Carbon capture and storage (CCS) is moving from niche pilot projects to a global climate strategy worth billions. Once seen as a backup plan, it’s now racing to the forefront — from massive U.S. industrial hubs to China’s fast-expanding carbon pipelines. Supporters call it essential for tackling the world’s toughest emissions in steel, cement, and energy. Critics warn it could be a costly detour.
As governments, investors, and big tech pour money into CCS, one question looms: can it deliver the deep carbon cuts needed to hit net zero by 2050?
This guide walks you through everything you need to know: how CCS works, the latest technologies, the biggest projects and market leaders, and where the fastest growth is happening.
We’ll also explore market trends, policy drivers, corporate demand, and the risks investors should watch. Whether you’re new to CCS or tracking it as a climate tech opportunity, this resource covers the science, the strategy, and the business potential shaping the future of carbon removal.
What is Carbon Capture and Storage (CCS)?
Carbon Capture and Storage is a climate technology designed to prevent carbon dioxide (CO₂) from entering the atmosphere. It captures CO₂ emissions from places like power plants, cement factories, and steel mills. This happens before the emissions can add to global warming.
A related term is Carbon Capture, Utilization, and Storage (CCUS). It takes things further by using captured CO₂ in products like synthetic fuels, building materials, or plastics.
The key difference between CCS and CCUS lies in the “U” — utilization. In CCS, the captured CO₂ is permanently stored underground, while in CCUS, part or all of that CO₂ is repurposed for industrial use before storage.
This technology helps fight climate change. It can reduce emissions from hard-to-decarbonize industries. The Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) both recognize CCS as a critical tool for achieving net-zero targets.
Global climate agreements, like those at the annual UN Climate Change Conferences (COP), stress that CCS is key to limiting global temperature rise to below 1.5°C.
How Carbon Capture Works: A Step-by-Step Process
CCS works in three main stages — capture, transport, and storage — with an optional fourth step for utilization. Let’s break down each one of them.
- Capture: The process starts by separating CO₂ from other gases produced during industrial processes or electricity generation. This can be done at power plants, cement kilns, oil refineries, and other facilities. Special chemical solvents, membranes, or advanced filters are used to remove CO₂ from flue gas or fuel before combustion.
- Transport: Once captured, CO₂ must be moved to a storage or utilization site. The most common method is through high-pressure pipelines. In some cases, ships or even trucks carry CO₂ over long distances, especially if storage sites are far from industrial hubs.
- Storage: For permanent storage, CO₂ is injected deep underground into geological formations such as saline aquifers or depleted oil and gas fields. These sites are chosen for their ability to trap CO₂ securely for thousands of years, with monitoring systems in place to detect any leaks.
- Utilization: In CCUS projects, some or all of the captured CO₂ is reused instead of being stored immediately. It can be converted into synthetic fuels, used in making cement and plastics, or even injected into greenhouses to boost plant growth. While utilization does not always result in permanent storage, it can reduce the need for fossil-based raw materials.
Tech Toolbox: The Many Ways of Capturing Carbon
CCS is not a single technology. Different methods are used depending on the type of facility, the fuel being used, and the stage at which CO₂ is removed. The main types are:
Post-combustion capture: This is the most common method today. CO₂ is removed from the exhaust gases after fuel has been burned. Chemical solvents or filters separate the CO₂ from other gases before it is compressed for transport.
Pre-combustion capture: Here, the fuel is treated before it is burned. The process converts the fuel into a mixture of hydrogen and CO₂. The CO₂ is separated and stored, while the hydrogen can be used to produce energy without direct emissions.
Oxy-fuel combustion: In this method, fuel is burned in pure oxygen instead of air. This creates a stream of exhaust that is mostly CO₂ and water vapor, making it easier to capture the CO₂.
Direct Air Capture (DAC): DAC removes CO₂ from the air instead of just one source. It uses big fans and chemical filters to do this. It can be used anywhere but requires more energy because CO₂ in the air is less concentrated.
As of end-2024, around 53 DAC plants were expected to be operational globally, rising to 93 by 2030 with a capacity of 6.4–11.4 MtCO₂/year.
Bioenergy with CCS (BECCS): This approach combines biomass energy production with carbon capture. Plants absorb CO₂ while growing, and when the biomass is burned for energy, the emissions are captured and stored. This can result in “negative emissions,” removing CO₂ from the atmosphere.
Global Race: Which Countries Are Winning CCS Leadership
Carbon capture and storage is now a reality. It’s in operation in many countries, with numerous projects either planned or being built. CCS technology is still new compared to global emissions. But momentum is growing.
Governments, industries, and investors are now committing to large-scale deployment. CCS capacity differs between regions:
United States
The U.S. leads CCS deployment, holding about 40% of global operational capacity. By mid-2024, facilities captured roughly 22–23 Mt CO₂ annually. Growth is driven by the expanded 45Q tax credit under the Inflation Reduction Act, rewarding storage and utilization. Flagship projects include Petra Nova in Texas and Midwest CCS hubs serving ethanol, fertilizer, and industrial sites.
