A Policy Framework for Scaling Up Permanent Carbon Dioxide Removal in the United States 

Executive Summary

Context of the report 

The removal of carbon dioxide from the atmosphere for storage in durable carbon sinks is an indispensable strategy in efforts to prevent the worst effects of climate change. In recent years, the United States (U.S.) and many other countries have taken steps to research, develop, and deploy technologies that can deliver permanent carbon dioxide removal (“CDR”) at scale by mid-century. However, scientific assessments indicate that on the order of a gigatonne (equivalent to 1 billion metric tons) of permanent CDR will be needed in the U.S. alone to reach the goal of net zero emissions, and potentially more if emission mitigation efforts are slow. Current U.S. policies are likely to be insufficient for creating the conditions and incentives necessary for reaching this scale of deployment, given the pace of planned development to date (Figure ES1). Therefore, this report provides a framework for developing an appropriate policy portfolio for the scale up of permanent CDR in the United States. 

The Innovation Technology Framework 

This report uses an Innovation Technology Framework (“Framework”) developed by Clean Air Task Force (CATF) and described in Chapter 3 herein as a guiding model for analysis. The Framework offers a systematic method for identifying and evaluating policy levers tailored to stimulate technological innovation and accelerate market acceptance across technology readiness levels (“TRLs”), which are described more holistically as Development Stages. A “Take-off Point” is identified as a no-regrets, medium-term deployment goal at which the technology (or technologies) will have reached technical and commercial maturity, and, in the case of decarbonization, where the mid-century target will have remained achievable. Policy design must account for the evolving characteristics of a technology as it passes through these Development Stages. These stages are not limited to technical maturity considerations; they also consider the policy tools available for governments to shepherd technologies to the Take-off Point. The stages are defined as: 

• R&D – This stage develops technologies from initial concept to demonstration at larger scales.  

• Early Output – The scale of this stage is technology dependent. It may be characterized as a handful of projects in some cases or as dozens of projects made at one or more factories. The price of the first project in the Early Output stage is often high. After companies build several iterations, these prices usually fall dramatically by the end of the stage. 

• Commercialization – At the end of this stage, technology costs are fully mature, technology risks are low, financing is available on commercial terms, and enough commercial-scale plants are built to reach the Take-off Point. 

CATF’s Innovation Technology Framework relies on four key levers of success to shape the needed government policies through these stages. These levers are categorized as: Lower Costs, Access to Finance, Project Development Time, and Ecosystem Barriers. To provide resilience in a changing political and economic context, a portfolio of suitable policies should be developed and progressed. 

Figure ES1. The S-Curve for scaling permanent CDR to 1 billion metric tons per year (Gtpa) by 2050 

Ensuring the climate impact of CDR technologies 

Several promising CDR techniques with potentially high levels of carbon storage permanence (>1,000 years) are at various stages of technology readiness and have differing policy needs (Table ES1). CATF has identified five key criteria for assessing CDR approaches: 1) Additionality, 2) Measurability, 3) Permanence, 4) Scalability, 5) Sustainability (“AMPSS”). Several technologies at lower levels in the early deployment phases have particular need to demonstrate performance against these criteria. Development of techniques that can accurately measure carbon uptake, additionality, and permanence should be a key R&D priority alongside cost reduction. 

Table ES1. Key characteristics of CDR techniques with high potential for permanent storage 

R&D stage: Creating collaborative and targeted R&D policy 

The U.S. Department of Energy (DOE) has established several funding streams and policies that are relevant for permanent CDR research, development and demonstration, including prize and grant-based funding for direct air capture and storage (DACS), support for trialing biomass-based and mineralization techniques at the pilot scale, and a technology-neutral CDR purchase pilot prize. A smaller RD&D effort has also been established by the National Oceanic and Atmospheric Administration (NOAA) to advance marine CDR. There is nevertheless significant scope for increasing the ambition and impact of research funding by ensuring a diverse portfolio of techniques is explored and further leveraging interagency cooperation to harness technique-specific expertise. As technologies are scaled up, R&D priorities can shift from ensuring fundamental adherence to AMPSS criteria towards fully exploiting the cost reduction potential of system optimization, and ‘learning by doing’ from pilot and commercial-scale projects. CATF recommends congressional and agency action to:  

• Triple CDR R&D funding and allocate dedicated funds to programs that advance R&D towards the goals of this report, on the basis that they are consistent with the Carbon Negative Shot. 

• Continue to diversify the scope of approaches – beyond DACS– funded and advanced by DOE. 

• Enhance collaboration between agencies such as the Advanced Research Projects Agency-Energy (ARPA-E) and NOAA to support R&D for both CDR technology development as well as monitoring, reporting, and verification (MRV) techniques. 

• Fully exploit the R&D learnings from pilot-scale and first-of-a-kind commercial projects by placing strong knowledge-sharing requirements on funding and fostering collaboration between private developers and research institutes. 

Early output and commercialization stages: A phased policy strategy for commercializing permanent CDR 

Permanent CDR techniques face a challenging combination of high costs relative to existing policy and market incentives and critical ecosystem barriers, including the nascent state of supporting infrastructure and certification and standards. Early large-scale projects in the U.S. and other jurisdictions frequently rely on multiple stacked incentives and other revenue sources to create a viable business case. These conditions increase project financing complexity, extend deployment time and hinder access to finance and repeatability. In the short-term, making incentives more certain and, in some cases, relying on a fewer number of stacked incentives can reduce Early Output stage complexity. In the Commercialization Stage where many more projects are built, forging a reliable pathway to commercialization will depend both on technology cost reductions and the introduction of a longer-term, fast-activating policy mechanism, such as a regulatory driver, which gradually increases demand for CDR and increases its value over time (Figure ES2). This could take the form of a compliance market or regulatory mandate for removals, with various options explored in this report. However, additional policy measures are also needed in the near term to support the Early Output phase for a portfolio of CDR techniques; this could take the form of a technology-neutral production tax credit for tons of carbon permanently removed. In addition, federal government has a key role to play in establishing a voluntary market for credible removal at sufficient scale, via increased MRV oversight and building on existing initiatives to elevate significant offtake commitments. This report recommends: 

• Supportive funding and MRV accreditation to crowd in further private investment for high-quality credits from the voluntary market. 

• Overarching policy strategy for addressing the funding gap in the Early Output and Commercialization phases, moving from more bespoke, stacked incentives (e.g., tax credits, fuel standards, VCM revenue) towards faster self-activating, regulatory drivers. This approach needs to ensure that costs are also driven down over time. 

• Implementing a technology neutral production tax credit for permanent CDR to help cover the Early Output phase for technologies beyond DACS and BECCS (which qualify for existing tax credits). 

• Developing and examining a portfolio of possible long-term drivers for CDR to build demand, such as a removal trading system or obligation on emitting entities. 

• An interagency task force – established by DOE – to oversee MRV efforts and certify third-party standards. 

• Action by Congress and federal agencies to remove ecosystem barriers to permitting and siting the enabling infrastructure needed for certain CDR pathways – for example, Class VI wells for geologic storage of CO₂ and CO₂ pipelines. 

Figure ES2. The cost gap for project deployment is progressively closed via falling technology costs and growing support from a long-term regulatory incentive

Next steps for policy design 

CATF recommends assembling a working group of CDR industry representatives, climate and energy NGOs, and policymakers to undertake the following policy design process to advance the CDR goals outlined in this report:  

1. The working group should develop a more rigorously quantified Take-off Point for CDR, both globally and in the United States. This must be accomplished through careful analysis that considers climate models, historic build rates in analogous industries, and other factors that might advance or inhibit project deployment speed. 

2. The working group should then develop a policy portfolio that can meet the Take-off Point objectives in the United States. This policy portfolio is a crucial element of achieving these objectives since stakeholders cannot rely on simply one policy option to address all of the barriers to scale. Multiple policies need to be launched to identify the ones that will be successful. 

3. The policies are modeled or quantified during the policy design phase. This enables stakeholders to predict and steer how policies are affected by external factors such as congressional decision-making. 

