CDR Market Update

Evolving Carbon Market

For much of the last decade, the voluntary carbon market evolved rapidly with an overriding emphasis on scale, speed, and affordability. Market growth was driven by corporate net-zero announcements and early offsetting commitments, where the primary objective was to neutralise emissions at the lowest possible cost.

In this phase, market success was typically measured by:

1. Total credits issued
2. Number of projects registered
3. Geographic expansion across host countries

Rather than by:

1. Longevity of carbon storage

2. System-level transformation of land-use or agricultural practices

3. Long-term climate resilience outcomes

As a result, several structural characteristics defined the market:

1. Emission avoidance and reduction projects (renewables, fuel switching, efficiency) dominated supply because they were easier to quantify and scale

2. Agriculture and soil-based solutions were often sidelined due to perceived risks around measurement, permanence, and farmer-level variability

3. Carbon Dioxide Removal (CDR) was discussed largely in future looking terms, with limited near term market integration

4. Co-benefits such as soil health, water security, biodiversity, and farmer livelihoods were treated as secondary attributes rather than core value drivers

While this phase played a critical role in building early liquidity and participation, it also exposed weaknesses, particularly around credit integrity, durability, and real world impact, which later became central to market scrutiny.

The Shifts & Changes

A fundamental shift was triggered by advances in climate science, most notably through assessments by the IPCC. These assessments clearly demonstrated that even under ambitious mitigation scenarios, residual emissions remain unavoidable, especially from hard-to-abate sectors that require active carbon removal, bringing CDR firmly into the present day climate agenda.

Key conclusions influencing the market include:

1. Global temperature stabilisation pathways cannot rely on emissions reductions alone.

2. Residual emissions must be addressed through active carbon dioxide removal (CDR).

3. Delaying CDR deployment significantly increases long-term climate risk.

This scientific clarity reframed CDR from a long-term innovation to a near-term climate requirement, forcing markets, standards, and buyers to reconsider the role of removals within credible net-zero strategies.

Integrity Corrections

Earlier gaps in market structure

During the early growth phase, the market lacked universally accepted benchmarks to define what constituted a “high-quality” carbon credit. This resulted in:

• Wide variation in project design quality.

• Inconsistent treatment of permanence and reversal risks.

• Growing scepticism among buyers and civil society.

How integrity frameworks addressed these gaps?

In response, the market underwent a deliberate integrity correction:

a) Verra strengthened AFOLU and land-use methodologies by:

• Introducing more explicit permanence and buffer mechanisms.

• Tightening monitoring and verification requirements for soil carbon and biochar pathways.

b) Gold Standard reinforced its land-use frameworks to:

• Ensure additionality beyond business-as-usual practices.

• Place verified sustainable development outcomes at the centre of project eligibility.

c) The ICVCM launched the Core Carbon Principles (CCPs), creating a shared market reference for integrity.

d) The VCMI clarified how companies should use credits responsibly, discouraging over-claiming.

Collectively, these initiatives shifted market participation from “how many credits can be issued” to “which credits genuinely deliver climate value”.

Policy Development

Earlier disconnect between markets and national policy

Historically, voluntary carbon markets operated largely outside national climate accounting systems, with limited integration into host-country planning or development strategies.

Current policy direction

Under the UNFCCC, Article 6 negotiations have increasingly clarified expectations around:

• Host-country authorisation and oversight
• Alignment with Nationally Determined Contributions (NDCs)
• Prevention of double counting between voluntary and compliance outcomes

This shift elevates the importance of agriculture and land-use projects that:

• Support national food security goals
• Improve water management
• Strengthen rural resilience

Rather than standalone offset projects, governments increasingly view these interventions as strategic climate tools.

Credit Buyer's Perspective

Earlier buyer motivations

Earlier corporate participation was largely driven by:

• Cost optimisation
• Reputational commitments
• Short-term offsetting needs

Current buyer priorities

Today, buyers increasingly differentiate projects based on type, durability, and impact, with growing emphasis on:

• Clear separation of emissions reductions vs carbon removals
• Preference for durable and longer-lived storage (including biochar and soil-based approaches)
• Projects delivering measurable social and environmental co-benefits
• Long-term offtake agreements rather than spot purchases

This shift is consistently reflected in analyses such as the World Bank State and Trends of Carbon Pricing 2025 and Ecosystem Marketplace State of the Voluntary Carbon Market 2025.

Funding (Public & Institutional)

Alongside private buyers, public finance institutions and governments are increasingly shaping market direction:

1. The World Bank has expanded investments in:

   • Climate-smart agriculture
   • Soil carbon enhancement
   • Methane reduction in rice systems

2. The Green Climate Fund continues to prioritise:

   • AFOLU mitigation programmes
   • Smallholder-focused climate interventions delivering resilience benefits

3. Sectoral guidance from the IATA recognises CDR as essential for long-term decarbonisation, signalling future demand for high-integrity removals

These developments point toward blended finance models, where public funding de-risks early stages and carbon markets provide sustained revenue.

Beetle Regen's Work aligned with the Market

Beetle Regen's interventions directly respond to the gaps and priorities emerging from this evolving landscape:

Improved Agricultural Land Management (IALM)

• Aligns with strengthened AFOLU standards recognising soil organic carbon enhancement
• Integrates mitigation with productivity, resilience, and long-term land stewardship

Biochar Deployment

• Addresses growing demand for durable carbon removal
• Aligns with tightening permanence and MRV expectations
• Delivers agronomic, resilience, and adaptation co-benefits increasingly valued by buyers and funders

Alternate Wetting and Drying (AWD)

• Targets agricultural methane, historically underrepresented in carbon markets
• Aligns with climate-smart agriculture and water efficiency priorities
• Supports both mitigation and adaptation objectives

Together, these approaches reflect a shift toward integrated climate smart agricultural systems rather than isolated offset projects.

Upcoming Goals

As the carbon market continues to mature, momentum is clearly moving toward:

• Higher-integrity, fewer projects
• Clear differentiation between reductions and removals
• Stronger MRV and permanence treatment
• Alignment with host-country and resilience priorities

The growing recognition of agriculture, soil, and biochar-based solutions signals a structural move away from short-term offsetting toward long-term, systems-based climate action.

Beetle Regen's work across IALM, biochar, and AWD sits firmly within this direction.

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