Canada
Canada hosts pioneering projects like Boundary Dam (the world’s first commercial coal CCS) and Quest in Alberta, capturing CO₂ from hydrogen linked to oil sands. National capacity is ~4 Mt per year, supported by a federal CCS investment tax credit targeting heavy industry and clean hydrogen.
Norway
Norway has led offshore CO₂ storage since the Sleipner project began in 1996, injecting ~1 Mt annually into a saline aquifer. The Northern Lights project, part of Longship, will create a shared CO₂ transport and storage network for European industries.
China
China’s CCS capacity grew from ~1 Mt/year in 2022 to over 3.5 Mt in 2024, mainly in coal-to-chemicals, gas processing, and EOR. CCS is now part of national climate strategies, signaling rapid expansion.
United Kingdom
The UK’s cluster model links industries via shared pipelines and offshore storage. The East Coast Cluster and HyNet, due late 2020s, could together capture over 20 Mt CO₂ annually.
Australia
Australia’s ~4 Mt/year capacity includes the massive Gorgon gas-linked CCS facility in Western Australia, despite operational setbacks. With vast geological storage potential, the country aims to be a CO₂ storage hub for Asia’s export industries.
Total Operational Capacity and Growth
As of 2024, global CCS facilities in operation had a combined capture capacity of just over 50 million tonnes of CO₂ per year. This shows steady growth, up from about 40 Mt a few years ago. However, it still accounts for just a small part of the over 40 billion tonnes of CO₂ emitted worldwide each year.
However, the project pipeline is expanding quickly. The facilities being built will double the current capacity. Early development projects might raise global capacity to over 400 million tonnes per year by the early 2030s if they stay on track.
The Rise of CCS Hubs and Clusters
A key trend in the industry is the creation of CCS hubs—shared infrastructure networks where multiple companies use the same transport and storage systems. This model lowers costs and speeds up deployment by avoiding the need for every facility to build its own pipeline or storage site.
The U.S. Midwest ethanol corridor, Norway’s Northern Lights, and the UK’s industrial clusters are among the most advanced examples. These hubs usually form close to industrial areas. Here, emissions are high, and the current infrastructure, like pipelines and ports, can be adjusted for CO₂ transport.
Why CCS Matters in the Climate Fight
Carbon capture and storage is not meant to replace renewable energy or other climate solutions. Instead, it focuses on the toughest parts of the emissions problem—places where cutting CO₂ is especially hard or expensive. Experts call these hard-to-abate sectors.
Hard-to-Abate Sectors
Some industries can’t simply switch to clean electricity. For example, making steel requires very high heat and chemical reactions that release CO₂. Cement production also releases CO₂ as a byproduct of making clinker, the key ingredient in concrete.
Chemical plants and refineries have complex processes that generate large amounts of CO₂. Even aviation faces limits, since planes can’t yet fly long distances on batteries alone. CCS can capture emissions from these sources. This helps reduce climate impact while keeping production running.
Here is the technology’s application in various industries:
Role in Meeting the 1.5°C Target and Net-Zero by 2050
To avoid the worst effects of climate change, scientists say global warming must be kept to 1.5°C above pre-industrial levels. That means reaching net-zero emissions by around 2050.
The Intergovernmental Panel on Climate Change (IPCC) has run hundreds of models to see how this can be done. In most scenarios, CCS plays a key role. Without it, the cost of meeting climate targets could rise by 70% or more, because other solutions would have to carry the full load.
Synergies with Clean Hydrogen, Carbon Markets, and Industrial Strategy
CCS also works well with other low-carbon solutions. CCS captures CO₂ that would escape when producing clean hydrogen, especially “blue hydrogen” from natural gas. This creates a cleaner fuel for use in transport, heating, and industry.
In carbon markets, CCS can generate credits for each tonne of CO₂ captured and stored. These credits can be sold to companies looking to offset their emissions. Governments are also linking CCS to industrial strategy by building shared hubs and pipelines. These will serve multiple factories, power plants, and fuel producers. This makes CCS cheaper and faster to deploy.
Endorsements from the IEA and UN
The International Energy Agency (IEA) calls CCS “critical” for reaching net zero, especially in heavy industry. It estimates the world will need to store 1.2 billion tonnes of CO₂ each year by 2050.
The United Nations also recognizes CCS in its climate plans. It has been featured in multiple COP agreements as a key technology for both reducing emissions and removing CO₂ from the atmosphere. These endorsements matter because they help drive policy support, funding, and international cooperation.
CCS Investment and Financing: How Much Does It Cost?
Carbon capture and storage can make a big impact on emissions. But it comes with a high price tag. Most projects cost between $50 and $150 for every tonne of CO₂ (and even over $400 for some technologies) captured and stored.
The lower end usually applies to large industrial sites near storage locations. The higher end often applies to smaller or more complex projects, or those that require long transport pipelines.