By embracing innovation, collaboration, and strategic policymaking, governments can pave the way for a sustainable future characterized by robust carbon removal solutions. It is CATF’s hope that this report serve as a catalyst for informed decision-making and meaningful progress towards achieving collective climate goals. 

Chapter 1. Introduction 

Numerous scientific assessments have emphasized the need for durable removal of CO₂ from the atmosphere to achieve international and national targets to limit the impact of global warming. Carbon dioxide removal (CDR) is integral to the goal of net-zero emissions – a prerequisite for halting CO₂-induced warming – as it can be used to balance any emissions that prove to be more costly to abate by other means. CDR is also the only means of reducing atmospheric CO₂ concentrations should they reach levels associated with unacceptable warming.¹   

The scale of deployment needed to effectively address climate change is monumental and increases as global efforts to mitigate emissions continue to fall short. The International Energy Agency (IEA) demonstrates in their “Delayed Action Case” that limiting global warming to 1.5°C would require 5 billion metric tons (Gt) of CO₂ removed every year in the second half of this century.² The International Panel on Climate Change (IPCC) 6^th Assessment Report on mitigation pathways identifies a median of over 300 Gt removed cumulatively by 2100 in 1.5°C-compatible pathways. The global trajectory for either emissions reductions or CDR is clearly not on track to reach this temperature goal, committed to by international signatories to the Paris Agreement.  

The net uptake and storage of CO₂ by land-based ecosystems and the oceans currently provides a vital carbon sink, drawing down a combined 22 metric gigatons per annum (Gtpa) CO₂ from the atmosphere³. However, the IPCC’s assessment is clear that there will remain a significant need for further carbon dioxide removal techniques, even if the potential of natural sinks is maximized and land use change emissions are reduced (Figure 1). In modeling of climate mitigation pathways, this deficit is typically filled by the permanent storage of atmospheric or biogenic⁴ CO₂ in geological reservoirs. Although around 50 million metric tons per year (Mtpa) of CO₂ is stored in geological reservoirs today (mostly in the U.S.), only around 1 Mt of this is biogenic CO₂ and still less could be robustly certified as delivering a net carbon removal. While a few large CDR projects are in advanced stages of planning or under construction, there is a significant deployment gap. In the last decade, a wide variety of alternative CDR storage techniques have emerged that promise high-durability storage and could supplement the contribution from geological storage, provided they can be rapidly and sustainably scaled up.  

Figure 1. Analysis of terrestrial carbon flows in 1.5°C compatible scenarios considered by IPCC’s 6^th Assessment Report⁵  

To bridge the gap between current warming trajectories and our climate targets, policy must be developed via three pivotal actions. First, and most importantly, rapid and rigorous implementation of emission reduction measures must be taken to minimize our future reliance on carbon dioxide removal. Second, natural carbon sinks in ecosystems need to be responsibly expanded through additional policies and proactively managed to safeguard against future climate impacts. Lastly, we need to rapidly develop, innovate, and scale up permanent carbon removal technologies to meet anticipated future climate demand.⁶  

This report is dedicated to the third measure, to accelerate the early adoption and scaling potential of innovative, permanent CDR methods before 2030 to limit global warming to 1.5°C, with a focus on the U.S. policy context. The current levels of permanent CDR technologies indicate significant escalations are needed in deployment. For example, to remove 0.1 Gt of CO₂ by 2030 represents a fiftyfold surge in permanent CDR from present levels by the decade’s close.⁷ Scenarios aiming to cap global warming at 2°C or below require a thirtyfold increase (0 to 540) by 2030 and a staggering thirteen-hundredfold increase (260 to 4,900) by 2050, compared to levels observed in 2020. Observations from technology scaling literature emphasize the pivotal importance of early developmental phases in shaping the potential impact of permanent CDR techniques on climate mitigation by the mid-century mark. Neglecting to invest in the development and deployment of these approaches now therefore exacerbates the CDR deficit by 2050, risking climate objectives. 

The overarching goal of the report is to identify policies that are most effective in the commercial development and deployment of CDR technologies in line with ambitious climate targets. This objective aligns with the ambitious targets set forth by the Department of Energy’s (DOE) Carbon Negative Shot, which aims to spur innovation in CDR pathways that can draw down carbon dioxide from the atmosphere for less than $100/metric ton by 2030.^8,9 However, there remains a clear policy gap in the United States’ long-term strategy to develop and deploy permanent CDR on a responsible and sustainable glidepath to gigaton-scale by mid-century. This report presents a framework for designing policies across innovation principles, informed by the unique characteristics of CDR and the urgent need for a political economy that can deploy permanent removals at gigatonne scale. It seeks to illustrate the symbiotic relationship between near-term and long-term policies, and how removal targets compel a dual-focus approach to designing those strategies along a continuum. The report should serve as a foundational policy blueprint for policymakers to navigate the intricacies of reaching permanent CDR deployment at scale, guiding efforts towards a more sustainable and resilient future. 

Organization of this report 

In designing the policy roadmap, the authors of this report draw upon the Innovation Technology Framework developed by CATF to guide their analysis. The Framework offers a systematic method for identifying and evaluating policy levers tailored to stimulate technological innovation and accelerate market acceptance across technology readiness levels (TRLs), which are described more hollistically as Development Stages.  

The report’s chapters are organized in this sequence: 

Chapter 1. Introduction: An introduction to CDR and the organization of the report. 

Chapter 2. Background and context: This chapter describes what CDR is and why it is critical to scale on time with the right qualities and cost. 

Chapter 3. The Innovation Technology Framework: A process for identifying a viable and systematic plan to achieve industrial-scale CDR in an uncertain world. 

Chapter 4. R&D stage: Design with the end in mind: Creating CDR approaches with the right characteristics. 

Chapter 5. Early output and commercialization stage: Creating a viable CDR industry with the capability of delivering mid-century climate goals. 

Chapter 6. Conclusion: Summary and next steps that lead to a portfolio of CDR policies. 

Chapter 2. Background and Context 

2.1 What is CDR? 

The IPCC defines carbon dioxide removal (CDR) as any anthropogenic activities that remove CO₂ from the atmosphere and durably store it in geological, terrestrial, or ocean reservoirs, or in products. ¹⁰ This encompasses an enormous variety of approaches ranging from natural processes to innovative technologies, each with different benefits, challenges, and policy needs. The definition notably leaves ambiguity on the length of time that should be deemed “durable”, and there is already significant variation in the level of durability required by various private and public sector initiatives – typically starting from a minimum of 30 years.¹¹ The definition of “anthropogenic activities” is also open to various interpretations, particularly in the land sector, where it can be challenging to demonstrate that activities are measurably additional to the managed or passive uptake of carbon provided by natural ecosystems without human intervention. This chapter will briefly review the status of some of the primary CDR methods and technologies under development and examine their respective roles in climate change mitigation according to CATF’s assessment criteria. 

2.2 Why are CDR technologies needed? 

Interest in removing CO₂ from the atmosphere has existed for almost as long as scientists have recognized the threat of global warming, with the idea of afforestation to reduce atmospheric CO₂ concentrations developed in the 1970s.¹² The idea of using technological processes to separate and sequester CO₂ from the air (direct air capture and storage, DACS) was first put forward in 1999, shortly followed by the principle of combining carbon capture and storage (CCS) with bio-energy processes to deliver negative emissions (bio-energy CCS, or BECCS) in 2001.^13,14 Public and private sector efforts to scale up these engineered processes have progressed throughout the early part of this century, while numerous novel CDR techniques have continued to emerge. Political and research interest in large-scale removal technologies was significantly boosted by the Paris Agreement’s commitment to limit global warming to 1.5°C, followed by the 2018 IPCC Special Report on pathways to reach this target, which included high levels of deployment of BECCS – particularly for scenarios with delayed action on mitigation.¹⁵  

In recent years, several other high-profile analyses of decarbonization pathways on a global or regional scale have highlighted a significant role for CDR and included more diverse approaches and technologies, in particular, DACS. Most notably: 

• The IPCC’s 6^th Assessment Report from Working Group III (mitigation pathways) examines a large range of modeled scenarios that are compatible with limiting warming to a range of temperature targets.¹⁶ Across 1.5°C-compatible scenarios with no or limited “temperature overshoot,” BECCS and DACS provide a median contribution of 334 Gt and 30 Gt respectively over the period to 2100. CDR from land use change such as afforestation and reforestation provides 262 Gt of cumulative removals over this period.  

