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The U.S. Department of Energy (DOE) has recently taken another major step towards addressing climate change by issuing a Notice of Intent (NOI) to launch a voluntary Carbon Dioxide Removal (CDR) Purchasing Challenge (“CO2 RP Challenge”). Building off the momentum of its CDR Purchase Prize program, the DOE’s CO2 RP Challenge will take a two-pronged approach to address critical supply and demand hurdles currently facing the CDR market. As CDR is such a critical element of our integrated reduction and removal methodology, Climate Vault submitted a response to the DOE’s CDR purchasing challenge.

Driving Change in the CDR Market

The proposed program holds significant potential for driving catalytic change in the CDR market and has already received support from several major companies, including Google. Specifically, the program seeks to:

  • Expand the pool of buyers purchasing carbon removal credits
  • Increase the volume of those purchases year over year
  • Identify up-and-coming carbon removal suppliers with strong technical and commercial viability

The DOE’s program is designed to foster a robust market for carbon removal by incentivizing organizations to commit to purchasing and retiring CDR credits annually, in increasing volumes, starting no later than 2025. Importantly, it also requires these “Credit Buyers” to disclose their CDR purchases and related data. In doing so, the DOE seeks to enhance market transparency, bolster the quality and integrity of carbon removal credits, and pave a path for greater participation in the CDR market.  

At Climate Vault, we support the DOE’s mission to create a reliable and effective system that can drive the demand for high-quality carbon removals and accelerate the development of these necessary technologies. At the same time, however, building greater flexibility into the system—in terms of how Credit Buyers can purchase carbon removals—could go a long way in accelerating the program’s intended impact. Below, I summarize our call for flexibility, but I also welcome you to read our full response here.

Climate Vault’s Call for Flexibility

Under the DOE’s proposed CO2 RP Challenge, Credit Buyers would be required to purchase and retire carbon removals in the same year. While this requirement is intended to catalyze action in carbon removal purchases, allowing for flexible mechanisms to procure carbon removals and longer timelines could ultimately foster a much greater impact:

1. Acknowledge Supply Limitations

The current requirement for same-year purchases and retirements of CDR credits assumes a sufficient supply of carbon removals, which is not necessarily the case in today’s CDR market. Unlike traditional voluntary carbon market projects, which often have credits readily available, the CDR market is still in its early stages. Many technologies have yet to achieve their first removals, let alone reach significant scale. By limiting Credit Buyers to carbon removals that can be purchased and retired in the same year, the CO2 RP Challenge could unintentionally stifle the growth of emerging technologies that require substantial lead time and investment to scale up their operations.

Proposed Solution: By allowing for flexible mechanisms, such as pre-purchase agreements, offtake contracts, and other creative procurement models, the DOE can bridge this gap. These mechanisms allow buyers to commit to buying carbon removals that will be achieved in the future. In doing so, they provide CDR suppliers with the necessary demand signals that they need today in order to justify capital expenditure and scale their operations to achieve carbon removals in the future. By securing long-term commitments from buyers, suppliers can plan and invest in expanding their removal capacities, thus gradually aligning supply with demand.

2. Ensure Affordability and Accessibility

The cost of removing 1 ton of CO2 today varies widely across different CDR technologies. While nature-based solutions are often more cost-effective, many technological approaches have not yet reached the $100/ton price point that would make them accessible to a broader market. By requiring Credit Buyers to purchase and retire in the same year, this could unintentionally limit participation to a select few corporate buyers with significant financial resources, thereby hindering broader market engagement

Proposed Solutions: Pre-purchase agreements, offtake contracts, and other flexible purchase mechanisms can help mitigate these pricing challenges. Instead of one-off annual purchases, longer-term contracts between buyers and suppliers can offer more flexible and accessible pricing options. By agreeing to purchase a consistent or increasing amount of carbon removals over several years, buyers can secure removals at potentially lower rates. This approach benefits suppliers by providing the necessary business forecasting and demand signals to grow and scale their operations  and benefits buyers by ensuring a steady supply of removals at a more manageable cost. Such arrangements could also foster collaboration and innovation, driving down costs over time as technologies mature and economies of scale are achieved.

3. Support for Varied CDR Technologies

Finally, requiring same-year purchases and retirements may inadvertently favor more mature CDR technologies over newer, novel solutions. For example, biochar is one of the more mature and cost-effective CDR technologies, leading to a shorter purchase-to-delivery cycle compared to other CDR solutions. Recent data shows that biochar projects have dominated carbon removal sales and deliveries. While this is a positive development, it may overshadow other promising technologies that are still in the early stages of development and have not yet achieved their first removals.

Proposed Solutions: We believe the program should be structured in a way that supports a diverse range of CDR technologies across terrestrial, technological, and oceanic pathways. By allowing flexible procurement timelines, the DOE can ensure that a variety of high-quality carbon removal projects receive the support they need to scale. This approach will enable the market to develop a robust and varied portfolio of CDR solutions, each contributing uniquely to achieving gigaton-scale removal by mid-century.

Diverse CDR Pathways are Critical

In our most recent request for proposals (RFP) round, Climate Vault received applications for projects in 18 countries across six continents, spanning the three CDR pathways we support: oceanic, technological, and terrestrial. This diversity underscores the innovative potential within the CDR community and the importance of providing flexible support mechanisms to foster these solutions.

Flexible options such as pre-purchase agreements, offtake contracts, and unique models (like Climate Vault’s own integrated reduction and removal approach) can provide the demand signals suppliers need. It also allows for a more adaptable timeline for CDR delivery and more manageable price points for buyers. This will help ensure that capital flows to a broad range of solutions, ultimately supporting the development of a diverse and effective CDR ecosystem—one of our core missions here at Climate Vault.

The DOE’s program has the potential to support the scaling of innovative CDR technologies, ensure affordability for buyers, and drive significant climate action in the years to come. I look forward to continued collaboration with the DOE and other stakeholders in the CDR community to advance our shared goal of achieving a sustainable and climate-resilient future.

This post was guest-written by Brynn Esterly, Climate Vault’s Head of Carbon Removal Solutions. 

About Brynn Esterly

Brynn Esterly is a climate and sustainability professional with 10+ years of experience within the financial services industry. In her current role as Head of Carbon Removal Solutions at Climate Vault, she is responsible for leading the annual RFP process for innovative CDR solutions. Her expertise spans environmental markets, product management, investor relations and corporate communications. She received a Masters in Sustainability Management from Columbia University. Connect with Brynn on LinkedIn here.