Government Support
Governments play a key role in making CCS affordable. In the U.S., the 45Q tax credit offers up to $85 per tonne for CO₂ stored underground and $60 per tonne for CO₂ used in other industrial processes.
Canada provides an Investment Tax Credit (ITC) covering up to 50% of eligible CCS costs. In Europe, the Innovation Fund supports early-stage CCS and other low-carbon projects, offering billions in grants.
Blended Finance and Partnerships
Because CCS is expensive, many projects rely on blended finance—a mix of public and private funding. Oil and gas companies invest in cutting carbon emissions. Meanwhile, governments help by offering grants and tax breaks.
Public-private partnerships are common, especially for shared CCS hubs where multiple companies use the same pipelines and storage sites. International lenders, such as the World Bank and the Asian Development Bank, are funding CCS in emerging economies.
Voluntary Carbon Market (VCM)
CCS can also generate carbon removal credits for sale in the voluntary carbon market. These credits are purchased by companies aiming to offset their emissions.
While VCM prices vary, high-quality removal credits often sell for $100 per tonne or more, making them a potential revenue stream for CCS operators. Market demand for CCS-based credits is still growing. It relies on trust in the technology’s monitoring and verification.
Investor Angle: How to Invest in the CCS Industry
Interest in carbon capture and storage is rising among ESG, climate tech, and energy transition investors. The global CCS market was valued at about $4.5 billion in 2023 and could grow to more than $20 billion by 2033, according to industry forecasts. This growth is being driven by stricter climate policies, corporate net-zero pledges, and rising carbon prices.
Public Stocks
Investors can buy shares in companies directly involved in CCS. Examples include Aker Carbon Capture (Norway), Occidental Petroleum (U.S.), Air Liquide (France), and ExxonMobil.
Many oil and gas majors now see CCS as essential to keeping their assets viable in a low-carbon future. These firms are investing billions in CCS hubs and carbon removal partnerships.
Private Startups
Private markets offer exposure to emerging technologies like DAC. Leading firms include Climeworks (Switzerland), CarbonCapture (U.S.), and Heirloom (U.S.).
DAC projects are smaller today but attract premium interest from tech backers and climate-focused venture capital. In 2022 alone, DAC startups raised over $1 billion in funding.
ETFs and Funds
There are also climate-focused ETFs and funds that include carbon removal technologies as part of their portfolios. These funds reduce risk by investing in various companies. They focus on CCS, renewable energy, hydrogen, and other low-carbon solutions.
Carbon Credit Markets
Some investors buy into CCS through the carbon credit market. This can be done by funding CCS or DAC projects that issue carbon removal credits.
Platforms like Puro.earth and CIX (Climate Impact X) connect investors with verified carbon removal projects. Credits from high-quality CCS projects can fetch $100–$200 per tonne depending on location and verification standards.
Due Diligence
Before investing, it is important to check policy risk, technology readiness, cost curves, and scalability. CCS works best in large industrial hubs with access to geological storage. Finally, watch these key sectors because they will likely drive demand and scale for CCS:
- The oil & gas sector uses CCS for enhanced oil recovery and to lower its emissions.
- Cement firms need CCS because their production process emits CO₂ that can’t be avoided easily.
- Hydrogen—especially blue hydrogen—depends on CCS to cut its carbon footprint.
- DAC startups aim to remove CO₂ directly from the air and may sell high-value removal credits.
- And carbon marketplaces and registries will shape how removal credits are priced and trusted.
These areas have the most potential to scale quickly as policies tighten and carbon prices rise.
Risks, Challenges, and Criticism of CCS
While CCS has strong potential as a climate solution, it faces several challenges that investors, policymakers, and project developers must consider.
- High Capital Costs and Slow ROI: Large CCS projects cost hundreds of millions to billions of dollars. At $50–$150 per tonne captured, returns depend on strong policy support, carbon pricing, or premium credits, with payback periods often spanning years.
- Energy Requirements and Lifecycle Emissions: CCS uses significant energy, sometimes from fossil fuels. Without low-carbon power, net emissions savings shrink, making efficiency improvements essential.
- Storage Risks: Leakage, Permanence, and Monitoring: Geological storage is generally safe, but leakage is possible. Continuous monitoring ensures CO₂ remains underground for centuries.
- Debate Over Fossil Fuel Dependency vs. Genuine Decarbonization: Critics say CCS can prolong fossil fuel use. Supporters argue it’s vital for industries like cement and steel.
- Policy Uncertainty and Lack of Global Standards: Policy changes can undermine project economics. The absence of global CO₂ measurement standards adds risk to cross-border investments.
Market Outlook (2024–2030): What’s Next for CCS?
The world is gearing up for a big expansion in carbon capture and storage. But just how fast will CCS grow—and what could power that growth?
Growing CCS Pipeline and Capacity
Momentum is clearly building. The Global CCS Institute reports a record 628 projects in the pipeline—an increase of over 200 from the previous year.
The expected annual capture capacity from these projects is 416 million tonnes of CO₂. This amount has been growing at a 32% rate each year since 2017. Once the current construction is completed, operational capacity is set to double to more than 100 Mt per year.