• The IEA’s Net Zero Roadmap includes 1.7 Gtpa of permanent CDR globally by 2050 (DACS and BECCS). In its delayed action case, based on current national net zero pledges, these technologies need to deliver 5 Gt of annual removals during the second half of the century.¹⁷ 

• DNV’s Pathway to net zero emissions report includes nearly 4 Gtpa of permanent CDR (BECCS and DACS) by 2050.¹⁸ 

• Princeton University’s 2021 study Net-Zero America finds that the U.S. may need permanent CDR technologies such as DACS and BECCS to remove between 0.77 and 1.27 Gtpa by 2050.¹⁹ 

• The majority of pathways considered by the U.S. government’s long-term strategy in United States: Pathways to Net Zero include roughly 500 Mtpa from CDR technologies by 2050, alongside a similar contribution from land-based removals.²⁰  

CDR is fundamental to the concept of net-zero emissions, which has become the preferred formulation of global warming policy targets in many countries.²¹ Removals are used to balance any residual emissions which remain at the point of net zero (hence the net). While there is no widely agreed upon definition of residual emissions,²² the term broadly encompass any greenhouse gas emissions that are technically challenging or impossible to abate, or that would cost more to abate than the cost of permanent removal from the atmosphere. In many climate mitigation scenarios, CDR continues to be deployed beyond the point of net zero in order to return atmospheric CO₂ concentrations to safe levels, in other words, delivering net-negative emissions. Lastly, near-term deployment of CDR before the point of net zero can be understood as an alternative means of reducing net emissions.  

While there is significant variation in the quantities of CDR required under different modeled scenarios, there is general agreement on the need for billions of metric tonss of CO₂ to be removed from the atmosphere annually, if global temperatures are to be stabilized at acceptable levels. The need for CDR generally increases as action on emissions abatement is further delayed.  

2.3 Types of CDR 

Carbon removal methods are commonly divided into those which increase the uptake and storage of CO₂ by natural carbon sinks, such as forests and soils, often grouped among nature-based climate solutions, and those which bind carbon in engineered sinks, such as the storage of CO₂ in geological reservoirs. The latter have been variously referred to as permanent, technical, engineered, or industrial removals. The term hybrid is often used for various approaches that fall between these categories, such as the processing of biomass (often a natural resource) to more stable forms of carbon, or the engineered acceleration of natural processes such as mineral carbonation or ocean absorption of CO₂. 

There is no widely agreed approach for categorizing different types of CDR, but in assessing their potential contributions towards climate change mitigation, it is useful to consider: 

• CO₂ source: Is CO₂ absorbed directly from the atmosphere, from the ocean (dissolved as carbonic acid), or via photosynthesis into biomass feedstocks? Biomass carbon removal and storage (BiCRS) is a term increasingly used to encompass the suite of CDR techniques that rely on biomass feedstocks as a source of carbon (with carbon storage in various forms).²³ 

• Carbon storage: Carbon can be stored in naturally occurring organic form, as processed organic material, or in inorganic form and in many different types of reservoirs. These reservoirs include living ecosystems, engineered reservoirs (such as underground wells or vaults, or integrated into building materials), in solid carbonate minerals, dissolved carbonate and bicarbonate ions, or as CO₂ trapped in the microscopic pore space of deep geological formations.²⁴ 

• Open or closed system: CDR processes and carbon sinks have varying levels of interaction with the surrounding environment. Most carbon sinks are inherently linked with the wider carbon cycle, with carbon flows to the atmosphere and to more permanent sinks such as the ocean. Closed system storage processes, such as geological sequestration, can be monitored more easily than systems that rely on storage in the open environment. 

Figure 2 depicts some of the main CDR techniques available or under development today and is followed by a brief outline of leading approaches classified by carbon sink. 

Figure 2. Types of carbon dioxide removal²⁵  

Storage as naturally occurring organic matter in living ecosystems  

Afforestation/Reforestation: Refers to the active conversion of unforested land into forests, either by planting forests when none previously existed (afforestation) or replanting of trees in land that was been previously occupied by forests (reforestation). 

Soil carbon sequestration: Soils naturally contain organic carbon in the form of broken-down plant matter and to a lesser extent as carbon in mineral form. The quantity of organic carbon stored in managed land can be increased through agricultural practices, such as planting perennial crops and cover crops (planted after the main crop is harvested), and less-intensive tilling of the soil. 

Coastal blue carbon: Refers to carbon stored in ocean and coastal ecosystems, such as salt marshes, mangroves, and sea grasses, primarily in sediments. These ecosystems are of particular interest as carbon sinks as they store carbon at a higher rate per area than land-based ecosystems. Restoring and augmenting coastal ecosystems can be considered CDR. 

Ocean fertilization: Describes the addition of nutrients, such as iron, to the ocean to stimulate the growth of phytoplankton that take up CO₂ through photosynthesis. Carbon stored in the phytoplankton could ultimately be sequestered in the deep ocean as the organisms die and sink, resulting in carbon storage on relatively long timescales. 

Storage of processed organic matter in living ecosystems or engineered reservoirs 

Biomass burial: Activities that bury organic carbon in woody biomass or other biomass-derived products under conditions that inhibit decomposition and can maintain those conditions for containment of the stored carbon for at least 100 years. A variant is biomass sinking, in which biomass is sunk in the deep ocean to depths unlikely to interact with the atmosphere for centuries. 

Biochar: Biochar is a carbon-rich solid material produced from the pyrolysis of biomass, which can be applied to soils (storage in a living ecosystem) or used in building materials such as concrete and asphalt (engineered reservoirs). The level of permanence offered by biochar is the subject of research and depends significantly on the particular features of the pyrolysis process, the chemical makeup of the biomass feedstock, and the storage environment.²⁶  Biochar comprises the majority of currently traded CDR credits on voluntary markets and is estimated to provide nearly 0.8 Mt of annual CDR.²⁷ 

Bio-oil: Gasification or fast pyrolysis can convert biomass to bioliquids or bio-oils which can then be directly injected underground. Over 7,000 metric tons of CDR have been realized by bio-oil to date.²⁸  

Storage as dissolved bicarbonate and solid carbonates

Ocean alkalinity enhancement: This technique involves increasing the alkalinity of seawater to enhance CO₂ absorption from the atmosphere, either by adding alkaline minerals such as lime or olivine to seawater or by directly manipulating alkalinity via electrochemical processes. This process draws down the dissolved CO₂ concentration of seawater by promoting the formation of stable bicarbonate ions and can cause the ocean to absorb more CO₂ from the atmosphere in order to restore the equilibrium level of dissolution. Bicarbonate in the ocean has an average residence time of 80,000 years. The process has been trialled at small scales in controlled ocean environments.  

Enhanced rock weathering: Finely ground silicate rocks (e.g., olivine, basalt) are spread over an area of land, accelerating the reaction of their alkaline constituents (calcium, magnesium, iron) with the CO₂ dissolved in rainwater and soil water. This reaction forms bicarbonate ions which may eventually be transported to the ocean where there is high probability of long-term storage. Some large pilot-scale demonstrations have been carried out, and the process is estimated to contribute around 0.03 Mtpa of CDR.²⁹ 

Utilization in mineralized products (ex-situ mineralization): Concentrated CO₂ collected from a variety of approaches can be used in the curing of concrete or reacted with alkaline rocks or industrial waste minerals to form aggregate materials. The resulting construction materials contain carbon bound as solid carbonates. 

