Agriculture, Energy Transition, Biofuel, Renewables, Carbon, Emissions

June 25, 2025

Voluntary carbon market drives CCS in paper and pulp, bioenergy industries

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HIGHLIGHTS

CDR from pulp and paper presents $3 billion opportunity

Carbon credits heard $150-$350/mtCO2e

Tech firms, data Centers view CDR as key to net zero

The voluntary carbon market is primarily driving the adoption and creation of carbon removal credits of carbon capture and storage in biomass industries such as pulp and paper and bioenergy, according to industry participants.

"Pulp mill is one of the sectors that has the largest share when it comes to biogenic CO2 emissions and should be considered when it comes to biogenic CO2 credits," Maryam Mkhani, Director of CCUS technology integration at Worley, said at the Carbon Technology Expo in Houston. "And number two--up to 90% of the biogenic CO2 emissions from pulp mill are actually capturable and they can generate more revenue in every learning that we have from implementing carbon capture in other industries."

Biogenic carbon dioxide emissions, as defined by the US Environmental Protection Agency, arise from the decomposition, digestion or combustion of organic materials such as wood-related materials, paper, sludge and others.

These emissions occur during biomass combustion -- especially in contexts like power generation using biomass or bioenergy with CCS -- and the pulping process, where wood components are broken down to produce pulp.

"Globally, about 2% of the CO2 emissions would be from the pulp and paper industry," Mkhani said. "But the good news is that most of these emissions are actually biogenic [and] the pulp mills are already operating."

Another advantage to already built projects, or "brownfield," is that they offer a point source of emissions that are at high concentration, which makes it easier for emissions to be captured compared to greenfield projects like direct air capture, Mkhani told Platts, part of S&P Global Commodity Insights on the sidelines of the event.

There are about 277 pulp mills operating across Europe and North America, and the collective biogenic emissions from those account for about 177 million mt of CO2 per year, Mkhani said.

Assuming that pulp mills capture 90% of the total biogenic emissions and trade the credits in the VCM anywhere between $150-$350/mtCO2e, this could equate to nearly $3 billion of CO2 removal credits that can be traded, Mkhani added.

Drivers for carbon capture in biomass, bioenergy projects

Biomass to energy and power plants considering adding carbon capture projects are expensive, requiring a high upfront capital investment, although betting on CO2 removal sales and tax credits from the Inflation Reduction Act 45Q provides an additional value, Nathan Hyrne, director at Babcock & Wilcox, told Platts.

Carbon capture costs depend on the project size and CO2 concentration. Bioenergy with CCS projects ranging from 50-100 MW and up to 500,000 mtCO2/year have higher costs than those for cement or pulp and paper projects, where CO2 concentrations are greater, Hyrne added.

Platts last heard Puro.earth-certified credits derived from a BECCS and ethanol project trading at $100/mtCO2e earlier in 2025 for volumes below 50,000 mtCO2e, with indicative values heard closer to $150/mtCO2e for delivery in 2025.

Additional offers from developers have been heard around $300/mtCO2e for non-ethanol BECCS projects and CO2 removal offtakes from pulp and paper mill retrofits below $200/mtCO2e.

Other drivers include data centers and hyperscalers, or large-scale cloud service providers, which prioritize carbon intensity and propel the market toward behind-the-meter power or carbon-neutral systems like BECCS, Will Latta, vice president at Babcock & Wilcox, told Platts.

Certain technology companies have targets for reducing their scope 1, 2 and 3 emissions, and the VCM with CO2 removal credits from tech removals or engineered projects serve to fill this need.

"Microsoft announced that they want to become carbon negative by 2030," Mkhani said. "And then by 2050, they want to remove their historical CO2 since its founding year, which was 1975 -- so that is driving the market [for CO2 removal]."

Tech removals are gaining traction across the VCM space, while nature-based solutions are dominating the removals space. Recent CO2 removal deals for DAC and BECCs, as well as the latest on primacy for the EPA's Class 6 wells, mark optimism for carbon management, sources said at the conference.

Platts assessed prices for US biochar for current-year delivery at $149/mtCO2e on June 25, holding a $9 premium to credits sourced from India. Biochar is also in the tech-carbon removal segment.

                                                                                                               

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