Similarly, the IEA sees global capture capacity rising from roughly 50 Mt/year today to about 430 Mt/year by 2030, with storage capability reaching 670 Mt/year.
Still, this is only a start. To meet global climate goals, CCS will need to scale much more, lasting into the billions of tonnes annually.
Policies Fueling Momentum
Governments are shoring up policy support to accelerate CCS rollout. Here are the regional trends so far:
- In the U.S., the Inflation Reduction Act (IRA) expanded the 45Q tax credit—making CCS more financially appealing for project developers.
- The EU’s Net-Zero Industry Act and updated Industrial Carbon Management Strategy aim to help the region capture at least 50 Mt by 2030, rising to 280 Mt by 2040.
- Across the Asia-Pacific, countries like Australia are positioning themselves as carbon storage hubs. With strong geology and policy backing, Australia could generate over US$500 billion in regional carbon storage revenue by 2050.
Corporate Buyers Powering Demand
Major companies are not just talking—they’re signing deals:
- Microsoft stands out as a leading buyer of carbon removal credits. It has contracted close to 30 million tonnes. This includes 3.7 million tonnes over 12 years with startup CO280 and 1.1 million tonnes in a 10-year deal with Norway’s Hafslund Celsio project.
- Shopify co-founded Frontier—a $925 million advance market commitment—with other big names like Stripe and Alphabet. It has also purchased over $80 million in carbon removal from startups using DAC, enhanced weathering, and other technologies.
These corporate purchases show a strong demand for CCS-backed removal credits. They also help build a stable market for project developers.
Carbon Pricing, ESG Rules, and Global Markets
CCS is also benefiting from broader climate market trends:
- Carbon pricing and trading systems globally are starting to include CCS credits. As prices rise, CCS projects can improve their economics.
- ESG reporting and net-zero commitments are increasing transparency and accountability. Firms are expected to show real results—CCS helps deliver that.
- The rise of international carbon markets and registries is creating standardized ways to value and certify carbon removals. This makes CCS credits more trustworthy and investable.
Quick Take
By 2030, CCS capacity could rise eightfold—from 50 million to over 400 million tonnes. This growth is being driven by government policy, big corporate offtake deals, and a maturing carbon credit market. While still far from what’s needed to fully tackle climate change, the CCS sector is clearly moving from pilot stage to commercial reality
The Role of CCS in a Net-Zero Future
CCS isn’t a silver bullet. It’s a vital tool that works with renewables, electrification, and nature-based solutions like reforestation.
Renewables stop future emissions. CCS tackles the emissions that still exist, especially from old infrastructure in steel, cement, and chemicals. These are costly and slow to replace.
CCS captures emissions at the source. This helps extend facility lifespans and supports climate goals. It’s especially important for economies with new industrial assets.
Beyond reduction, CCS can enable permanent carbon removal through direct air capture and bioenergy with CCS, storing CO₂ underground for centuries. These methods can offset hard-to-abate sectors such as aviation and agriculture.
Responsible deployment is key. It needs strong MRV standards, community engagement, and alignment with sustainability goals. This helps avoid delays in phasing out fossil fuels.
CCS, when used wisely, connects our current fossil fuel economy to a low-carbon future. It helps reduce emissions we can’t fully eliminate yet and gives us time to develop cleaner technologies.
CCS is Not a Silver Bullet—But a Vital Tool
Carbon capture and storage is not a cure-all for the climate crisis. No single technology can deliver net zero on its own, and CCS should be viewed as one tool in a broader decarbonization toolkit.
A balanced approach requires acknowledging both the potential and the limitations of CCS. The technology can cut emissions and even remove carbon permanently when it’s based on solid science, strong policies, and clear reporting.
However, overreliance or misuse—particularly if it delays the shift away from fossil fuels—risks undermining climate goals.
The pathway to net zero will demand a combination of innovation, investment, and urgency. Carbon capture and storage is part of that solution set, and with careful governance, sustained funding, and clear standards, it can help bridge the gap between today’s emissions reality and the low-carbon future we urgently need.
- FURTHER READING: Carbon Capture and Storage to Grow 4x by 2030: Is It a Turning Point for Climate Action?
The post What is Carbon Capture and Storage? Your Ultimate Guide to CCS Technology appeared first on Carbon Credits.
Carbon Footprint
Carbon Market 2026: Supply Squeeze Pushes Premium Carbon Credit Prices Up, Sylvera Finds
The global carbon market is changing fast in 2026. The latest insights from Sylvera’s State of Carbon Credits report show a clear shift. Volumes are falling, but value is holding steady. This means buyers now focus more on quality than quantity.
Furthermore, the market is splitting into two clear segments. High-quality credits are in demand and sell at higher prices. Older or lower-quality credits are losing interest. This divide is growing stronger and shaping how the market will evolve in the coming years.
