Navigating the Carbon Removal Market: Strategic Motivations, Barriers, and the Critical Role of Intermediaries

Abstract

The urgency of climate change has made carbon dioxide removal (CDR) a crucial strategy for achieving net-zero targets and mitigating hard-to-abate emissions. This qualitative case study explores the strategic motivations for corporate investments in CDR, the barriers encountered by buyers and suppliers, and the role of intermediaries like CarbonX in facilitating these efforts. Companies invest in CDR driven by resource-based motivations, including leveraging internal capabilities, talent retention, product innovation, and green financing. Industry-based motivations involve responding to competition, customer and investor demand, forming strategic alliances, and securing early access to CDR supplies. Institution-based motivations include anticipating future regulations, benefiting from institutional support, and a commitment to societal and environmental goals. However, significant barriers hinder progress, including the need for leadership commitment, financial constraints, lack of internal expertise, market complexity, reputational risks, long sales cycles, regulatory uncertainty, and inadequate standards and incentives. Intermediaries are vital in addressing these challenges by providing expertise, facilitating transactions, and fostering collaboration across the CDR supply chain. This study employs Peng’s Strategy Tripod and Stabell and Fjeldstaad’s Value Configuration Models, drawing on interviews with essential stakeholders, to analyze the CDR market. The research highlights the need for clear regulations, financial incentives, and public-private collaboration to support CDR growth. The thesis concludes with recommendations and proposes future research to deepen the understanding of the CDR industry, emphasizing the role of intermediaries in advancing global climate strategies.