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Abstract

Closing the carbon dioxide removal (CDR) gap requires significant capital deployment. Carbon markets – both compliance and voluntary forms – are a central tool to raise such investment. However, for them to do so efficiently requires understanding the current and future market dynamics: between CDR and other forms of emission reduction and avoidance projects, as well as between conventional and novel forms of CDR. This perspective article outlines current trends related to the role of CDR in the voluntary carbon market. It then builds on this by exploring future developmental pathways for CDR via the voluntary carbon market as well as emerging international and domestic compliance carbon market regimes. It shows that while the use of such market mechanisms to support CDR has thus far been comparatively limited, the fundamentals are there for them to be effective tools in scaling CDR in future. Further developments are however needed for them to be a successful diffuser of CDR in this regard.