Shell’s Sharp Cut Pulls Down Market Volumes
Carbon credit retirements reached 51 million in the first quarter of 2026. This is down from 55.3 million in the same period last year. The total market value also fell slightly to $290 million, compared to $309 million a year ago.
Despite this decline, prices did not weaken. The average price per credit increased to $5.69 from $5.60. This shows that buyers are willing to pay more for credits they trust.
Interestingly, a major reason for the drop in volumes was reduced activity from Shell. The company sharply cut its purchases. It retired just 494,000 credits in Q1 2026, compared to 6.7 million in Q1 2025 and 5.6 million in 2024. This single change had a large impact on the overall market.
Value Now Drives the Market
The carbon market now runs on a simple idea. Value matters more than volume. Buyers want credits that deliver real environmental impact. They prefer projects with clear data, strong verification, and proven results.
High-quality credits now define the market. These credits meet strict standards and often align with compliance systems. Because of this, they command higher prices and stronger demand.
This shift is also linked to the rise of compliance markets. Programs like CORSIA are increasing demand for reliable credits. As a result, voluntary buyers and compliance buyers now compete for the same supply.
Experts expect this trend to grow stronger. Compliance demand could surpass voluntary demand by 2027. This will increase pressure on supply and push premium credit prices higher.
The report highlighted that, investment-grade credits (BBB+) now command an average of $20.10 per credit in Q1 2026, up from $18.10 in Q1 2025, as shown in the image below:
Recap of 2025 Carbon Market
Compliance programs made up 24% of total retirements in 2025. According to Sylvera, this share is rising fast. It is expected to go beyond voluntary demand by 2027. This growth is mainly driven by CORSIA Phase 1 rules and the expansion of domestic carbon markets.
This means compliance demand is set to change the carbon market in a big way. Soon, both voluntary buyers and regulated systems will compete for the same high-quality credits. This is already making supply tighter and more competitive.
At the same time, international trading under Article 6 gained momentum. In 2025, around 20 new bilateral agreements were signed, and the first large-scale carbon credit trades took place. This shows that global carbon transfer systems are now becoming active in practice.
However, the system is also becoming more complex. One key factor is “corresponding adjustments,” which now decide whether a credit is fully acceptable in compliance markets. In addition, countries like China, Japan, Brazil, and Indonesia are building their own domestic carbon systems.
These systems are expected to create strong new demand, but they also add more rules and complexity to the market.
Supply Crunch Becomes the Key Challenge
However, Sylvera has flagged a different scenario for his year. Supply is now the biggest issue in the market. High-quality credits are becoming harder to find. Many credits exist, but not all meet strict requirements.
Furthermore, the main bottleneck is coming from approvals under Article 6. These rules govern international carbon trading. Delays in approvals mean many credits cannot yet enter the market. Now this creates a gap. Supply looks strong on paper, but usable supply remains limited. This shortage keeps prices firm and supports premium credits.
CORSIA Supply Expands, But Not Enough
There has been progress in aviation supply. Eligible credits under CORSIA reached 32.68 million. This is more than double last year’s level.
These credits come from major registries like Verra, Gold Standard, and ART TREES. However, supply still falls short in practice. Not all credits meet full compliance standards. This keeps the market tight and competitive.
Moving on, the question is what’s driving market growth.
Cookstoves Drive Market Growth
Cookstove projects are growing quickly. Their share increased from 17% in 2025 to 26% in Q1 2026. Africa leads this segment. Around 80% of the supply comes from the region. Most of these projects also meet compliance requirements under CORSIA.
Quality is improving in this category. Developers are moving away from older methods. They now use stronger, data-driven approaches. This shift improves trust and attracts more buyers.
Other projects:
- REDD+ Regains Trust: Forestry projects under REDD+ are making a comeback. Their share of retirements rose to 25% in Q1 2026. These projects faced heavy criticism in the past. However, new rules and better standards are restoring confidence. Updated methodologies have removed weaker credits. This has improved the overall quality of supply. Global policy clarity has also helped. Buyers now have more confidence in using REDD+ credits in compliance markets. This has supported demand.
- Waste management projects: They are growing in importance, and their share reached 10% of total retirements, the highest so far. Landfill methane projects are leading this growth. These projects are easier to measure and verify. They also meet compliance standards. Buyers are now exploring options beyond traditional sectors. Waste projects offer a reliable and practical solution.
New Credit Types Expand the Market
Several new project types are growing fast. They are adding fresh supply and attracting new buyers.
- Clean water projects have seen strong growth in recent years. They now produce millions of credits annually. Marine and mangrove projects are also gaining attention. They offer strong environmental benefits and long-term carbon storage.
- Industrial projects focused on nitrous oxide reduction are expanding as well. These projects are highly measurable and align well with compliance systems. At the same time, regenerative agriculture is growing at the fastest pace. It has moved from almost no activity to millions of credits in a short time.
These new categories are helping the market grow. However, quality remains the key factor that drives demand.
Buyers Shift Toward Better Credits: Regional Analysis
Buyer behavior is changing across regions. The United Kingdom is leading the move toward high-quality credits. Companies are under pressure to show real climate action. This has pushed them to choose better credits.
