6. Market Barriers and the Need for Structured Agreements
The CDR market today faces a combination of structural, technical, and institutional barriers:
(a) Technological maturity
A number of CDR pathways, such as direct air capture (DAC) and enhanced mineralization, are still progressing from the pilot or demonstration stage toward full commercial scale. This transitional stage creates considerable uncertainty with respect to their long-term performance, cost trajectories, and ultimate bankability. Rather than framing these issues solely as "implementation challenges," it is more accurate to recognize that some pathways are not yet technically mature enough to be considered reliable or investable.
The forms of immaturity can be categorized as follows:
Fundamental research required. Certain approaches, such as ocean alkalinity enhancement, still face unresolved scientific questions about their effectiveness, potential environmental impacts, and scaling limits.
Development work required. Other methods, including DAC, have been proven in principle but require significant engineering and operational improvements, including large-scale deployment, reductions in unit costs, and the buildout of enabling infrastructure such as heat and power supply.
Advances in MRV required. Pathways such as soil carbon enhancement or mineralization projects face uncertainty because the credibility of their climate impact depends heavily on monitoring, reporting, and verification (MRV) technologies. Improvements in measuring permanence, additionality, and leakage are essential before these CDR credits can be treated as fully durable.
For pathways that remain immature, contractual agreements may need to include special provisions. These could involve extended development milestones that acknowledge the longer timeline to technical readiness, more flexible delivery schedules that accommodate delays or failures, a buyer's explicit tolerance for shortfalls or underperformance, and clear contractual allocations of risk associated with MRV uncertainty.
(b) Infrastructure gaps
Even when capture technologies function as intended, large-scale deployment depends on the availability of transport and storage infrastructure. CO₂ pipelines, shipping capacity, and geological storage sites are unevenly distributed geographically and often face long permitting timelines. These infrastructure bottlenecks limit the ability of projects to deliver removals at scale, particularly outside regions with existing oil and gas infrastructure.
(c) Fragmented standards
Although multiple registries and standards are available for crediting removals, there is not yet a single globally recognized framework that ensures consistency, comparability, and integrity across markets. This lack of harmonization makes it difficult for buyers to compare CDR credits across pathways or regions and adds complexity to contractual negotiations.
(d) Transaction costs
Because the market has not yet converged on widely accepted contractual norms, nearly every offtake arrangement must be negotiated from scratch. This increases both the time required to finalize agreements and the associated legal and advisory costs. In many cases, transaction costs are disproportionately high compared to the relatively small volumes of CDR credits being traded in the early market.
(e) Investor risk perception
The absence of standardized contracts and bankable revenue structures exacerbates investor concerns. Developers often struggle to demonstrate predictable cash flows that would enable them to attract equity or debt financing. At the same time, buyers remain cautious about the credibility of the CDR credits they purchase, especially when permanence and additionality are not assured.