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Photo credit: Fahroni \/ Shutterstock<\/p>\n
The carbon removal market has quietly entered a consolidation phase.\u00a0<\/p>\n
Driven by the abrupt reversal in federal support for the industry, the lack of available growth capital, and the rapidly-approaching corporate 2030 decarbonization timeline, many in the industry agree that a contraction has begun for both developers and marketplaces. And while the usual corporate buyers continue to double down on credits, recent months have seen carbon removal companies across multiple pathways shutter, after burning through the venture capital funding they raised in the early 2020s.<\/p>\n
For Patch, a centralized platform for the global carbon market ,<\/strong> the clearest sign of that contraction has been the influx of opportunities for strategic partnerships, said CEO Brennan Spellacy. This week, the company exclusively shared with Latitude Media, Patch is finalizing a deal to absorb the carbon brokerage business built by Pachama, a platform for nature-based solutions.<\/p>\n Pachama is exiting the market business altogether in order to focus exclusively on its technical diligence services (of which Patch is a customer). Moving forward, Patch will be Pachama\u2019s \u201cpreferred transaction partner,\u201d meaning that instead of selling any credits, Pachama will direct buyers to Patch, which will also absorb existing buyers from Pachama\u2019s platform.<\/p>\n The move isn\u2019t a traditional acquisition \u2014 though Patch is in the midst of several conversations around those types of deals too, Spellacy said. But it\u2019s a decisive effort by Pachama to \u201cfocus\u201d its business model and focus on a single vertical. (The company originally had three lines of business including its credit marketplace.)<\/p>\n \u201cSix months ago my inbox was quiet when it came to this kind of stuff,\u201d Spellacy explained. \u201cNow it feels like every week I\u2019m having a net new conversation on a potential acquisition or divestment-type opportunity.\u201d<\/p>\n Despite the lingering question of whether there would be a stable market ready for carbon removal solutions when they reached scale, it\u2019s not the case that buyer hesitancy provoked the consolidation, Spellacy said.<\/p>\n \u201cWe\u2019ve actually seen an acceleration of our business over the last 18 months, through the inauguration,\u201d he explained.\u00a0<\/p>\n The reasons for the boom<\/p>\n There are several factors driving that boost, Spellacy added. The first is simple math. Now that we\u2019re in 2025, 2030 decarbonization goals are in corporations\u2019 five year plans. \u201cThat climate commitment is actually starting to get back on the strategic agenda \u2014 not will we do it, but how do we do it. That\u2019s been a really nice tailwind for us.\u201d<\/p>\n At the same time, many of the companies who were able to get funding in 2021 and 2022 \u2014 when there were plenty of dollars going out the door \u2014 are starting to run out of cash. If they weren\u2019t able to find the right product market fit, they\u2019re now looking for a strategic exit \u2014 or in some cases, simply going out of business.\u00a0<\/p>\n \u201cAs a result, there are just fewer market participants in the ecosystem, and a lot of that demand rolls downhill into the arms of Patch,\u201d Spellacy explained. \u201cWe\u2019re able to be there as an off ramp, if you will.\u201d<\/p>\n Spellacy believes the carbon tech ecosystem was \u201cmassively overfunded\u201d in 2021 and 2022. (Though Patch itself was a beneficiary of that boom, raising a $55 million Series B in 2022 led by Energize Ventures.) Now though, there\u2019s a \u201cflight to safety\u201d among investors, fueled in large part by the uncertain landscape of the second Trump administration.<\/p>\n \u201cCapital markets are tighter, and it\u2019s becoming a lot clearer who\u2019s going to be a part of the solution set of the toolkit in 2030,\u201d Spellacy explained. Today, funding an existing player and enabling them to consolidate further is a \u201cbetter bet\u201d than funding a net new player, he added.<\/p>\n Power Resilience Forum 2026 | January 21-23, 2026 | Houston, TX<\/p>\n Join leaders from across the power sector to address how utilities are planning and operating for grid resilience in the face of extreme weather.<\/p>\n Early bird pricing ends Oct 15!<\/p>\n