Carbon Unbound and the Limits of Markets

Recently, I attended my first Carbon Unbound conference in New York, where I spent more time than I usually do talking about carbon markets with companies and buyers. I’ve been a skeptic of a market-first approach to scaling carbon removal for a while and those conversations gave a bit more color to exactly why I worry that right now we’re focusing too much on markets.

We know the benefits of markets. For carbon removal companies, demand and customers are critical. My skepticism of markets in getting us to gigaton scale carbon removal is not a criticism of the companies going after them or of the voluntary purchasers who have done something genuinely fantastic for the field. It’s about being clear eyed on what actually needs to happen for us to have a chance at climate-relevant carbon removal.

It’s weird to go for markets first, policy second

Carbon removal is in its infancy. For most new technologies–we love using the example of solar–policy intervention is essential in the first couple of decades. This allows the technology to reach a higher readiness level where challenges core to building commercially viable projects get solved without the pressure of consistent delivery.

We’ve done this a little bit backwards in carbon removal. Yes, there has been policy in the past few years. But the first federal policy to support carbon removal was a deployment tax credit–45Q–where direct air capture was added as an eligible technology in 2018. This came before any federal investment in R&D for carbon removal.

Early carbon removal purchases came at the same time as federal R&D investments. That’s unusual! But so were those early purchases…

All voluntary purchasers are not the same

It’s hard to overstate how catalytic early purchases from companies like Stripe and Shopify were for the nascent carbon removal field. The money came early and provided demand for fledgling companies hoping to scale something for which there is no inherent market. These purchases were the primary lever that moved the field from a handful of companies to the hundreds we have today. What they weren’t is a validation of traditional carbon markets, where companies buy carbon removal credits to reach their climate goals.

The problem is that we conflate different approaches to buying into one ‘voluntary market’ framing when their differences have enormous implications. Many of the purchasers today are taking a very different approach than the first movers.

Stripe, for example, has no net-zero goal. Check out their climate page. It’s all about carbon removal, the need for it long-term, and why early adopters are crucial. There is even an option on their page to direct a percentage of your company’s revenue to help the earliest stage start-ups. This is not an approach that puts delivery of tons removed first. Instead, it looks first at the impact that investments today can have in the overall carbon removal field.

Now take a look at Microsoft’s carbon removal page. The first two sentences are about their climate commitments to remove their historic emissions by 2050 and be carbon negative by 2030. Unlike Stripe, they’re not making a pitch for general investment in the carbon removal field; they’re explaining why carbon removal is a necessary part of their net-zero and legacy emissions goals.

That matters because it means that Microsoft, and other buyers like them, care a whole lot about whether or not carbon removal projects actually deliver tons. They’re purchasing carbon credits, not making angel investments. The problem is that the carbon removal field is incredibly nascent, which means consistent delivery is tough. Microsoft’s investments–in particular the size of those investments, accounting for around 90% of carbon removal purchases in 2025–have buoyed the field during a policy and economic turbulence. And Microsoft is pausing those purchases.

The success and impact of early purchases from companies like Stripe is not a validation of market-based approaches. It’s a validation of early investment in the carbon removal field. Just like every other climate technology, carbon removal needs sustained funding that is not reliant on commercial success. And even after a couple decades of that…

Markets have real limits

Carbon removal is a public good. It mostly doesn’t create a product with an inherent market. Carbon removal is also far bigger than just direct air capture or BiCRS or other durable and easily measured pathways, many of which are unlikely to ever be a great fit for markets at scale.

I get why carbon removal start ups care about buyers and what they need to survive the next 6, 12, 18 months, I really do. Civil society organizations, however, need to have a longer time horizon and prioritize gigaton scale. That requires us to look beyond markets–particularly in the United States–to pathway and sector specific policies.