ADVANCE MARKET COMMITMENTS

An advance market commitment (AMC) promises that buyers will purchase a specified volume of qualifying products at an agreed price if suppliers develop and deliver them. Applied to CDR, it gives developers a prospective revenue stream before sufficient supply exists, helping them justify investment in research, construction and scale-up. Governments, companies and philanthropies can make commitments alone or pool them. Payments normally follow verified delivery, although prepurchases or milestone payments can provide earlier finance. Once suppliers qualify, buyers turn the commitment into purchase contracts, or offtakes. Unlike routine procurement, the commitment is made before removals are available at scale.

The central design decisions are size, duration, guaranteed price and rules determining which removals qualify. Prices must be high enough to change investment decisions without locking buyers into excessive payments as costs fall. Credibility requires secured funding or guarantees before announcement. Buyers must also explain how suppliers are chosen and what happens if volumes arrive late or not at all. Requiring verified delivery before payment avoids spending on removals that never materialise. However, projects may need milestones or contracts that lenders can rely on to finance construction. Verification, ownership and retirement rules must be clear from the outset.

By guaranteeing future buyers, an AMC can help promising technologies cross the “valley of death” between successful demonstration and commercial scale. The future revenue can help developers attract investors, secure loans and finance construction while current sales remain too small. Large, multi-year commitments can also encourage suppliers to expand production and reduce costs through repeated delivery. Most spending happens only when removals are delivered, often years later.

Buyers may promise more than they can fund, set prices too low to attract suppliers or lock in prices that later look excessive. Broad eligibility can reward weak removals, while narrow rules can favour a few firms and suppress alternative methods or stall innovation. Suppliers may still fail to deliver after investors respond to the announcement. Long commitments can also become politically fragile unless contracts, budgets and remedies for non-delivery are clear.

Monitoring can compare supplier participation, projects launched, milestones reached, verified tonnes delivered and cost per tonne across successive rounds. Programme managers should also assess whether contracts helped suppliers raise investment or debt. Low participation may require changes to prices, eligibility or contract terms; falling costs or delivery above expectations can justify larger or more competitive rounds.

CDR developers and investors can test whether prices, volumes, timelines and contract terms would unlock projects. Economists and finance specialists can help calibrate price and volume, while certification bodies define credible delivery evidence. International partners and philanthropies with AMC experience can contribute funding and design lessons. Public programmes should explain the commitment and publish how suppliers will be selected.

International organisations with pooled budgets, supranational institutions and national governments can make multi-year purchase commitments. Companies can combine purchasing budgets through a shared programme, while philanthropies can finance riskier early purchases. Each can act separately, but combining budgets creates a larger commitment and spreads delivery risk across buyers.