to lead the global carbon removals market is only just beginning.
The suite of technologies that remove carbon from the air and store it on or under the ground — including biochar, carbonated materials bioenergy with carbon capture and storage, and direct air carbon capture and storage — have gone from a niche to a necessary piece of the climate change solutions puzzle. According to the Intergovernmental Panel on Climate Change, both engineered and natural carbon removals are vital to every scenario in which the world limits global warming to 2 degrees Celsius.
The World Resources Institute estimates that up to 10 gigatons of carbon must be removed from the atmosphere each year by 2050 to reach the targets outlined in the Paris Agreement. That’s as about as much carbon dioxide as the entire U.S. emitted in 2022. But only 5 million tons of carbon has been removed by engineered removal technologies to date, meaning that the engineered carbon removal market has an enormous playfield into which it must expand.
Engineered carbon removal has become worthwhile to pursue largely because of the voluntary carbon market in which my company participates — a mechanism that places a value on each ton of carbon a project removes and safely stores and provides a marketplace that connects credit suppliers and buyers.
Over the last several years, the U.S. enacted several policies that established it as a global leader in the engineered carbon removal market. The Inflation Reduction Act expanded the types of removal projects that qualify for the section 45Q tax credit and raised the potential credit amount to as much as $180 per ton for some carbon capture methods. This expansion made it easier for companies to enter the carbon removal market and sparked a record number of projects to break ground. An estimated 140 engineered carbon removal projects are now under development in the U.S.
One such project made headlines earlier this month as Red Trail Energy became the world’s first biofuel producer to enter the international carbon market by capturing and permanently storing tens of thousands of tons of carbon that would have otherwise been vented into the atmosphere.
The Energy Department’s Carbon Dioxide Removal Purchase Pilot Prize has similarly driven innovation in carbon removals and U.S. leadership in the field. Launched in September 2023, it authorizes the federal government to spend up to $35 million on removal credits, advancing technologies that reduce emissions from hard-to-abate sectors including aviation and shipping and eliminating legacy climate pollution that lingers in the atmosphere.
Earlier this month the Energy Department issued a challenge for organizations to purchase high quality, permanent CDR credits as part of this funding effort. The Energy Department has long supported carbon removal technologies such as direct air capture through innovation hubs and prize competitions, and funding for research on carbon removal has led to the discovery of innovative new technologies such as enhanced rock weathering, a process that supercharges the natural ability of rocks to permanently capture and store carbon.
A healthy engineered carbon removals market is good for the climate and for the U.S. economy. The market saw record growth in 2023, thanks in part to $1.2 billion in early-stage capital investment, and 2024 is poised to be another year of significant growth.
A carbon removals market that delivers gigaton-scale removals could be worth up to $1.2 trillion by 2050, supporting a range of players, including investors, suppliers, buyers, traders, and other intermediaries, and creating jobs and new skillsets. Domestic brands such as Microsoft and Stripe have made major investments in carbon removal technology credits to meet their net zero and other climate goals, and U.S. businesses have entered into more agreements to purchase future removal credits than any other country.
But Canada, Brazil and other countries are close behind the U.S. in the engineered carbon removal supply and demand. To keep the U.S. among the leaders in a market that must grow alongside other climate solutions, policymakers should continue leveraging the buying power of the U.S. business community, the ingenuity of its scientists, and the scalable potential for carbon removals help achieve a climate safe future for everyone.
Daniel Sierra is compliance director at Puro.earth, a crediting platform for engineered carbon removal.