The United States and Canada are also improving. Buyers prefer projects that meet both voluntary and compliance standards. This supports demand for high-quality supply.
North America Sets the Benchmark
North America sets the benchmark for quality. A large share of its credits meets high rating standards. This strong quality supports higher prices. The average price reached $14.80, the highest globally. Strong domestic demand and strict standards drive this trend.
On the other hand, South America is seeing strong demand but limited new supply. This creates pressure in the market. Prices have slightly declined to $11.50. However, the quality mix is improving. Waste projects are helping fill the gap left by falling forestry supply.
- Europe remains the largest market by volume. However, the quality mix is still uneven. Some buyers continue to use lower-rated credits.
- Japan and South Korea focus on lower-cost options like hydropower. This keeps their share of high-quality credits low. In Latin America, buyers often choose local projects. Limited regulatory pressure keeps the quality demand weaker.
- Africa is moving toward better quality. High-rated supply is increasing, while low-rated supply is falling. As explained before, cookstove projects are the main driver. At the same time, lower-quality forestry projects are declining. This improves the region’s overall market position.
- Asia faces weaker market conditions. Supply has dropped sharply due to fewer renewable energy projects. The average price stands at $5.30, the lowest globally. Demand remains steady but lacks strong growth. This keeps prices under pressure.
Indonesia Stands Out in Asia
Indonesia is a bright spot in the region. Credit prices have risen strongly in the past year. High-quality peatland projects are driving this growth. International deals under Article 6 are also adding value. These factors attract buyers looking for reliable credit.
This shows how strong quality and supportive policies can boost market performance.
Final Take: Quality Defines the Future
The carbon market in 2026 is clear and focused. Quality now drives demand, pricing, and growth. Buyers are becoming more selective. They want credits that are verified, reliable, and compliant.
Supply remains tight, especially for high-quality credits. At the same time, compliance markets are growing. This increases competition and pushes prices higher.
The gap between high- and low-quality credits will continue to widen. In simple terms, the market is no longer about how many credits exist. It is about how good they are.
- READ MORE: Top Carbon Credit Companies to Watch in 2026
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Carbon Footprint
US and Australia Boost Critical Minerals Support with $3.5B Alliance, Challenging China’s Grip
Australia and the United States have launched a $3.5 billion critical minerals partnership, marking one of the largest bilateral efforts to secure materials essential for clean energy and electric vehicles (EVs).
The agreement focuses on strengthening supply chains for minerals such as lithium, cobalt, nickel, and rare earth elements. These materials are vital for batteries, solar panels, wind turbines, and other low-carbon technologies.
The deal comes as global demand for these minerals rises sharply. The International Energy Agency estimates that demand for critical minerals could quadruple by 2040 under net-zero scenarios. Lithium demand alone could grow more than 40 times by 2040, driven by EV adoption and battery storage.
Australia plays a central role in this supply chain. It currently produces about 55% of the world’s lithium, making it the largest global supplier. However, much of the processing still takes place overseas, creating supply risks for Western economies.
The new partnership aims to address this gap by boosting both extraction and domestic processing capacity.
Billions Back the Full Value Chain—from Mine to Market
The $3.5 billion investment will be deployed over seven years. The United States will give around $2.1 billion. This funding comes from the Defense Production Act and the Infrastructure Investment and Jobs Act. Australia will provide $1.4 billion through national financing programs.
The funding is designed to support the full value chain, from mining to refining to advanced research. The main areas of investment include:
- $1.8 billion for new mining projects and infrastructure upgrades
- $1.2 billion for processing and refining facilities
- $500 million for research, innovation, and sustainable extraction technologies
A key goal is to reduce reliance on external processing markets and build more resilient supply chains. This includes expanding refining capacity for lithium and rare earth elements, which are often processed outside producing countries.
The partnership is also expected to create economic benefits. Government estimates say about 15,000 direct jobs will be created. Additionally, around 30,000 indirect jobs will come from supply chains and related industries.
Breaking China’s Grip on Mineral Processing
The agreement reflects growing concern over the concentration of mineral processing in China. Currently, China dominates key parts of the global supply chain.
According to the International Energy Agency:
- China handles about 60% of global lithium processing
- It controls more than 80% of rare earth refining
- It also leads in battery component manufacturing
This dominance creates risks for supply security, pricing, and geopolitical stability. Disruptions in one region can affect global clean energy deployment.
By investing in alternative supply chains, Australia and the United States aim to diversify production and reduce these risks. The partnership could also encourage other countries to develop their own critical minerals strategies.
In addition, the deal may help stabilize prices for key materials. Volatility in lithium and nickel markets has impacted EV production costs. It has also delayed some renewable energy projects in recent years.
Supporting Climate Goals and the Energy Transition
The partnership has direct implications for global climate efforts. Critical minerals are essential for scaling clean energy technologies. Without a reliable supply, the pace of decarbonization could slow.
