May 2026 Newsletter

Shopify’s 2025 Climate Report was unusually candid for a leading buyer. The company received only 37% of the carbon removal credits it was due by the end of 2025, and across its full contracted book of 254,000 tonnes since 2019, around 10% has actually been delivered (Shopify, 2026). Shopify used the moment to call on other corporates to step up their own purchasing, arguing that catching up on deliveries hinges on demand and policy (Quantum, 2026a). The report landed a month after Microsoft signalled it would prioritise existing offtakes over new deals, and against a market that crossed one million tonnes of cumulative durable removal deliveries for the first time in December 2025 (CDR.fyi, 2025).

Underneath the delivery story, the buyer base is slowly broadening. We find it useful to think of carbon removal demand in three groups. The first is the hyperscalers and market builders, the technology companies that have written the durability preferences, long-dated offtake structures and contract templates the rest of the market now inherits. The second is the early corporate entrant, the company that accepts it will need removals to meet a net-zero target and would rather engage now at today’s prices than wait. The third is the buyer purchasing for a specific claim or compliance obligation. The market today sits on the cusp between the first and second groups. Roughly half of durable removal buyers in the first half of 2025 were first-time purchasers, and names from outside technology are beginning to appear, with ByteDance contracting more than 100,000 tonnes in a single transaction (CDR.fyi, 2025). This is a slowly broadening base, and while the volumes remain modest, the direction is becoming clear.

When a corporate buys removals to neutralise a quantified set of residual emissions for a net-zero claim, it is no longer making a discretionary purchase. It is taking on delivery risk, the risk that contracted tonnes arrive late, in smaller quantities, or not at all. The 2025 data shows this risk is real and that it is highly specific to the pathway. Biochar, a relatively mature process, has delivered close to 660,000 tonnes since 2022 and converts contracts into credits quickly. Direct air capture sits at the opposite end, with roughly 0.05% of more than two million contracted tonnes delivered by the middle of 2025 (CDR.fyi, 2025). The continued delay to Stratos, the Occidental/1PointFive plant in Texas that is the largest direct air capture facility in the world, underlines the point. The plant has slipped past its original 2024 start date again, this time on a facility issue unrelated to the core technology (Quantum, 2026b).

This is the case for portfolio construction rather than single-project buying. A portfolio that blends engineered pathways with nature-based approaches spreads exposure across different delivery profiles, durability characteristics and price points. Nature-based and biochar credits can deliver near-term volume at lower cost, while longer-dated engineered offtakes build durability into the strategy. Diversifying across developers and delivery vintages matters as much as the mix of methods, because a portfolio offers little protection if a single supplier or an entire engineered segment runs behind schedule at the same time. Spreading the risk does not remove it, but it converts a binary bet on one project into a managed position across many.

For corporates, the practical lesson from 2025 is to treat removals as a managed portfolio of long-term carbon assets rather than a series of one-off purchases, and to weight deliverability and developer resilience alongside headline price and first-of-a-kind appeal. A well-constructed portfolio also does something less obvious. It hedges the claims and policy risk that increasingly surrounds the use of credits, because a strategy across methods, standards and vintages is easier to defend as integrity expectations tighten than a concentrated position in a single project or pathway.

The supply side of carbon removal now has a growing scaffolding of integrity standards. The EU’s Carbon Removals and Carbon Farming framework (CRCF) sets certification rules for removals in Europe, the Integrity Council for the Voluntary Carbon Market has issued its Core Carbon Principles as a quality benchmark for the voluntary market, and the Paris Agreement Crediting Mechanism is developing standards for credits issued under Article 6.4 (European Commission, 2024; ICVCM, 2023). What has lagged is the demand side. A policy brief published this month by the Carbon Business Council, based on 25 in-depth interviews with senior sustainability leaders across the United Kingdom, Germany, France and the United States, found that corporate removal demand is being parked (Mäkelä and Loopesko, 2026). Three factors, quality, cost and policy certainty, drove 23 of the 25 stated purchase decisions. The message was that waiting currently looks safer than moving.

The deepest barrier is not price. It is that a removal purchase is hard to approve inside a company when the rules for using the credits are unsettled. A legal analysis published in April sets out the problem clearly. Liability for green claims arises from two distinct sources, the integrity of the credit and the integrity of the claim itself, and courts have repeatedly held that a poorly framed claim can create exposure even where the underlying credits are independently verified (Herzog, 2026). Recent cases against Apple in Germany and the United States, and the long-running action against Delta Air Lines in California, show the risk is live (Herzog, 2026). No jurisdiction has yet enacted a safe harbour, a legal provision that would shield companies relying on qualifying high-integrity credits from claims-related liability. California’s Assembly Bill 1911, introduced in February, is the only such proposal currently in the public domain (Herzog, 2026). In this environment, engaging with credits can expose a company to more litigation risk than staying on the sidelines, which is precisely the wrong incentive for a market that needs buyers.