Geological storage of CO₂ 

Bio-Energy CCS (BECCS): A variety of biomass resources and commercial biomass conversion processes produce bioenergy and biogenic CO₂, including the digestion of agricultural waste to biogas (and upgrading to biomethane), the fermentation of high-starch content crops to bioethanol, and the combustion of biogenic waste and other (often woody) biomass to produce heat and power. CO₂ capture technologies can be used to isolate a pure stream of CO₂resulting from these conversion processes before it is compressed and injected into deep geological formations such as depleted oil and gas reservoirs or saline aquifers.²⁸ The large-scale storage of CO₂ from bioethanol plants is carried out at two facilities in the U.S., while capture from two woody biomass-fired heat and power plants has been piloted in Japan and in Denmark is currently under construction. BECCS does not necessarily provide net removal of carbon, as its greenhouse gas emissions impact, and scalability, depends significantly on the biomass resource used and the counterfactual fate of the biomass. When appropriately designed to deliver net CDR and not harm people or the environment, BECCS is considered a form of biomass carbon removal and storage (BiCRS).  

Direct air capture and storage (DACS): CO₂ is absorbed directly from the air by solid or liquid materials that react with CO₂. These materials are then regenerated to release pure CO₂, which can be compressed and stored in deep geological formations such as depleted oil and gas reservoirs or saline aquifers. DACS can be a highly energy intensive process, so consideration of the greenhouse gas intensity of energy inputs is important in determining its ability to deliver net removals. A DACS facility in Iceland stores up to 36,000 metric tons of CO₂ per year and a 500,000 tpa (metric tons per annum) facility is under construction in Texas. 

Direct ocean capture and storage (DOCS): Similar in concept to DACS, but in this approach dissolved CO₂ is separated from seawater (rather than air) before it is sequestered in geological storage sites. By drawing down the dissolved CO₂ concentration in the seawater, the process may drive additional absorption of atmospheric CO₂ into the ocean to rebalance the inorganic carbon concentrations, similar to ocean alkalinity enhancement. Achieving net CDR via this process requires that the CO₂ depleted seawater remain in contact with the atmosphere for sufficient absorption to occur. The process is being trialed in the U.S. at the scale of 100 metric tons of CO₂ per day. 

2.4 Key criteria for ensuring the climate impact of CDR 

CATF uses five key criteria as a framework for assessing the potential of different forms of CDR to address climate change, which can in turn inform policy actions and funding. The criteria are: 1) Additionality, 2) Measurability, 3) Permanence, 4) Scalability, 5) Sustainability (AMPSS).  

1. Additionality: Carbon dioxide removal activities must demonstrate additionality, meaning they generate carbon dioxide removal that would not have occurred without the CDR policy or carbon market financing intended to incentivize the activity. Accurate determination of additionality is particularly relevant to ecosystem-based removals (or other natural processes such as rock weathering), which require a rigorous counterfactual scenario with no human intervention, as well as for any CDR projects that are subject to multiple policy or market drivers.  

2. Measurability: Effective assessment of a CDR technique requires thorough quantification of the net removed CO₂ through comprehensive lifecycle emissions accounting and robust measurement methods, including feasible monitoring, reporting, and verification. Measurability indicates the degree of certainty in determining both the gross amount of carbon removed and stored, an accurate accounting of all emissions associated with the process, and the durability or permanence of the removal. Accurately quantifying the net removal requires analysis of the greenhouse gas intensity of all inputs to the process. 

3. Permanence: Different carbon removal methods reliably store carbon for widely varying lengths of time and with different risks of CO₂ re-release (reversal). Carbon stored in natural ecosystems can be subject to significant risk of reversal in some regions via natural decomposition or disturbance such as fire, disease, drought, or human intervention. Underground storage of CO₂ in appropriately selected geological formations is considered to provide storage on the order of millennia (becoming more stable over time). Only CDR techniques with a demonstrated low risk of physical reversal for at least 1,000 years in their storage reservoir are considered here as permanent for determining appropriate use cases. 

4. Scalability: Evaluation of a CDR technique includes assessing its capacity for significant carbon dioxide removal expansion. While every ton of carbon dioxide removal is valuable, emphasis should be placed on techniques that can be replicated at a large scale across various geographic locations to meet the needs of climate mitigation.  

5. Sustainability: Negative externalities, such as social and environmental impacts, can result from CDR activities and should be accounted for via comprehensive research on the impacts of scaling CDR technologies and through strict regulation to ensure that CDR projects result in no net-harm to the environment and people. Such impacts can be assessed through a comprehensive analysis of various environmental, economic, and social factors through lifecycle analyses (LCAs), integrated assessment models (IAMs), and Environmental Impact Assessments (EIAs), in addition to economic and equity considerations. By integrating these analyses, policymakers can determine the sustainability of a CDR technology, which should ultimately inform a technology’s pathway to development, deployment, and regulation. Process sustainability can have a direct impact on scalability – a technique may only be sustainable at low deployment levels. 

Research shows that the decadal-to-century scale removals provided by nature-based approaches such as afforestation and soil carbon enhancement have a role in limiting peak warming,³⁰ but these approaches are unlikely to be sufficient for long-term temperature stabilization.³¹ There are also fundamental limits to the extent of the global carbon sink which can be provided by the biosphere, particularly when taking into account ongoing emissions from food production in the land sector (such as agriculture) and the risk to ecosystems from climate change (e.g., increasing wildfire risk and severity). 

CATF recommends that CDR deployment occur though the use of a shifting portfolio of CDR methods over time, with more permanent storage methods progressively replacing shorter-term storage and nature-based removals as technologies are demonstrated and cost-effective. Ideally, at the point of net zero, any residual fossil emissions should be balanced by permanent CDR. 

This report therefore focuses on policies which can support the development and deployment of permanent CDR methods (defined as storage for at least 1,000 years) and those with the potential to demonstrate adequate levels of permanence in future. These technologies will undoubtedly be needed at very large scales to avoid the worst effects of climate change, but face the most significant policy challenges, owing to high costs and other barriers that will be discussed in the following chapters. Suitable technologies will also have to satisfy the other AMPSS assessment criteria to a satisfactory extent. Currently, CDR approaches that offer very high levels of permanence and measurability are associated with the storage of CO₂ in deep geologic reservoirs (BECCS and DACS). The high permanence of these methods, along with their measurability and scalability, explains their frequent inclusion in system modeling of decarbonization pathways. However, questions of scalability and sustainability remain to be answered and need to be addressed for these approaches. 

Table 1. Representative CDR techniques assessed according to the AMPSS criteria³² 

Other CDR technologies have the potential to offer high levels of permanence, including biochar, bio-oil, enhanced weathering, ocean alkalinity enhancement, and direct ocean capture. In addition to better scientific understanding of their permanence on climate-relevant timescales, these technologies variously need improved MRV as well as demonstrable measurability, scalability and sustainability (Table 1). Indeed, the development of techniques to accurately measure carbon uptake, additionality, and permanence, can be a key R&D priority for these lower-TRL techniques. Sustainability is a particularly important issue for all biomass-based pathways, as different biomass resources have vastly different levels of availability and net climate benefit, ranging from sustainable waste biomass that might otherwise decompose into greenhouse gases to purpose-grown energy crops that pose a risk of displacing food production and carbon-rich ecosystems, if not carefully regulated. However, analysis by the Lawrence Livermore National Laboratory indicates that the U.S. could produce enough sustainable biomass feedstocks to deliver 700 Mt of annual removals (without land-use change).³³ Global and regional decarbonization pathways with more realistic constraints on biomass availability tend to require greater use of other permanent CDR methods, such as DACS. 

Chapter 3. The Innovation Technology Framework 

3.1 Introduction to the Innovation Technology Framework 

CATF’s Innovation Technology Framework is a process for identifying a viable and systematic plan to achieve industrial-scale deployment of climate technologies in an uncertain world. 

Efforts to advance federal legislation often span multiple presidential terms. This time scale has particular implications for climate policy, including measures to advance CDR. From the start, it is crucial to identify the various policies that meet climate goals because there are limited second chances. How are those policies identified? What endpoint should those policies target? These questions require a thoughtful and systematic approach.  

The Innovation Technology Framework is a conceptual model that can be used to develop a viable and systemic plan for scaling new technologies. It is worth remembering what the British statistician George Box said about models, “all models are wrong, but some are useful.” The Framework is useful because it can help identify the right policies to drive CDR to scale. The Framework builds on four simple ideas, shown in Box 1. 

