Delivery Risk Is the Carbon Market's Quiet Crisis

February 27, 2026

Delivery Risk Is the Carbon Market's Quiet Crisis

Here is a question most corporate buyers do not ask early enough: what happens between signing a carbon removal contract and receiving a verified tonne?

The answer, in many cases, is a long and uncertain stretch of time where a surprising number of things can go wrong.

This is delivery risk. And it is quickly becoming the most underpriced exposure in the voluntary carbon market.

What delivery risk actually looks like

Delivery risk is not one thing. It is a collection of failure modes that sit between a purchase commitment and a verified, retired removal credit.

Some are technical. A direct air capture plant may underperform its nameplate capacity by 30 to 50 percent in early years. A bioenergy project may face feedstock supply disruptions. A geological storage site may encounter unexpected permeability issues during injection.

Some are commercial. A developer may run out of capital before reaching steady-state operations. A key equipment supplier may default. Insurance coverage may not materialise on the terms the project model assumed.

Some are regulatory. Permitting timelines may slip by years. MRV frameworks may change between contract signing and delivery. A host country may revise its position on whether removals can be exported under Article 6.

And some are structural. The project may deliver tonnes, but not on the timeline the buyer's climate strategy requires. A two-year delay in a ten-year offtake may look manageable on paper, but it can create serious gaps in annual reporting and target alignment.

None of these risks are hypothetical. All of them are happening right now, across the portfolio of early carbon removal projects globally.

Why the market is not pricing this correctly

Most buyers evaluate carbon removal at the point of purchase. They assess the technology, review the developer's track record, check the MRV methodology, and negotiate a price per tonne.

That process can be rigorous. But it overwhelmingly focuses on quality at entry rather than probability of delivery.

This creates a specific blind spot.

A buyer might select a project with excellent permanence characteristics, credible science, and a strong team. But if the project is pre-revenue, pre-permit, or pre-construction, the buyer is not purchasing a tonne. They are purchasing an option on a tonne, with delivery risk embedded in the price whether they recognise it or not.

In traditional commodity markets, the gap between a forward contract and physical delivery is managed through well-understood instruments. Margin calls, collateral, insurance, and liquid secondary markets all exist to absorb delivery failures.

The carbon removal market has almost none of this infrastructure. When a project fails to deliver, the buyer is typically left with a contractual claim against a thinly capitalised developer and very few practical remedies.

The portfolio illusion

Some buyers attempt to manage delivery risk through diversification. Buy from ten projects instead of one, the logic goes, and the portfolio absorbs individual failures.

This is reasonable in theory. In practice, it has limits.

First, genuinely high-quality carbon removal projects are scarce. Diversifying across ten projects often means lowering the quality bar on several of them, which trades delivery risk for integrity risk.

Second, many early-stage projects share correlated risks. They depend on the same handful of equipment suppliers, the same limited pool of geological storage operators, and the same policy frameworks. A supply chain disruption or regulatory shift can affect multiple projects simultaneously.

Third, portfolio approaches require active management. A buyer who purchases from ten projects and then waits five years for delivery is not diversifying. They are accumulating unmonitored exposure.

What structured engagement looks like

Managing delivery risk is not about avoiding early-stage projects. Some of the most important carbon removal capacity will come from projects that are early-stage today. The question is how buyers engage with them.

Structured engagement means several things in practice.

It means conducting technical due diligence that goes beyond the developer's own projections to stress-test assumptions about capacity ramp, feedstock availability, storage integrity, and regulatory timelines.

It means negotiating contract terms that include meaningful milestone-based protections, not just penalty clauses that are unenforceable against an insolvent counterparty.

It means maintaining ongoing oversight of project progress, not as an adversarial audit but as a partnership that surfaces problems before they become defaults.

And it means building replacement capacity into the strategy so that a single project failure does not derail a company's climate commitments.

The cost of getting this wrong

For companies with public net-zero targets, delivery failure is not just a financial loss. It is a reputational and strategic exposure.

Imagine announcing a landmark carbon removal agreement in 2026, only to disclose in 2030 that the project delivered 40 percent of contracted volumes. The financial write-down may be manageable. The credibility damage may not be.

Investors, regulators, and the public are learning to ask harder questions about climate claims. A company that cannot demonstrate reliable delivery of its removal commitments will face scrutiny that no amount of narrative can deflect.

This is not a reason to avoid carbon removal. It is a reason to take delivery risk as seriously as the market takes quality.

A different way to think about procurement

The carbon removal market is young. Most projects are early-stage. Delivery risk is real and unavoidable.

But it is also manageable, if buyers treat procurement not as a one-time purchase decision but as an ongoing asset management discipline.

That means engaging earlier, structuring better, monitoring actively, and planning for contingencies.

The companies that do this well will not just buy carbon removal. They will build portfolios that actually deliver.

And in a market where delivery is becoming the binding constraint, that distinction will matter more than price, more than volume, and more than any headline announcement.

Author: Thomas Munch, Founder of Pure Carbon Partners
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