In the battle against climate change, Carbon Dioxide Removals (CDR) have emerged as an essential tool for reaching global climate goals. As companies and countries grapple with reducing their emissions, CDR represents a solution for managing the unavoidable emissions that remain. With corporations like Microsoft leading the charge and investing millions in these technologies, it’s time for businesses to understand the opportunities and challenges that CDR presents. Here’s what you need to know.

Why CDR is Crucial for Climate Goals

Carbon Dioxide Removal technologies involve extracting CO2 from the atmosphere and storing it permanently, which is critical in ensuring that global temperatures stay within safe limits. Unlike emission reduction strategies, which aim to lower future emissions, CDR actively removes the greenhouse gases already causing harm. As the pressure mounts on corporations to deliver on their net-zero promises, CDR is becoming a necessary component of climate strategies, complementing emissions reductions to achieve meaningful results.

Ole Henrik Ree, an industry lead at Microsoft, recently noted, “There is no scenario in which we can reach our climate goals that does not include carbon dioxide removals.” Microsoft’s move to pre-purchase over 17 million CDR credits signals that the corporate world is getting serious about investing in solutions beyond merely cutting emissions. This investment trend is expected to grow as more corporations begin to realize that their carbon footprint cannot be managed through emission reductions alone.

Types of CDR Technologies

There are several key CDR technologies that businesses should be aware of:

1. Bioenergy with Carbon Capture and Storage (BECCS): This method involves capturing CO2 emissions from biomass energy production and storing it underground. BECCS has gained traction, especially in regions like Scandinavia, where sustainable forestry provides the necessary biomass.
2. Direct Air Capture (DAC): Direct Air Capture involves machines that pull CO2 directly from the air and store it permanently. While still costly, this technology holds immense promise due to its scalability and ability to deliver large volumes of removals. Microsoft has invested in Switzerland-based Climeworks, one of the pioneers in this field.
3. Enhanced Rock Weathering: This process speeds up natural reactions that absorb CO2. It has a lot of potential for scaling and has attracted companies like Lithos Carbon and Undo, which recently entered deals with Microsoft.
4. Biochar: This involves the conversion of biomass into a stable form of carbon that can be stored in soils, providing dual benefits of carbon sequestration and improved soil health.

These technologies vary in terms of scalability, cost, and readiness, but they all play a role in the CDR portfolio that the world needs to reach net-zero.

The Challenges of Scaling CDR

Despite its potential, CDR still faces significant challenges. The most pressing issue is the cost, as technologies like DAC are expensive, with costs currently ranging from hundreds to thousands of dollars per ton of CO2 removed. Early adopters like Microsoft are investing to help bring costs down, but businesses must understand that CDR is not yet a cost-neutral solution.

Public perception is another major hurdle. There is a real risk that negative media coverage—such as claims of “greenwashing”—could stifle the growth of CDR projects. This is why transparency is key. Companies that invest in CDR need to ensure they communicate their efforts clearly, explaining not just the benefits but also the scientific validation behind the projects they support.

Moreover, the infrastructure for CDR is still developing. Unlike carbon credits that offset emissions through renewable energy projects or forest preservation, CDR credits require a rigorous process to verify the actual removal and permanent storage of CO2. This often involves bespoke due diligence, as Ole Henrik Ree noted, describing Microsoft’s current investments in CDR as a “very involved process” that requires deep scrutiny of every detail.

Opportunities for Businesses

Despite these challenges, CDR presents a significant opportunity for businesses willing to invest early. Those who engage now stand to gain a competitive advantage, both by demonstrating climate leadership and by securing access to credits that may become scarce and more expensive in the future. Companies that act now can lock in prices, support the growth of essential infrastructure, and position themselves as sustainability leaders.

Another benefit is regulatory preparedness. As governments move closer to enforcing net-zero regulations, companies that have already integrated CDR into their climate strategies will be better positioned to meet compliance requirements without facing sudden and potentially costly adjustments.

In short, while CDR is still in its infancy, the strategic benefits of becoming an early adopter are clear. Beyond the immediate climate impact, companies can benefit from brand reputation, regulatory readiness, and positioning themselves as pioneers in a crucial growth area.

Moving Forward with CDR

Carbon Dioxide Removals are here to stay, and they’re poised to become a core part of corporate climate action. The journey towards integrating CDR solutions will require investment, patience, and a transparent approach. Businesses must navigate technological, financial, and reputational challenges to successfully leverage CDR, but those who do will be in a prime position to lead in a low-carbon economy.

At XGC, we are committed to being part of this journey—not only helping businesses reduce emissions but also helping them invest in the future of carbon removals. As CDR solutions scale, the next decade will be about building partnerships, sharing knowledge, and leading the way towards a truly sustainable future.