3.2 Using the Innovation Technology Framework 

The following steps are taken when applying the Framework to a specific climate technology:  

• Locate the technology or approach on the S-curve of Innovation. Is it in the R&D stage, the border of R&D and Early Output stages, or another stage? 

• Develop a first approximation of the Take-off Point using the results of climate models, historic build rates, or analogs from other industries. 

• Analyze the Levers of Success to determine the immediate priorities. 

• Conduct a Gap Analysis examining the difference between current policies and the levers analysis. 

• Develop policy options and recommendations based on the analysis above.   

The final step, developing policy recommendations, is a process described in more detail in the following section. 

3.3 Developing policies to scale up climate technologies 

Designing detailed policies requires additional analysis that extends outside the Innovation Technology Framework. First, the approximate Take-off Point estimate initially developed is revisited, and the uncertainties are examined more closely. Later in policy development, modeling examines how close the policy or group of policies come to achieving this target. Therefore, feeling comfortable with the numeric value of the Take-off Point is critical. 

Next, the process must develop a Portfolio of Policies that meets a specific Lever(s) of Success outcome rather than relying only on a single policy. For example, suppose it takes multiple years to pass legislation. In that case, government control will likely change with time, economic conditions may shift, or events like natural disasters or wars may shape new political realities. Developing several approaches hedges against these uncertainties. These policies may be introduced at once or over time as conditions change. The figure below illustrates how different options within a portfolio might fare before one of them is adopted. 

Figure 4. Illustration of how a portfolio of policy approaches with different failure points can be used to identify successful policy 

In developing the portfolio, the potential for coalitions that support or oppose the policies needs consideration. This step considers the political viability of each option. 

Finally, the policies must be quantified through modeling to assess how suitable they are for reaching the Take-off Point, their cost to the government, their impact on jobs, and other factors.  

3.4. Applying the Innovation Technology Framework to CDR: Identifying the target and the barriers that must be overcome in order to scale CDR

The goal is to reach the Take-off Point quickly through innovation and deployment-focused policies. To do this, we must determine the Take-off Point and identify which are the priority Levers of Success that are most important to emphasize within CDR. 

3.4.1 Take-off Point 

Many CDR technologies with the potential to deliver permanent removal are still in the R&D phase, including enhanced weathering, direct ocean capture, ocean alkalinity enhancement and ocean fertilization. DACS and BECCS are at the start of the Early Output phase, with BECCS having been demonstrated at large scale on two ethanol plants in the United States, and DACS demonstrated at one or two smaller facilities, with additional plants under construction for both technologies. 

Estimating the Take-off Point and the deployment level at Market Saturation begins with models, such as the detailed models of the energy system, land sector, and wider economy used to assess global decarbonization pathways. Section 2.2 has highlighted some of the system modeling studies that have assessed the need for CDR in net zero or 1.5°C-compatible scenarios. There is a wide range of variation in global IPCC modeling results for BECCS deployment, with median values of 2.7 Gtpa globally and 473 Mtpa in the U.S. under 1.5°C-compatible scenarios. However, IEA analysis indicates a need for 1.7 Gtpa globally or 5 Gtpa in a delayed action scenario, the latter of which appears most likely in the current policy context. This higher level of mid-century deployment is also reflected in DNV’s analysis with 4 Gtpa. While the U.S. contribution to these global models is not presented, it can be reasonably approximated based on the U.S. share of historic CO₂ emissions, which is nearly 24%.³⁴ At the national level, scenarios in the ‘Net Zero America’ study indicate at least 770 Mtpa of permanent CDR (DACS and BECCS) by 2050 and as much as 1.2 Gtpa.  

Based on this analysis, we have adopted the deployment target of 1 Gtpa in 2050, which reflects both national decarbonization modeling and a U.S. share of global deployment targets under conservative assumptions around emission reductions. The S-curves in Figure 4 show three different trajectories to 1 Gtpa in 2050, which implies an approximate Take-off Point of 250-500 Mtpa should be reached by 2036. For comparison, the figure also shows expected deployment of DACS capacity, based on announced and planned projects alone, which reaches only 76.2 Mtpa in 2035. This may be supplemented by a further 20 Mtpa of BECCS capacity which is currently announced in the U.S.; however, nearly all of this capacity is in the existing bioethanol industry and is therefore unlikely to deliver net removals based on current industry practices.³⁵ 

Figure 5. The S-Curve for scaling permanent CDR to 1 Gtpa by 2050 

This analysis, based on a review of energy system modeling, can give an approximate idea of the deployment pathway required, but more rigorous analysis is needed to build a more accurate model of a feasible S-curve both for CDR as a whole, and on an individual technology basis. The Take-off Point represents a ‘no regrets,’ medium-term deployment option, from which the mid-century goal remains in reach given feasible build-out rates, while not exceeding lower bound estimates for CDR demand. Several factors could shift this target level higher or lower; factors to consider include: 

• Buildout rates of analogous technologies 

• The impact of enabling technologies such as geological CO₂ storage 

• Geographic constraints that exclude countries unable to shoulder the cost burden. 

Future work by CATF will further develop this analysis. For the purposes of this report, the market saturation of 1 Gtpa in 2050 and an approximate Take-off Point of 250-500 Mtpa in 2036 helps gauge the general policies of this report. 

3.4.2 Levers of success 

To move existing and contemplated DACS and other CDR technologies to the Take-off Point, we use the Levers of Success to identify the categories of policies that will help reach the Take-off Point quickly. As discussed in Chapter 2, CDR techniques have diverse characteristics and currently sit at different points on the S curve; they therefore have fundamentally different challenges and policy needs (Figure 1). Techniques with lower TRL, mostly between the R&D and Early Output phase (i.e., undergoing medium or large-scale demonstration), will need to prove not just technical viability, but their respective performance according to the AMPSS criteria. They face challenges relating to the capacity of current certification methodologies to recognize and assess their potential contribution. Techniques that have passed the Early Output stage and are progressing to Commercialization (BECCS, DACS, biochar) are in particular need of easier financing, faster project development times, a better understanding of sustainability risks, and attention to ecosystem barriers such as public acceptance and infrastructure (Box 2). 

Figure 6. Estimated positions of various higher-durability CDR techniques on the development S curve

DOCS, direct ocean capture and storage; OAE, ocean alkalinity enhancement; EW, enhanced weathering; DACS, direct air capture and storage; BECCS, bio-energy carbon capture and storage

The Levers can make the S-Curve narrower (meaning less time is needed to progress through the curve) and taller (CDR achieves higher market penetration than expected). Table 2 outlines the impact of each Lever, their degree of relevance to different CDR techniques, and examples of broad policy approaches that could be used to engage each Lever. 

Table 2

Lever	Relevance to CDR	Impact on S-Curve	Policy Examples
Lower Cost	Relevant to all permanent CDR – particularly high costs associated with DACS, OAE, DOCS	Height	R&D funding  Knowledge sharing obligations on funded projects
Ease of Financing	Applies to all permanent CDR	Width	De-risking projects
Project Development time	Particularly relevant for technologies using geological storage	Width	Fast-activating subsidies
Ecosystem Barriers	Regulatory (all technologies)  Infrastructure (geological storage, carbon transport, sustainable biomass supply chains)  Public acceptance (geological storage, ocean-based, biomass resource-based)	Width and height	Building public acceptance – community engagement obligations  Establishing Standards, Certification, Monitoring  Developing infrastructure

• A clear active priority is to lower technology cost. 

• An additional active and clear priority is to reduce ecosystem barriers. Because CDR is a diverse set of approaches, the ecosystem barriers vary. However, strong standards, certification, and monitoring protocols are key across all technologies to ensure AMPSS criteria are met. This regulatory or market ecosystem barrier must be addressed for CDR reductions to have a durable market. DACS and BECCS also depend on wider deployment of CO₂ infrastructure (pipelines and geological storage). For lower TRL techniques, some barriers may remain unknown until R&D is complete.  

• Ease of financing will be an emerging priority. The exact contours of policies to meet this need may emerge later, after addressing cost issues and technology readiness. 

