What could durable CDR demand look like by 2035?

Will durable carbon dioxide removal (CDR) demand become large and stable enough to support new supply? 

To answer this, ClimeFi identified five main drivers of demand: regulation, price, voluntary standards, pressure to hold a credible claim, and supply and delivery. We tracked 15 key market indicators that will influence low, medium, and high demand scenarios going forward. The scenarios are built on ClimeFi’s proprietary data, drawing on our understanding of supply, demand and regulation, our procurement mandates, and our central positioning in the market between buyers and suppliers.

In the medium case, which ClimeFi sees as the most likely, potential demand reaches about 12 Mt a year in 2030 and 79 Mt in 2035. These figures exclude Microsoft, whose demand follows its own targets rather than the drivers above.

Figure 1: Potential annual durable CDR demand in 2030 and 2035 (excl. Microsoft)

In the medium case, which ClimeFi sees as the most likely, potential demand reaches about 12 Mt a year in 2030 and 79 Mt in 2035. These figures exclude Microsoft, whose demand follows its own targets rather than the drivers above. 

The ClimeFi view

• The indicators are more important than the forecast.  Demand varies widely from one scenario to another, from 16 to 178 Mt a year by 2035. For buyers and investors, the most useful output is not the forecast itself, but the key indicators we have identified to track over the next 24 months. How they evolve should give a strong indication of which scenario the market is heading towards, and narrow the uncertainty in the months ahead.‍
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• Supply is likely to be tight. In the medium case, our supply forecast lands close to demand, so it remains uncertain whether the market will be heavily supply-constrained. Either way, we expect, and are already seeing, the most promising suppliers nearly sold out for 2030, leaving mainly the more expensive or riskier projects for buyers who wait.

For more detail on our analysis and assumptions, please feel free to contact ClimeFi at marketing@climefi.com.