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14 min ago 2 min read
Funding uncertainty remains a key barrier to demonstration projects and continued growth of the carbon dioxide removal (CDR) ecosystem, according to the third edition of the State of Carbon Dioxide Removal industry report.
While more countries are funding CDR demonstration projects, policy reversals, particularly in major markets like the US, underscore the fragility of the sector, the report states.
“Furthermore, many companies continue to struggle with the persistent bottleneck of converting leads into actual sales due to the uncertainty in the voluntary carbon market, as evidenced by the shift among European startups towards alternative business models,” it notes.
“Ultimately, delivering on announcements from CDR innovators for removals in 2030 and beyond – whether at the company scale or through coordinated efforts such as CDR2030 – will require rapid growth that, while not unprecedented, necessitates sustained effort and public and private support.”
In the US, two DAC hubs were issued funding in 2023, totalling $1.2bn, to build demonstration plants. Funding for two more DAC hubs has not been awarded, and their funding status remains uncertain.
The report lists many active demonstrations globally, including Australia, Canada, UK, Germany, EU (where funding has doubled to 12 countries), Japan, Netherlands, Norway, Saudia Arabia and China. The IEA estimates that $5bn in R&D funds for CDR projects has been announced globally.
However CDR policy remains in “early fragmented stages of development across regions and countries,” it added, “So international coordination is needed to help chart a coordinated path forward.” The EU set out the first voluntary standard for permanent carbon removals .
At the end of 2025, just two million tonnes of CO2 had been delivered from novel CDR methods. Twenty two companies have capacity targets for 2030, totalling 42 million tonnes.
Talent availability is another bottleneck. Building a workforce spanning engineering, operations, project management and other services is essential for scaling CDR from pilots to large-scale deployment.
Swiss CO2 removal company Climeworks recently signed with Toronto-Dominion Bank, its first with a Canadian financial services firm.