Two government-led responses are worth watching. The Coalition to Grow Carbon Markets, now comprising eleven governments, with the United Kingdom, Singapore and Kenya as co-chairs, published its Programme of Work in May. It aims to reduce policy fragmentation, align national frameworks with a set of shared principles and, by 2028, contribute to increased and sustained corporate demand at prices that reflect fair value (Coalition to Grow Carbon Markets, 2026). The EU’s carbon removals buyers’ club, formally launched in Brussels in May, takes a more direct approach. Modelled on the Frontier coalition, it pools public and private demand to bring early-stage projects to a final investment decision. It operates as one structure with two tracks, one for permanent removals and one for carbon farming, with all projects required to meet CRCF standards (Carbon Pulse, 2026a). The Commission hopes to see first offtake commitments by the end of the year (CarbonGap, 2026).

Both initiatives are genuine steps forward. The Coalition to Grow Carbon Markets is a real positive, bringing eleven governments behind a shared set of principles and a common direction of travel. The proof will be in the delivery, and the year ahead will show how much of its Programme of Work translates into policy on the ground, but the ambition and the coordination it represents are exactly what a fragmented market needs. The EU buyers’ club sits at an earlier stage. Its governance and legal structure are still to be settled, and the scale of demand it will ultimately create is not yet clear, though its launch is an encouraging sign that the Commission recognises its CRCF supply-side standards need to be matched by support on the demand side.

What neither initiative resolves on its own is the claims and accounting uncertainty that the survey and the legal analysis identify as the binding constraint. That sits mostly with regulators and standard setters, and it is the space to watch over the coming year. The Science Based Targets initiative’s revised Corporate Net-Zero Standard, expected this summer, is one example to track, with its proposed treatment of removals likely to shape how corporates plan their demand (SBTi, 2026).

Supply-side standards are necessary but not sufficient. Until a company can buy, report and defend a carbon credit with confidence, demand will continue to grow at slow pace.

The EU’s Carbon Border Adjustment Mechanism (CBAM) is a charge on the carbon embedded in certain imports into the bloc, designed to put foreign producers on the same carbon-cost footing as European industry covered by the EU Emissions Trading System (ETS). It came into full effect on 1 January 2026 for imports of iron and steel, cement, aluminium, fertilisers, hydrogen and electricity. One central question had remained unanswered, namely how a carbon price already paid in the country of production would be recognised. On 13 May the Commission published a draft implementing regulation that answers it, opening a door to carbon credits (European Commission, 2026). The draft is open for feedback until 10 June.

The draft allows an importer to deduct a carbon price paid abroad from its CBAM bill, and it treats the use of carbon credits as a valid form of that payment. Where a producer’s home country operates a carbon pricing scheme that accepts domestic credits, the EU will defer entirely to the national standard and impose no additional quality or quantity criteria (European Commission, 2026). Where that scheme accepts international credits, those credits must be Internationally Transferred Mitigation Outcomes authorised under Article 6.2 or Article 6.4 of the Paris Agreement, and their use is capped at 10% of the emissions covered by the scheme (European Commission, 2026). In short, a country can let its exporters use carbon credits to reduce their CBAM exposure, but only if it has first built a domestic carbon price, and only within limits the EU has set for international credits.

Something important to note here: CBAM is a price-for-tonne mechanism, not a tonne-for-tonne one. The importer does not surrender one credit to cancel one tonne of CBAM liability. Instead it deducts the price actually paid abroad from the price of a CBAM certificate, which is pegged to the EU ETS. To illustrate, if a CBAM certificate is priced at 80 euros and the carbon price paid in the country of production works out at 25 euros, the importer must still surrender the remaining 55 euros. Because carbon prices in exposed economies, and the price of most credits, sit well below EU ETS levels, a significant payment to the EU will remain due even where credits are allowed. This is why exporters in countries such as India are expected to lobby for tonne-for-tonne recognition, under which a domestically generated credit would cancel a full tonne of CBAM liability rather than only the portion its price happens to cover.

The clearest effect of CBAM so far has been to push exposed economies to build their own carbon pricing, so that the revenue is captured at home rather than paid to Brussels. India launched its Carbon Market Portal in March and expects compliance trading to begin around October 2026, having seen its aluminium exports to the EU fall by more than 40% year on year as CBAM took hold (ICAP, 2026; AlCircle, 2026). Turkey will run an Emissions Trading System pilot across 2026 and 2027, explicitly to reduce the CBAM bill its industry would otherwise face (ICAP, 2026). The new Article 6 opening adds a further reason for exposed countries to design schemes that recognise high-integrity international credits.

Two cautions temper the optimism. First, while the EU caps and screens international credits, it sets no additional quality criteria for the domestic credits a third country may allow into its own scheme, which leaves the integrity of that channel with national regulators rather than Brussels (European Commission, 2026). Second, the proposal will likely face political opposition at home. The European Parliament’s lead negotiator has in the past rejected the inclusion of international credits (Table.Briefings, 2026), and some industry groups argue that CBAM should mirror the ETS, which does not yet admit credits. For Carbonaires, the signal is more important than the immediate volume. This is an early and contested directional move rather than a demand surge, but it points to where compliance-driven demand for high-integrity Article 6 credits is likely to sit over the coming decade, and it is firmly one to watch.