Battery storage is a key example. Energy storage systems help manage the variability of renewable energy sources like solar and wind. Expanding mineral supply will support the growth of these systems.
The IEA projects that global battery capacity must increase significantly to meet climate targets. Some estimates suggest energy storage capacity needs to grow more than sixfold by 2030 to stay on track for net-zero emissions.
The US-Australia alliance could help unlock this growth by ensuring stable access to raw materials. This, in turn, may reduce costs for batteries and renewable energy systems over time.
Both countries have also committed to improving environmental standards in mining. This includes reducing emissions, improving water management, and limiting land impacts. These measures are important because mining itself can be carbon-intensive.
Efforts to lower emissions in mineral extraction could also influence carbon accounting frameworks. As supply chains become more transparent, companies may need to track and report emissions linked to raw material sourcing.
ESG, Carbon Markets, and the New Mining Reality
The expansion of critical minerals supply chains is expected to influence carbon markets and ESG strategies.
As mining activity increases, so does the need to manage emissions. This could increase the need for carbon credits in the extractive sector. This is true for projects that cut or offset emissions from mining.
At the same time, improved supply chains for clean technologies may accelerate renewable energy deployment. This could support carbon reduction efforts across multiple sectors, including power generation and transportation.
The partnership may also lead to higher standards for responsible sourcing. Materials produced under strict environmental and social guidelines could command a premium in global markets.
This shift aligns with growing investor focus on ESG performance. Companies face growing pressure to show that their supply chains meet sustainability standards. This includes tracking emissions across Scope 1, 2, and 3 categories.
Over time, these trends could reshape how carbon credits are used. Companies may focus more on cutting emissions directly in their supply chains, rather than just using offsets.
Industry Scrambles to Secure the Next Wave of Supply
The announcement has received strong support from industry players. Major automakers and battery manufacturers are seeking secure and stable supplies of critical minerals. Companies like Tesla, Ford, and General Motors want to source materials from projects tied to the partnership.
Mining firms are also responding. Albemarle Corporation and Pilbara Minerals will likely gain from more investment and quicker project timelines.
Investor interest in the sector is rising as well. Global spending on energy transition minerals is growing rapidly, supported by both public and private capital.
The International Energy Agency reports that investment in critical minerals has increased sharply in recent years. This trend is expected to continue as countries compete to secure supply chains for clean energy technologies.
A Defining Shift in the Global Energy Economy
The $3.5 billion Australia–US critical minerals partnership represents a major step in reshaping global energy supply chains. It addresses a key bottleneck in the transition to a low-carbon economy: access to essential raw materials.
In the short term, the deal may help stabilize supply and reduce risks linked to market concentration. In the long term, it could accelerate the deployment of clean energy technologies and support global climate goals.
For carbon markets, the impact is indirect but important. More minerals can help speed up the use of renewables and energy storage. This, in turn, cuts emissions throughout the economy. At the same time, higher mining activity may drive demand for carbon credits and new emissions reduction strategies within the sector.
The success of the partnership will depend on execution. Expanding mining and processing capacity takes time, investment, and strong environmental oversight.
If these challenges are addressed, the alliance could serve as a model for future international cooperation on critical minerals. It also highlights how energy security, economic policy, and climate action are becoming increasingly connected.
Ultimately, as demand for clean energy continues to grow, securing sustainable and reliable mineral supply chains will remain a key priority for governments and industries worldwide.
The post US and Australia Boost Critical Minerals Support with $3.5B Alliance, Challenging China’s Grip appeared first on Carbon Credits.
JPMorgan Chase has signed two major carbon removal agreements this month. The first one involves a purchase of 60,000 metric tons of durable carbon dioxide removal (CDR) over ten years from climate startup Graphyte. The deal uses biomass-based technology that converts agricultural and timber waste into stable carbon blocks stored underground.
In parallel, JPMorgan has also secured 85,000 tons of forest-based carbon removal credits through improved forest management projects. These credits, marketed by Anew Climate, come from U.S. forest projects managed by Aurora Sustainable Lands.
They aim to extend harvest cycles, boost forest health, and enhance long-term carbon storage. The approach helps maintain higher carbon stocks in working forests while supporting biodiversity and sustainable timber production.
Taylor Wright, Head of Operational Sustainability at JPMorgan Chase, noted:
“We were excited to add credits from the Little Bear Forestry Project to our carbon removal portfolio. The dynamic baselining provides meaningful evidence that these credits meet a high threshold for quality, supporting our interests as both a buyer and as a steward of market integrity.”
Carbon Removal Still Small, But Growing Fast
The agreements are part of a broader push by the bank to expand its carbon removal portfolio. While the total volume is small compared to global emissions, the deals highlight a shift in corporate climate strategies.
Companies are now focusing more on durable carbon removal, not just emission reductions. JPMorgan’s mix of engineered and nature-based solutions also reflects a growing trend toward portfolio diversification in carbon removal sourcing.
Carbon removal remains a small but critical part of climate action. The United States emits about 5 billion tons of CO₂ per year, showing how limited current removal volumes still are.