• Increasing the deployment speed is another emerging priority. This barrier will likely be more solvable once project developers address cost, ecosystem, and financing barriers.   

3.5 Chapter summary 

For the rest of this report, we will use as starting points the following goals and focus areas: 

• The Take-off Point for permanent CDR is 250-500 Mtpa in 2036. Once it is reached, society can better assess how much CDR is needed in 2050, but reaching the Take-off Point ensures the goal remains feasible. 

• Successful policies to progress CDR technologies through the S-curve should also work to lower cost (e.g., through R&D, deployment learning, and feedback loops), increase deployment speed and address ecosystem barriers. 

• Chapter 4 will address the R&D stage of the curve.  It will start with a Gap Analysis that considers the current state of technologies and current U.S. policies that might advance them.  The chapter makes a series of policy recommendations for the R&D stage. 

• Chapter 5 uses the same process to develop policy recommendations for the “Early Outcome” and “Commercialization” phases. 

Chapter 4. Research and Development Phase 

Design with the end in mind: Creating CDR approaches with the right characteristics. 

4.1 Introduction 

The research and development (R&D) phase of CDR projects typically starts with concept creation. The concept is then tested at a small scale in the laboratory and refined. This phase also involves evaluating the constraints and opportunities of commercial deployment. Projects that pass initial testing and business model review move on to the pilot or prototype stage. Here, they undergo testing at specialized facilities or through adaptation of existing equipment. This progressive approach ensures that only the most promising projects advance, increasing the likelihood of successful commercial deployment. 

4.2 R&D policy for CDR 

Good policy is designed with the end state in mind to ensure that it effectively addresses the intended goals and outcomes. Designing R&D policy with the end in mind requires robust frameworks capable of guiding actions and decisions toward long-term goals. For CDR to be effective in the long term, the AMPSS criteria should be used as a framework for assessing policy actions and funding in the R&D stage. 

For example, it is vital that emerging and promising CDR technologies establish measurability and permanence in the R&D phase before scaling to later demonstration phases. Adherence to the principle of additionality will primarily be determined by establishing appropriate project design parameters in the Early Output phase. Establishing the measurability of a technology during the initial stages of R&D is particularly crucial to prevent potential challenges in accounting and public perception that could hinder its path towards commercial success. Ultimately, building upon measurability before the Early Output and Commercial stages is indispensable to the subsequent phases; it enables the large-scale delivery of tons removed, validates the bankability of offtake agreements, safeguards standards and certification from fraud, and signals overall market integrity to both the private and public sectors. While some emerging technologies may require a significant build out of an information and data ecosystem to achieve measurability, which will involve scaling in parallel with the technology itself, at minimum a robust framework for measurability must be developed and initiated during the RD&D phase.  

4.2.1 The primary policy levers during the R&D stage  

In the R&D stage, the main success levers addressed through policy are cost reduction and the removal of ecosystem barriers. Furthermore, all R&D policies should be ‘designed with the end in mind’ by aligning with the AMPSS framework.  

Lower Costs: R&D is a key means of lowering technology cost, both at low TRL stages and for the optimization of large-scale project designs during the Early Output phase (FOAK to NOAK). However, taking innovation from the lab to a pilot facility can require significant capital and may be challenging to fund from a company’s own balance sheet. Grant funding and cost-share from government can be catalysts at this stage. The government should aim to fund multiple pilots across a diverse set of technologies and applications across a specific removal portfolio.  

Removal of Ecosystem Barriers: In the context of R&D more broadly, ecosystem barriers include developing standardized protocols for MRV of new removals techniques. R&D may also be needed to address infrastructure barriers, for instance, in the planning and development of CO₂ pipeline and storage networks. 

Policy catalysts: In the context of the four Innovation Technology Framework levers – Lower Costs, Faster Project Development & Deployment, Easier Access to Financing, and Removal of Ecosystem Barriers – we define a policy catalyst as a strategic government action that stimulates further policy development and implementation, thereby indirectly influencing these levers. A policy catalyst actively prepares the ground for more targeted government actions that directly impact the levers instead of exerting direct influence itself. Examples include ‘moon shots,’ ‘missions,’ or research agendas.  

4.3  Inventory of existing policies 

The DOE’s Office of Fossil Energy and Carbon Management (FECM) is currently tasked with addressing industrial carbon management technologies, including CDR. In the context of a wider program of carbon management innovation, DOE has previously employed a targeted approach to develop first-generation technologies of point source capture with transformational cost targets that CDR research benefits from today. The National Energy Technology Laboratory (NETL) fosters R&D that goes beyond DACS, with emerging research in the areas of BiCRS, enhanced mineralization, and ocean-based and terrestrial CDR approaches with permanent storage. NETL has taken a transformational approach to R&D by carrying forward point-source prototypes that have follow-on utility in BiCRS technologies and contribute to the advancement of next-generation DACS technologies, given their attributable knowledge.³⁶ NETL incorporates these learnings into its DAC Center and has initiated a four-year plan to develop a process that integrates expertise from the Lab’s extensive materials design, computational materials design, computation fluid dynamics, and process system design research portfolios to advance a cutting-edge system.³⁷ Current policy support mechanisms for CDR R&D are reviewed in Table 3, including key policy catalysts that have helped set the agenda for CDR scale up at the R&D phase and beyond. 

Table 3

	Type of Policy	Example	Gap Analysis
Policy Catalysts	Research Agenda Setting	2019: the National Academies of Sciences, Engineering, and Medicine (NASEM) published a report “Negative Emissions Technologies and Reliable Sequestration: A Research Agenda.”
	Multilateral target	Carbon Dioxide Removal Launchpad    As a co-lead of the Carbon Dioxide Removal Launchpad, DOE and a coalition of countries are working to reduce the costs and accelerate the development of carbon dioxide removal technologies. Members of the Carbon Dioxide Removal Launchpad agreed to build at least one 1,000+ tpa carbon dioxide removal project by 2025, contribute to a collective $100 million investment for demonstration projects by 2025, and support efforts to advance measurement, reporting, and verification. (DOE)	More countries must be integrated in the CDR launchpad mission. CDR-focused NGOs can support this effort.
	Multilateral target	Carbon Management Challenge: Member countries of the Challenge advance a global goal of expanding carbon management projects to reach gigaton scale annually by 2030, as part of keeping the 1.5°C climate goal within reach.	More countries need to support the Challenge
	National government target	Carbon Negative Shot: Establishes an objective to advance carbon dioxide removal pathways that will capture CO2 from the atmosphere and store it at gigaton scales for less than $100/net metric ton of carbon dioxide-equivalent within the decade. (DOE)

Lowering Costs	Research subsidies and grants	2020: Materials and Chemical Sciences Research for Direct Air Capture of Carbon Dioxide. $13.2 million     2021: Materials and Chemical Sciences Research for Direct Air Capture of Carbon Dioxide. $24 million.    2023: The DAC Pre-Commercial Technology Prize: Up to $3.2 million in cash prizes to teams that identify a critical need and develop and test a solution.      2023: Advancing Marine CDR Research program through NOAA Ocean Acidification Program. $24.3 million
	Shared research facilities	Included in the Carbon Negative Shot: Funding  Multi-Pathways CDR Testbed Facilities  NETL DAC Facility  National Carbon Capture Center  Arizona State University Centre for Negative Emissions DAC testbed	DOE should consider funding an ocean-CDR testing facility
	Funding for pilot projects and scale-up facilities	Commercial Direct Air Capture Technologies Prize Competition: $35 million has already been made available through the CDR Purchase Pilot Prize. This helps remove ecosystem barriers by signaling long term demand with offtake agreements and building trust in     Carbon Negative Shot includes funding for:  1. Small Biomass Carbon Removal and Storage (BiCRS) Pilots   2. Small Mineralization Pilots	More funding should be made available for pilot facilities between 1-5 ktpa with cost-share of above 50%
	Support for the innovation ecosystem	DAC EPIC Prize: Up to $3.7 million will be distributed over three phases to incubator teams to support DAC entrepreneurs.	More funding should be made available to support the broader CDR ecosystems and not only incubators supporting DAC

4.4 Policy options and recommendations 

4.4.1 Transformational R&D  

Transformational R&D focuses on inventing new processes, materials, and methods that incorporate entirely different technology designs or approaches. Studies of photovoltaic R&D have shown that the transformational approach is more decisive at the beginning of the study period to lower the cost curve than the more traditional approach of incremental R&D (in contrast to economies of scale models, which become pivotal in later deployment phases) (Figure 6).³⁸ The entire CDR landscape is so new that there is no dominant base technology to transform, making this approach to R&D particularly germane, not least for its emphasis on dramatic cost reductions that aim to expedite learning-by-doing models.  

