Carbon Credits Explained – Biochar, DAC and BECCS

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• Carbon Credits Explained – Biochar, DAC and BECCS

25 June 2025

Demand for high-quality carbon credits continues to outstrip supply, driving growth in carbon dioxide removal technologies – but what are the main factors shaping this market?

In this Opinion piece, Eve Pope from IDTechEx explores and assesses three key carbon dioxide removal technologies.

Eve is a Senior Technology Analyst at IDTechEx, focusing primarily on sustainability and carbon capture, utilisation, and storage (CCUS). Before joining IDTechEx, Eve graduated from the University of Cambridge with a BA in Natural Sciences. 

 

Record-Breaking Carbon Dioxide Removal Credit Sales

 

With record-breaking sales once more in 2024, the popularity of carbon dioxide removal credits continues to rise. As the industry speculates incorporation of carbon removals into broader compliance carbon markets such as the EU Emissions Trading System will arrive post-2030, IDTechEx’s report “Carbon Dioxide Removal (CDR) 2025-2035” analyses key technologies, players, and carbon credit markets. Three important carbon dioxide removal solutions – all capable of generating carbon credits which businesses can purchase to reduce Scope 3 emissions – include biochar, DAC (direct air capture), and BECCS (bioenergy with carbon capture and storage).

 

Biochar

 

Biochar is produced via pyrolysis of biomass, locking away carbon dioxide taken in by plants during photosynthesis. Carbon removal credits from biochar are already being delivered at a large scale, with players such as Exomad Green, Varaha, and Carboneers among the top sellers.

However, the economic benefits of biochar extend beyond the sale of carbon credits. Biochar can also improve soil properties, enhancing its productivity, resilience, and reducing fertiliser demand.

In terms of durable, high-quality, carbon dioxide removals, biochar carbon credits are often the lowest-priced. Even so, many carbon credit buyers prefer to purchase a portfolio that encompasses a range of carbon dioxide removal solutions. This is because different types of carbon credits have their own strengths and weaknesses. For example, biochar carbon removal credits may have some drawbacks relating to the duration of removals, additionality concerns, and limited ability to scale up.

 

Direct air capture (DAC)

 

Direct air capture (DAC) involves chemical or physicals methods of capturing CO₂ directly from the atmospheric air and locking it away geologically for thousands of years. Removals are highly verifiable, so buyers can have confidence in the high quality of these credits. However, the nascent technology requires specialised equipment and large amounts of energy, so remains expensive. Some DAC carbon removal credits sell for over $1000/tonne of CO₂.

The biggest sellers of DAC carbon credits include 1PointFive, Climeworks, Heirloom, and Holocene. Two of these companies – 1PointFive and Holocene – are owned by Occidental Petroleum and use liquid solvents. In contrast, Climeworks and Heirloom use a solid sorbent based approach.

Direct air capture has significant scale-up potential. However, uncertainties remain. These include whether low-cost green energy sources will be readily available given rising competition from data centres, and whether strong financial support for DAC in the US will survive considering the Trump-era of uncertainty for climate technologies. 

While buyers are willing to pay a premium to foster promising DAC technologies for the time being as demand for high-quality carbon removal credits outstrips supply, costs will need to decrease to ensure the success of DAC long-term.

 

Bioenergy With Carbon Capture and Storage (BECCS)

 

BECCS (bioenergy with carbon capture and storage) involves capturing CO₂ from the flue gas of an industrial biogenic process (typically ethanol production or biomass combustion, hence the term “bioenergy”). Higher CO₂ concentrations mean this process is less expensive than DAC but still has the same long-duration high-quality removals. BECCS is the largest scale durable, engineered CDR approach as of today.

In 2024 and 2025, a surge of interest in BECCS carbon dioxide removal credits emerged in the voluntary carbon credit markets. Microsoft, the biggest corporate buyer of carbon dioxide removal credits, signed the largest carbon removal deal ever in April 2025 for ~7 million tonnes of BECCS credits. The deal was with a company called AtmosClear and was reportedly worth $800 million. Further activity is expected as government support emerges for BECCS, with the US, Denmark, and Sweden already providing significant support.

 

Other Carbon Dioxide Removal Technologies

 

Beyond biochar, DAC, and BECCS, other carbon dioxide removal solutions can range from planting trees (afforestation/deforestation) to harnessing the power of the ocean (ocean alkalinity enhancement, direct ocean capture, seaweed sinking). It is estimated that over 1 billion tonnes of carbon dioxide removal each year will be needed in addition to Earth’s natural carbon sinks by 2050 to reach global climate goals. This will require many carbon dioxide removal technologies to scale up, and increased support from businesses and governments alike needs to come sooner rather than later.

Picture: a graphic depicting a person physically moving a dial representing the severity of CO₂ emissions. The person is moving the dial towards a green "low" area away from the red "danger" area. Image Credit: Adobe Stock

Article written by Eve Pope | Published 25 June 2025

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