Why industrial CO2 supply is shrinking in Northwest Europe and what is driving the crunch
Merchant CO₂ supply in Northwest Europe is structurally concentrated. A large share comes as a by-product from a small number of industrial hubs, especially ammonia and fertiliser production, plus some hydrogen and refinery assets. When those plants go into turnaround, curtail output because gas prices crush margins, or rationalise capacity, CO₂ availability drops fast. The shock is usually on supply, not demand.
Gas volatility is still the first-order driver because it hits ammonia economics directly. When ammonia output falls, the associated CO₂ stream that used to be recovered and sold also falls. That is why CO₂ shortages can show up suddenly in food and industrial applications even if end-user demand has not changed much.
Decarbonisation is a second driver because it can cannibalise legacy CO₂ sources. Electrification, efficiency, and carbon capture and storage can reduce flue gas volumes or divert captured CO₂ away from the merchant market and into storage. Research and sector discussions are already asking whether alternative sources can meet quality requirements, which is a sign that the old supply model is no longer taken for granted.
Operational and logistics risk is the third driver, and it is easy to underestimate. The European merchant CO₂ chain depends on liquefaction, cryogenic transport, and onsite storage. When supply confidence drops, disruptions propagate through allocations, delayed deliveries, and sudden constraints on tank availability. Gasworld’s reporting on declining “supply confidence” into 2026 captures this shift from occasional tightness to a recurring reliability problem.
Buyers feel this as contract friction, not just higher prices. Lead times lengthen, allocation becomes normal, and force majeure clauses get tested. Landed cost becomes the real number to watch because transport, tank rental, and telemetry can move quickly during peaks. Food and beverage is often prioritised over other uses, which matters if you are a buyer in horticulture, industrial processing, or refrigeration.
CO₂ fragility does not hit all sectors equally. For greenhouse horticulture, CO₂ is not a utility. It is a production input, and intermittent supply can translate directly into yield and revenue risk.
How greenhouse growers use CO2 today and what happens when supply becomes unreliable
CO₂ enrichment is used to push photosynthesis and improve yield, quality, and cycle times. Growers manage it like a performance lever, with practical KPIs such as kg/m², uniformity, and predictable harvest timing. Sector planning documents treat “external CO₂” as a strategic commodity because it affects both productivity and competitiveness.
Pipeline CO₂ infrastructure can be a competitive advantage, but it also creates upstream dependency. The Dutch example often cited is the OCAP network, which moves CO₂ from industry to greenhouse districts and reduces reliance on trucking. The trade-off is concentration risk: if a small number of upstream industrial sources go offline, a large downstream greenhouse cluster feels it immediately.
Demand can be large at national scale. Sector documents indicate external CO₂ demand for greenhouses can reach roughly 1.5 to 2 Mt per year in high-demand scenarios, and OCAP is described as an anchor supplier with communications citing around 400,000 t per year. Those figures matter because they show why “just replace it with trucks” is not a serious contingency plan for the whole system.
When CO₂ becomes scarce, growers ration first. They dose only during daylight hours, prioritise premium crops, and renegotiate supply terms. Some switch back to onsite combustion-based CO₂ generation via CHP or boilers when feasible, but that can conflict with goals to phase down gas use and decarbonise heat. FloralDaily’s reporting that Dutch greenhouse farms bought less external CO₂ in 2022 fits this pattern of forced adaptation.
The business risks are concrete and B2B-relevant. Lost yield can mean missed retail contracts and penalties. Emergency switching can raise OPEX quickly because trucked CO₂ requires tanks, logistics coordination, and sometimes new site equipment. Sustainability claims can also become fragile if a grower reverts to fossil-derived onsite CO₂. Quality and contaminants add another layer, because alternative sources must meet specifications and measurement standards to be safely used in food-adjacent environments.
If the CO₂ input needs to be both reliable and lower-carbon, DAC becomes an obvious candidate. The key is to separate DAC as a CO₂ supply product from DAC as carbon removal, because the economics and claims are not the same.