Figure 7. Transformational research and development shifts the entire cost curve downward

This report recommends that Congress appropriate dedicated funds to programs that advance R&D towards the goals of this report, as they are consistent with the Carbon Negative Shot. Congress should allocate more funding to DOE so that it can implement the following approach through funding opportunities. National Labs should incorporate elements of transformational R&D into their FEED, pilot, and TRL 1-6 project designs. This can be achieved by directing applicants to design projects through specific selection criteria according to 1) AMPSS criteria and 2) the objective of cost reduction for existing technologies and the development of new approaches, by requiring applicants to model the cost reduction projections over time. 

Despite the importance of CDR and DOE’s funding priorities, the suite of transformational R&D at the agency is currently limited. This report recommends tripling the funding for CDR R&D at DOE from current (2024) levels given the agency’s strategic expertise and equities in CDR R&D, especially for MRV, to bolster National Labs programs and lead on collaboration with Federal and non-Federal entities. Collaboration between National Laboratories and other applied research facilities (e.g., the National Oceanic and Atmospheric Administration, NOAA) and government agencies combines the cutting-edge research facilities, scientific expertise, and extensive networks of the former entity with the strategic direction, funding, and regulatory frameworks of the latter.  

To enable more strategic research for CDR approaches beyond its technical expertise, the DOE should continue to diversify the scope of approaches beyond DACS, establish clearer criteria for selecting projects, prioritize interdisciplinary research initiatives, foster partnerships with agencies specializing in relevant fields (e.g., environmental science, agriculture), and facilitate knowledge exchange among experts from different sectors to leverage diverse perspectives and expertise.  

4.4.2 Portfolio diversification 

Federal policies should seek to support a portfolio of CDR approaches through transformational R&D in the pilot phase. In addition to the DAC Center, NETL is deploying transformational thinking for a range of CDR approaches to develop materials, component designs, structured material systems, integrated bench-scale projects, and studies that span pre-FEED and FEED to smaller to larger-scale pilots.³⁹ As mentioned, most government R&D funding to date has been directed towards DACS. While this is a vital technology, the R&D stage is a window of opportunity to advance and innovate other pathways. The CDR Purchase Prize and the proposed CDR R&D Act⁴⁰ are promising examples of recent actions in this direction and signal government willingness to support learning-by-doing for the advancement of CDR. More such funding is needed to advance diverse carbon removal approaches. R&D-stage development can reveal which approaches show the most promise, allowing policymakers to develop targeted support mechanisms for building a diverse portfolio of permanent carbon removal solutions. Biomass-based CDR approaches will benefit from continued R&D led by the U.S. Department of Energy (DOE) Bioenergy Research Centers (BRCs) including: the Great Lakes Bioenergy Research Center, led by the University of Wisconsin-Madison in partnership with Michigan State University; the Center for Bioenergy Innovation, led by DOE’s Oak Ridge National Laboratory; the Joint BioEnergy Institute, led by DOE’s Lawrence Berkeley National Laboratory; and the Center for Advanced Bioenergy and Bioproducts Innovation, led by the University of Illinois at Urbana-Champaign, as well as U.S. DOE’s Regional Biomass Resource Hub Initiative (RBRH), led by Idaho National Laboratory (INL) and other efforts at national laboratories on biomass, biomass conversion and bioenergy. 

4.4.3 Interagency collaboration 

In addition to diversifying R&D for CDR approaches, another objective of transformational R&D is to coordinate between stakeholders with relevant expertise. There was a promising shift in emphasis towards interagency coordination around CDR during the Biden Administration, with the USDA, DOD, DOE (especially FECM and OCED), DOI, EPA, and the State Department working together on distributing R&D efforts. In November 2024, NOAA, the White House, and several other federal partners developed a strategy for marine CDR research.⁴¹ The proposed CDR R&D Act would direct nine federal departments and agencies to fund and conduct R&D and demonstration of CDR activities and techniques over ten years.⁴² These are important steps to expand R&D support across multiple CDR approaches and federal government entities. 

Federal funds can be appropriated to existing research programs across agencies, and agencies can coordinate the use of these funds for maximal impact through interagency agreements, collaborative grant mechanisms, and coordinated funding initiatives. The CDR R&D Act would be a strong candidate for increased funding as a transformational approach. By targeting a diverse range of approaches, coordinating efforts across relevant agencies and National Labs, and contributing to the advancement of the Carbon Negative Shot objectives, this program serves as an example of how the strategies this report advocates for can be carried out.   

Collaboration across federal programs can leverage different areas of expertise to unlock new approaches. Given the DOE has been the primary recipient of federal appropriations for CDR R&D, the agency should continue to build out its leadership role by strengthening existing interagency working groups or partnerships. Moreover, it should establish new partnerships that specifically leverage the complementary resources of different agencies around specific challenges, such as enhancing MRV requirements under the National Lab Call, that advance the technology and market readiness of approaches to meet the country’s climate goals.⁴³ For ocean-based CDR approaches, it is recommended that other agencies assume a collaborative leadership role for applied research. Consider, for example, ARPA-E’s SEA-CO2 (Sensing Exports of Anthropogenic Carbon through Ocean Observation) program⁴⁴ that was established to accelerate the advancement of scalable MRV technologies for ocean-based CDR. To effectively measure complex carbon fluxes in the ocean, this program needs to leverage additional computational ocean modeling capabilities and advanced instrumentation from partnerships with related agencies like NOAA and the Pacific Northwest National Laboratory. Such partnerships could extend to formal memoranda of understanding, sharing assets (such as research vessels and platforms) and workshops to aid information sharing and optimize federal spending. 

The proposed REMOVE Act⁴⁵ would establish an interagency group to advance a whole-of-government approach to study and produce CDR. This group would be tasked with identifying cost-effective CDR techniques and accurate MRV, coordinating research budget and planning, and developing a strategic plan for Federal R&D and demonstration. It would oversee a Carbon Removal Initiative encompassing working groups associated with principal CDR research categories (geological, terrestrial, ocean, technological). 

Overall, a more collaborative approach to R&D partnerships enables transformational results through the pooling of resources, sharing of knowledge, and coordination of efforts across different sectors by maximizing the impact of R&D investments and increasing the likelihood of successful technological breakthroughs. 

4.4.4 Advancing MRV through R&D 

The lack of reliable MRV practices, tools, and technologies for CDR approaches hinders many options under consideration, as stakeholders, potential buyers, and quantification methodology require robust MRV. R&D efforts should include development of MRV and data presentation approaches that provide stakeholders access to robust, simplified, and transparent data on the monitored and verified efficacy of removal across the broad portfolio of approaches. 

Enhancing MRV capacity is critical for methods that are not easily monitored (i.e., have low measurability) but may offer lower costs, high scalability, and permanent removal. Illustrative examples of this include the DOE Lab Call⁴⁶, launched in 2023, which aims to alleviate measurement issues by fostering collaborations between DOE National Laboratories and emerging CDR companies. Likewise, SEA-CO2 seeks to improve sensor technologies to monitor bicarbonate solutions for ocean-based CDR.⁴⁷ This report recommends policy support for similar R&D initiatives to support development of MRV tools and data infrastructure. Furthermore, advancing MRV tools offers additional benefits for later development stages, because these tools help to enhance bankability, foster trust among stakeholders, and facilitate widespread adoption of CDR.  