However, long-term demand is expected to grow sharply. The Intergovernmental Panel on Climate Change estimates that by 2100, the world might need to remove 100 to 1,000 gigatons of CO₂. By mid-century, annual removal should reach about 10 gigatons per year.
Today’s market is far from that scale. Most carbon removal deals are measured in thousands or hundreds of thousands of tons. But these early contracts are seen as critical. They help build supply, reduce costs, and attract investment into new technologies.
JPMorgan’s latest deals fit this pattern. Together, the 60,000-ton biomass contract and 85,000-ton forest-based agreement provide long-term demand signals across different removal pathways. This helps scale both emerging engineered solutions and more established nature-based approaches.
Turning Waste Into Permanent Carbon Storage
Graphyte’s process, known as “carbon casting,” uses natural carbon capture through plants. Biomass absorbs CO₂ through photosynthesis. The material is then dried, compressed, and sealed to prevent decomposition. This allows the carbon to remain stored for long periods.
The company uses waste materials such as crop residues and timber byproducts. This reduces the need for new land use and lowers overall costs. The process also uses relatively low energy compared to other removal methods.
Projects linked to the JPMorgan deal include facilities in Arkansas and Arizona. These projects also provide added benefits. For example, using forest thinning residues can help reduce wildfire risk and support land restoration.
This reflects a broader trend in carbon markets. Buyers are increasingly looking for projects that deliver both carbon removal and environmental co-benefits. The bank’s forest-based deal reinforces this trend by supporting improved forest management practices that enhance carbon storage while maintaining productive landscapes.
JPMorgan’s $1 Trillion Net Zero Strategy and Climate Finance Push
JPMorgan’s carbon removal investments are part of a wider climate strategy. The bank has committed to facilitating $1 trillion in climate and sustainable development financing by 2030. It has already deployed about $309 billion between 2021 and 2024 toward this goal.
In addition to financing, the bank is building a diversified carbon removal portfolio. Since 2023, it has signed deals to cut hundreds of thousands of tons of CO₂. This includes a plan for up to 800,000 tons of carbon removal through long-term contracts.
The company aims to match its unabated operational emissions with durable carbon removal by 2030.
JPMorgan is also investing in a range of technologies. These include direct air capture, bio-oil sequestration, biomass storage, and forest-based removal. Its latest forest deal shows a continued commitment to high-quality, nature-based removals that meet stricter standards for durability and verification.
This diversified approach helps reduce risk while supporting different pathways to scale. Compared to many financial institutions, JPMorgan remains an early mover. Most large buyers in carbon removal are still technology companies, particularly Microsoft.
Microsoft Pullback Shakes Market Confidence
However, Microsoft, the largest buyer of carbon removal credits, has reportedly paused new purchases.
The tech giant has played a dominant role in the market. It accounts for up to 90% of global carbon removal purchases and has contracted more than 45 million tons of CO₂ removal to date. In 2025 alone, the company signed agreements for 45 million tons, doubling its 2024 volume and far exceeding any other buyer.
However, reports suggest the company may be adjusting the pace of new deals. This shift does not mean the end of carbon removal demand, but it signals a transition.
The market can no longer rely on a single dominant buyer. In this context, JPMorgan’s continued activity—across both engineered and nature-based deals—shows how new buyers are stepping in to support market stability.
Market Trends: From Cheap Offsets to High-Durability Carbon Credits
The carbon market is evolving quickly. Traditional carbon credits often focus on avoiding emissions, such as protecting forests. However, there is growing demand for removal-based credits that physically take CO₂ out of the atmosphere.
Corporate net-zero goals drive this shift. Many companies now face limits on how much they can reduce emissions directly. Carbon removal is becoming necessary to address remaining emissions.
At the same time, supply remains limited. High-quality removal credits are scarce. This keeps carbon prices high, especially for engineered solutions.
Early buyers like JPMorgan are helping shape the market. Long-term contracts provide price signals and encourage project development. They also help define standards for quality and verification.
Another key trend is the focus on durability. Buyers prefer solutions that store carbon for decades or centuries, rather than short-term offsets.
Early-Stage Market, High-Stakes Growth
Despite growing momentum, carbon removal is still in its early stages. Current volumes are small compared to global needs. Policy support is also limited in many regions.
However, corporate demand is rising. Deals like JPMorgan’s show how private sector investment is driving the market forward.
The combination of long-term contracts, new technologies, and climate finance is expected to accelerate growth. Over time, this could help bring down costs and expand supply.
For now, the focus remains on building scale. Each new agreement adds to a growing pipeline of projects. These projects will play a key role in meeting long-term climate targets.
JPMorgan’s latest purchases may be modest in size. But together, they reflect a larger shift. Carbon removal is moving from early experimentation to a more structured and investable market, supported by a broader mix of buyers and solutions.
The post JPMorgan’s Carbon Bet Marks a Turning Point for the Removal Market appeared first on Carbon Credits.
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