Direct air capture as a CO2 supply product vs as carbon removal: different economics, claims, and compliance implications
DAC creates two different products that are often mixed up. DAC-to-product captures atmospheric CO₂, purifies it, and sells it as a gas or liquid for use in greenhouses, beverages, or industrial processes. DACCS captures CO₂ and stores it permanently, for example via mineralisation or geological injection, with the intent of generating certified carbon removals.
Claims break when these are conflated. “Captured from air” does not automatically mean “carbon removal,” and “carbon-negative CO₂” is not a safe shorthand if the CO₂ is used and then released. The EU’s Carbon Removal Certification Framework (CRCF) explicitly frames certification for permanent carbon removals, and DACCS sits in that category. That is a different compliance and integrity lane than selling CO₂ as a commodity input.
Economics also diverge. For supply-chain buyers, the benchmark is merchant liquid CO₂ delivered cost and reliability, including onsite storage and logistics. For removals buyers, the benchmark is a removal price per tCO₂e plus MRV, delivery schedules, and long-term liability terms. Public information on DACCS deployments such as Climeworks’ Mammoth illustrates that current scale is still small relative to industrial and horticultural demand, which is why near-term DAC adoption in horticulture is often framed as a supply resilience play rather than a removals volume play.
Energy is the dominant variable in both cases. Cost and carbon intensity depend heavily on electricity and heat sources, and buyers increasingly want proof, not marketing. That pushes projects toward clearer energy procurement narratives, such as PPAs, guarantees of origin, and more granular matching approaches, plus transparent lifecycle accounting.
Contracts follow the product. DAC-as-supply looks like an offtake for CO₂ with uptime SLAs and purity specifications. DACCS looks like a removals offtake agreement with MRV, registry issuance, and provisions for permanence and reversal risk. Mixing the two in one contract is possible, but only if attribution is clean.
Early deployments in the Netherlands and Germany are useful because they force these distinctions into operational reality: uptime, purity, integration, and what “reliable” really means in a greenhouse setting.
What early DAC deployments in the Netherlands and Germany signal for scale, costs, and operational performance
The Netherlands is a natural testbed because it combines greenhouse demand, CO₂ logistics experience, and applied research. HortiDaily has reported on commercial and pilot activity connected to research and greenhouse operations, with the sector asking a blunt question: can DAC replace liquid CO₂ cost-effectively, reliably, and at scale?
Modularity is the near-term scaling logic, but it changes how buyers plan. The Geoengineering Monitor DAC mapping notes modules on the order of up to about 7,000 tCO₂ per year. That is meaningful for a single medium-to-large site or a small cluster, but it immediately raises practical questions: how many units are needed for seasonal peaks, what redundancy is required, and how does maintenance scheduling align with crop cycles?
Product quality is a gating item for multi-sector adoption. Achieving beverage-grade liquid CO₂ with purity above 99.9% is a gating requirement for multi-sector adoption. That matters because it expands the addressable market beyond greenhouses into beverages and food packaging, where specifications are strict and quality assurance is non-negotiable.
Cost competitiveness is not only about euros per tonne. Delivered cost includes energy, sorbent consumption and replacement, compression and liquefaction, and onsite storage. In a market where “supply confidence” is falling, availability has its own value because it can prevent production interruptions. That is why buyers increasingly ask for verifiable kWh per tCO₂, uptime guarantees, and performance data across seasons, not just nameplate capacity.
Germany adds another signal: the shortage narrative is not confined to one sector. Just Drinks reported that drinks companies curtailed output amid a CO₂ squeeze, which underlines that CO₂ is a production constraint in multiple value chains. That makes onsite or near-site supply models more credible, especially where continuous operations or brand commitments make downtime expensive.
Even if DAC produces CO₂ from air, it does not automatically produce carbon credits. The accounting boundary depends on what happens to the molecule after capture.
Carbon credit and accounting angles: when DAC CO2 can generate removals and when it cannot
DAC-to-utilisation is generally not a carbon removal because the CO₂ is short-lived. If CO₂ is used in greenhouses, beverages, or packaging, it is typically released back to the atmosphere through plant respiration, consumption, or degassing. Under the logic reflected in the EU CRCF approach to permanent carbon removals, removals require durable storage, and DACCS is the relevant pathway.
