Build the Market, Scale the Impact: How International Cooperation Can Scale Carbon Removal
Carbon dioxide removal (CDR) and international trade both center on balance. By removing excess carbon dioxide, built up in the atmosphere over decades, we can re-balance Earth’s natural systems. Meanwhile, the goal of international trade is to match what one country can efficiently produce with what another needs, so both sides gain from exchange. Combining CDR and international trade is a powerful tool to benefit national economies and the environment globally.
International trade creates a win-win for countries importing and exporting CDR credits. Some countries have clear advantages—geological storage, clean energy, available land—while others lack the conditions to deliver removals efficiently and cost-effectively. Carbon dioxide removal - domestically or through imported credits - is increasingly included in national targets and strategies. High-integrity CDR credits durably remove carbon dioxide from the atmosphere, helping ensure that cross-border climate action leads to real net reductions rather than shifting emissions, while directing investment toward building carbon removal systems where they can scale most effectively.
Rules for international carbon markets under Article 6 are largely in place, and attention is shifting to implementation. The EU and other major economies are deciding how to incorporate international trading of reductions and removals. What remains now is to accelerate market growth through pilots and transactions that build confidence and demonstrate potential.
In the near term, countries will face a trade-off between prioritizing the lowest-cost emissions reductions today and investing in carbon removal for the future. Countries with strong export potential may also be reluctant to trade carbon removals that could otherwise be credited toward their national target. Some countries may defer to voluntary and corporate demand instead of actively building the agreements and systems needed to participate in international markets. Navigating through these tensions is necessary to create an efficient CDR market at scale.
To unlock national and global benefits of CDR credit trading, we need to build market infrastructure and agreements now.
Net-Zero Affordability
The only viable pathways to net-zero are ones that can demonstrate they are affordable, both now and in the future. Efforts to drive down CDR costs over the coming decades will ensure that these solutions are ready to balance the hardest to abate residual emissions that can’t be eliminated cost-effectively. Access to international markets expands the buyer pool, helping projects scale and costs decline. This enables high-quality projects to move forward wherever conditions are right, whether due to favorable geography, abundant clean energy, lower input costs, or strong community support. The result is a more efficient global system in which countries can access high-integrity removals most cost-effectively, making national net-zero targets more affordable.
Early Market Leadership
Numerous countries are starting to shape international markets by integrating carbon dioxide removal into their national strategies. For example, Switzerland, Japan, and Singapore are all engaging as buyers of international credits and exploring a growing role for removal credits. Despite facing constraints in the domestic deployment of CDR (e.g., limited geological storage), each of these countries recognizes that participating in international markets for CDR can help to drive down costs of achieving their national climate targets while growing new industries at home.
Switzerland has established over a dozen bilateral agreements under Article 6.2, cementing its position as an early market mover. The Switzerland-Norway agreement and pilot is the first national agreement to enable cross-border transfers of durable CDR credits.
Japan is continuing to build on its deep experience integrating global mitigation and domestic strategy. It is increasingly incorporating CDR as a necessary complement to deep emissions reductions and a strategic industrial opportunity; durable, high-integrity CDR credits are expected to be included in future phases of its domestic Green Transformation Emissions Trading System.
Singapore is positioning itself as a regional carbon markets and services hub, and expects to rely strongly on international emissions reductions and removals to achieve its climate targets. The design of its carbon tax enables the use of high-integrity international credits for emissions reductions or removals for a portion of compliance, providing a pathway for CDR to occupy an increasingly important role over time.
Traction, Not Trade-Offs
Successful CDR at scale will be deployed globally. Early deployment of carbon dioxide removal (CDR) is likely to concentrate in where capital is more readily available and supportive policies can help to manage the higher upfront costs and risks associated with first-of-a-kind projects. While these conditions are often more accessible in high-income countries, the Global South CDR Coalition and other actors are doing important work to ensure there are equitable opportunities for all countries with high CDR potential to build and benefit from this industry. International trade and technology transfer is an accelerant for CDR investment. Initial CDR deployment will play a critical role in refining technologies, establishing robust monitoring and verification systems, and building market infrastructure. As costs decline, participation broadens. Done well, this evolution can align investment with local priorities, support capacity building and climate resilience, and ensure that the benefits of CDR are shared.
In this initial phase, countries with significant potential for CDR deployment will need to balance achieving their domestic targets and building the infrastructure for international markets that will be required for CDR to succeed at scale. These can be complementary, not competing goals.
National Advantages, International Cooperation
Canada has natural advantages - like extensive geological storage, expansive coastlines, abundant clean energy and feedstocks, and a highly skilled workforce - that make it a potential global hub for CDR. Popular opinion further strengthen this position:
In recent Canadian public opinion polling, 67% of respondents agreed that CDR can create jobs and grow the economy
By 2050, a scaled CDR industry could reduce the marginal cost of reaching net zero, deliver economy-wide GDP gains of $78 billion, create 300,000 jobs, and generate $23 billion in annual government revenue with benefits beginning as early as 2035
Despite promising early demand signals (like public procurement), Canada’s CDR industry won’t reach its full potential if it’s driven by only domestic demand. Canada hasn’t yet translated its constructive engagement in international carbon market development into a pathway for project developers to actually engage in these markets.
Canada could start tapping into international markets by enabling small-scale pilots, through bilateral agreements or international mechanisms like CORSIA. This would catalyze the development of infrastructure for high-integrity markets (e.g, registries), demonstrate market demand, and learn by doing. To maintain momentum towards its domestic climate commitments, Canada could build in guardrails, like establishing a maximum amount of carbon removal credits it is willing to export in the near-term, or providing domestic buyers with first right of refusal for a portion of the credits generated.
This is just one example of how a country could start taking near-term steps to scale CDR at home and abroad. The EU’s proposal to enable the use of ITMOs for up to 5% of its emissions target could be another example, if it establishes a clear role for high-integrity carbon removal credits within that framework. Countries have yet to include CDR in their national targets (nationally determined contributions); embedding CDR commitments and investments would be another meaningful step.
While corporate and voluntary demand will continue to play a critical role in advancing and financing an affordable net-zero transition, market engagement by nations is needed to build a stable and standardized carbon dioxide removal market at scale. Countries that establish early partnerships to match import demand with export supply will have a distinct market advantage.
