Carbon removal demand slowed by market risks and uncertainty

Corporate buyers of carbon dioxide removal (CDR) credits are being met with various risks and uncertainties while managing the rising pressure to meet net-zero targets.

When speaking with Carbon Pulse on the topic, partner and leader of Torys’ Climate Change practice, Tyson Dyck, said buyers are approaching carbon removal like a commodity but without the backing of a fully developed market.

“There’s still some risk, in terms of the product itself – is the buyer going to get what they bargained for at the end of the day?” he asked.

Ratings agencies, measurement, reporting, and verification suppliers, and other gatekeepers are helping buyers manage project and delivery risks—particularly for those without in-house expertise—while contract structures are expected to evolve as buyers seek greater certainty in long-term offtake agreements.

“We’ll start to see more and more firm delivery commitments on behalf of developers and sellers in this marketplace and stronger reps and warranties around the quality of the products that are being sold,” Tyson said.

That certainty is particularly important for intermediaries seeking to sell CDR credits on to third parties, where back-to-back transactions depend on confidence that the original credits can be delivered on time, he added.

Looking ahead, Tyson told Carbon Pulse that compliance markets could become a major driver of demand if carbon dioxide removal is incorporated into robust schemes. However, he cautioned that high prices and strict delivery timelines remain key barriers, with buyers often favoring spot purchases after verification over taking on long-term delivery risk.

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