Double counting is the core pitfall for buyers and investors. If a project sells a tonne of DAC CO₂ as a product and also sells a “removal” for that same tonne, the claim is not credible because the tonne was not stored permanently. At most, some buyers may argue avoided emissions if DAC CO₂ displaces fossil-derived merchant CO₂, but displacement is hard to prove cleanly and is not equivalent to a removal claim.
MRV and additionality are what separate a commodity sale from a certified removal. For removals, you need measurement of captured CO₂, transparent energy and carbon intensity accounting, chain-of-custody controls, and a credible case that the removal would not have happened without the project. The CRCF emphasises quality requirements such as additionality and robustness, and that direction of travel matters for how high-integrity DACCS claims will be assessed.
Tokenisation makes the distinction even sharper. Tokenising “tonnes of CO₂ sold” is a supply-chain instrument, not a carbon removal asset. A removal token needs different metadata: storage method, durability, reversal risk, MRV audit trail, and linkage to a recognised certification and issuance process. Without that, tokenisation increases confusion rather than liquidity.
Value stacking can be legitimate if attribution is strict. A DAC operator can sell CO₂ as a commodity for cashflow and separately sell removals only for the fraction that is permanently stored, for example via separate lines, contracts, and accounting. The rule is simple: one tonne, one claim.
Market design will decide how fast DAC moves from pilots to a meaningful supply option. Buyers and investors should focus on contracting, permitting, energy sourcing, and how CO₂ infrastructure reshapes bargaining power.
What buyers and investors should watch next: contracting models, permitting, energy sourcing, and cross-border market impacts
Multi-year contracting is likely to expand because spot exposure is now a risk, not a strategy. Gasworld’s “supply confidence” framing points toward more CO₂ offtakes with energy-indexed pricing, availability clauses, and take-or-pay structures. For greenhouses and food and beverage, SLAs, purity specs, and redundancy plans such as backup liquid tanks will increasingly be part of procurement, not an afterthought.
Permitting and local integration can make or break decentralised DAC. Even without storage, a DAC unit can require approvals related to equipment footprint, noise and airflow, grid connection, and onsite compression, liquefaction, and cryogenic storage. DACCS adds a different class of permitting for transport and storage, which is typically longer lead-time and more capital intensive. The European Commission’s consultation on CO₂ markets and infrastructure signals that policy attention is shifting from capture alone to the full system of transport, hubs, and market rules.
Energy sourcing is the deal breaker for both economics and credibility. Investors should ask for evidence on PPAs or equivalent instruments, the time profile of electricity supply, and how marginal grid emissions are handled in lifecycle accounting. Buyers should ask for a product carbon intensity number for delivered CO₂ and the audit mechanism behind it, because “from air” does not automatically mean “low-carbon” if the energy is carbon-intensive.
Cross-border dynamics will keep changing who has leverage. Shortages and decarbonisation can drive logistical arbitrage in liquid CO₂, but they also increase competition for the same molecule across food, greenhouses, refrigeration, and industrial uses. As CO₂ infrastructure evolves, bargaining power and pricing can shift between hubs and end-users, and buyers should expect more volatility in delivered cost and allocation rules during disruptions.
Technology due diligence needs to look like industrial procurement, not climate storytelling. Buyers and investors should request verifiable data on kWh per tCO₂, sorbent consumption, maintenance intervals, seasonal uptime, and achieved purity levels above 99.9% where relevant. They should also benchmark DAC against alternatives such as onsite recovery from fermentation, upgrading CO₂ streams from biogas, or point-source capture, because the best answer may differ by site constraints and reliability needs.
The investment thesis is becoming more nuanced. DAC for supply can win first where interruption costs are high and where policy and economics push gas out of the system, making legacy CO₂ sources less dependable. Over time, high purity and reliability can open higher-value segments, while monetising removals at scale remains tied to MRV standards like CRCF and to storage infrastructure build-out. That split is not a weakness. It is a clearer map of what DAC can credibly sell today, and what it can credibly claim tomorrow.
