News about Microsoft pausing new carbon dioxide removal (CDR) purchases has understandably surprised many across the market. Given Microsoft’s outsized role in credit purchases, any sudden shift raises questions. While Microsoft states this is not the end of their carbon removal program, the timing and context are worth reflecting on.
After more than five years of closely following the carbon removal space, I see this moment less as a shock and more as a signal. The carbon removal market is still young, and events like the Microsoft announcement can create room for recalibration. Potentially, a more practical market logic could emerge.
Based on my observations from recent years, three core themes stand out in light of the news.
When a single buyer shapes the market
It is important to acknowledge how crucial Microsoft’s engagement has been to the development of carbon removal markets. Without that demand signal, there would be far less activity today.
However, such concentration also introduces risk. I have been speaking about this structural issue in the CDR markets many times: when a single buyer represents roughly 80 percent of demand, the market starts to behave more like a collection of client relationships than a functioning system for transactions.
Many projects, developers, brokers and investors have optimised their strategies around the expectations of one dominant buyer. They may now have to rethink their approach to find a new balance, focusing on delivery certainty, portfolio logic, and scalable emission reductions.
Carbon credit delivery still matters more than announcements
Another uncomfortable reality is that only a limited share of pre-sold tonnes in the CDR market have actually been removed so far. According to CDR.fyi, the latest tracked figure is only 2.7%. It means that over 97% of all credits sold have not yet been delivered!
Long development timelines, technical uncertainty, and complexity in financing mean that delivery risk remains high across the market. This is not a criticism of ambition. It is simply a reminder that the carbon removal market is still a young space, and time will ultimately determine how much of what has been sold results in permanent storage.
From a buyer’s perspective, especially at scale, this uncertainty compounds quickly. As the announced projects begin moving from plans to execution, we are starting to see the real techno-economics of carbon removal approaches. One could guess that in some projects, such as BECCS, storage providers have not been able to deliver on their promises.
The bias toward BIG in the CDR market
Most CDR projects today are designed around being big: large facilities, large volumes, and large promises. Size has often been treated as a proxy for credibility. If you can assemble an ambitious project, perhaps you also have the capability to execute it.
There is an understandable reasoning behind this. Large-scale solutions are needed to address the magnitude of greenhouse gas emissions, particularly when offsetting emissions at the scale of companies like Microsoft.
In practice, however, this has meant large CAPEX requirements, complex execution, and significant technical and operational risk. Simply put: huge projects that nobody has done before. In addition, past challenges of credit quality in forestry and land-use projects have resulted in heavy and slow due diligence processes. This slows market progress even for smaller, more de-risked project developers.
The result has been a distorted signal: you must be big enough to be interesting. Smaller, tangible, and faster approaches have often been deprioritised, even when they could offer clearer risk profiles and earlier learning. That logic now appears to be under reconsideration.
From Paused to Rebalanced
Seen through this lens, the Microsoft purchase pause may not represent a retreat from carbon removal, but rather a reset in how portfolios are built. Instead of concentrating risk into a few massive bets, a more diversified approach can emerge, including:
- Smaller-scale solutions
- Clearer delivery paths
- Co-benefits beyond carbon storage alone
- Strong links to the decarbonisation of real industrial systems
This is where Utilize and Store approaches make practical sense. Storage alone is a difficult business driver. When carbon removal is integrated into processes that also offer operational benefits, emission reductions and lower operational costs, storage becomes a valuable bonus rather than the sole justification.
What the carbon market reset means going forward
My expectation is not a collapse, but consolidation and learning. Some players may struggle, while others will adapt. Approaches that combine delivery certainty, an optimized carbon footprint and integration into real industrial value chains are more likely to move forward.
They may look less impressive in headlines and may not deliver massive removal volumes in single projects. However, if the business case works, these approaches often rest on more solid foundations and can be repeated.
From my perspective, this moment of refection is less about abandoning carbon removal and more about turning it into an integral part of industry, not a separate topic. The pause can be uncomfortable – but it can also be productive.
About Carbonaide
Carbonaide makes carbon-negative concrete economically viable. With the Carbonaide CO₂ solution, concrete manufacturers can utilise carbon dioxide to improve their products and store carbon permanently.