4.4.5. Grants and prizes 

The DOE has made extensive use of both grant and prize-based funding awards to advance CDR R&D and deployment. Grants are typically distributed to projects through a merit review process, following a solicitation with specific project criteria. Research grant funding in the CDR space includes the Materials and Chemical Sciences Research for DAC funding program.⁴⁸  

Prizes are awarded based on predefined criteria, such as the successful demonstration of a technology or the achievement of a desired outcome. They differ from grants in that they are typically awarded based on the successful accomplishment of a predefined goal or challenge, rather than through a competitive application process. The DOE’s CDR Purchase Pilot Prize⁴⁹ is one example where applicants develop carbon dioxide purchase agreements through a pilot project that delivers third-party verified carbon dioxide removal; a maximum of ten teams will be selected as grand prize recipients. Eligible applicants include private entities, as well as academic institutions that meet the specified criteria and each winning team will be awarded a purchase award prize of up to $3 million. Other government prizes include the $115 million American-Made DAC Prize competitions⁵⁰, sponsored by FECM and administered by DOE’s National Renewable Energy Laboratory.  

This report recommends accelerating this expansion of funding towards other permanent CDR approaches through funding programs like these grants and prizes. More policies are needed at this stage to support technology entrants by lowering the cost and facilitating the ease of access to finance that would attain wide-scale deployment of different technologies across different U.S. geographies. Grants offer funding to support ongoing research projects, allowing researchers to establish the long-term efficacy and feasibility of CDR technologies. Prizes, on the other hand, can incentivize innovation and breakthroughs by rewarding successful outcomes or milestones achieved in the development of CDR technologies. Long-duration experiments to explore the permanent removal potential of methods in the R&D phase are critically important, and we recommend additional funding for a portfolio of different permanent methods.  

4.4.6 Procurement for innovation 

The limited and uncertain near-term market for high-durability CDR is a key challenge. While there is widespread agreement that significant CDR will be needed to meet our long-term climate goals, the near-term market for more costly, permanent CDR is limited to select industries. For this reason, government procurement of CDR plays a key role in supporting early projects and driving innovation in R&D of new removal technologies. While procurement in the traditional sense constitutes governments purchasing an already deployed product, procurement programs can also bolster technology development and accelerate the innovation process to reach the final product.  

The government can implement a series of procurement policies to jumpstart R&D for a diverse portfolio of high-quality and durable carbon removal solutions. Purchases can also be combined with pilot prizes, where the funding is issued over a series of prize phases. CDR suppliers representing a suite of technologies consistent with the Carbon Negative Shot⁵¹ will compete for purchase agreements with DOE. The CDR Purchase Pilot Prize is focused on procurement for innovation rather than procurement for tons because it aims to incentivize the development of new and innovative CDR technologies. This approach is recommended for the R&D stage because it encourages experimentation, exploration, and advancement in the field of CDR, fostering the creation of more effective and efficient technologies. By prioritizing innovation, the prize stimulates competition and drives progress, ultimately accelerating the development of scalable and impactful CDR solutions. Such a program can therefore play a key role in supporting early CDR delivery and may also help spur additional private market purchases due to the recognition provided to purchase-prize winners.  

Congress should continue supporting CDR procurement by directing agencies to create programs that both encourage new technology entrants and foster innovation. Agencies should support technologies approaching commercial scale and also purchase carbon removals achieved from emerging technologies. These programs should commit to buying from a variety of CDR methods that the DOE identifies as potentially meeting the AMPSS criteria and are cost-competitive. To provide an on-ramp for multiple concepts within each pathway, procurement criteria should be announced well in advance of when the procurement decisions will be made. The objective of the program should be to spur greater purchases from early-stage CDR providers in each category, most of whom will likely need to be private purchasers unless the procurement program is very large. Agencies like the DOE should explore different procurement-for-innovation models to maximize the amount of high-quality CDR tons purchased. Options include direct government purchases and retirement of CDR tons or offering subsidies to encourage private market purchases. These subsidies could be distributed through a reverse auction, where bidders compete to provide the most CDR tons at the lowest subsidy. This approach ensures early market support for innovative CDR technologies, which is critical for their development and scaling. 

4.4.7 Private R&D funding and public-private partnerships 

The private sector has proven instrumental for paving the way to large-scale demonstration CDR. One of the mechanisms that the private sector can use to advance CDR development and deployment is advanced market commitments (AMCs) to purchase CDR credits. The largest private purchaser of AMCs is Frontier, a $1 billion fund that enters intodirect purchase agreements for future removal credits. Its members include Stripe, Amazon, Microsoft, McKinsey and JP Morgan Chase. To date, Frontier has issued four rounds of funding, contracting $453 million as of December 2024⁵². Companies like Climeworks, Charm, and other carbon removal companies have already delivered thousands of tonnes to companies.  
Integrating market signals with innovation increases future buyers’ willingness to enter the market, highlighting the need for more private-public partnerships to develop and expand the market. The report recommends that shareholders require transparency about the quality of offsets when companies report carbon removal through CDR projects and that the DOE establish CDR quality standards and encourage their adoption as minimum requirements for AMCs (discussed further in Section 5.4.3) 

4.5 Chapter summary: Recommendations for CDR policy support during the R&D stage 

• Triple CDR R&D funding and allocate dedicated funds to programs that advance R&D towards the goals of this report, on the basis that they are consistent with the Carbon Negative Shot. Tripling CDR R&D funding would maintain the combined level of spending from FY2024. The Energy Act of 2020 established a CDR RD&D program at DOE’s FECM authorizing $69,458,000 or CDR RD&D in FY 24.⁵³ DOE’s Office of Science and Office of Energy Efficiency and Renewable Energy (EERE) also regularly appropriate funds for CDR, and appropriated $25,000,000 and $23,000,000 respectively in FY24.⁵⁴  Taken together, these bipartisan appropriations total $118 million for CDR RD&D in FY24⁵⁵. 

• Use DOE funding programs like grants and purchase prizes to spur innovation and diversify the scope of approaches beyond DACS. 

• Enhance collaboration between agencies such as ARPA-E and NOAA to support R&D into both CDR and supporting MRV techniques. 

• Fully exploit the R&D learnings from pilot-scale and FOAK commercial projects by placing strong knowledge sharing requirements on funding and fostering collaboration between private developers and research institutes. 

Chapter 5: Early Output and Commercialization Stages

Creating a viable CDR industry with the capability of delivering mid-century climate goals 

5.1 Introduction 

This chapter outlines the policy approach needed to bring CDR to the Take-off Point by moving through the Early Output and Commercialization stages. It starts with a gap analysis, examining the current policies that are relevant to these stages and what is still needed, followed by policy recommendations to fill this gap. 

While this chapter combines both stages, it’s important to note the similarities and differences between them. The Early Output stage characterizes techniques with a handful of examples at commercial scale. In contrast, the Commercialization stage is measured in tens and perhaps even hundreds of commercial applications. This scope distinction has profound impacts on policy design. In the Early Output stage, policies like government grants or loans are effective because the number of projects needing these programs is small. A government agency can effectively administer these limited programs with existing staff. If the grants or loans in this illustration are large enough, the projects are built, all other things being equal. In the Commercialization stage, however, the policies must be largely self-activating.  If hundreds of projects are needed, reliance on a single agency for approvals can create delays when agency staff lack the capacity to process these approvals in a timely manner. Policies like production tax credits (wind and solar, for example⁵⁶) can be self-activating, in that project developers can claim the benefit without prior government approval and more quickly build their projects.   

This chapter is primarily illustrated by the policy context for scaling up DACS, given this technology has just entered the Early Output phase and faces significant challenges – particularly relating to cost. However, many of the challenges and policies outlined are also relevant to the deployment of other relatively higher-cost, permanent CDR technologies. 

5.2 Inventory of current policies and voluntary actions 

This section describes federal and state policies in the U.S., as well as the growing voluntary marketplace for permanent CDR. 

5.2.1 Federal policies 

U.S. Federal support for deployment of large-scale CDR projects has grown significantly in recent years. Table 4 summarizes key policies targeted at this stage of technology development. 

Table 4

Program	Authorization	Funding Level	Notes	Innovation Policy Framework Criteria
Energy Act 2020	Energy Act		Established a robust RD&D program to scale new and improve existing ways to remove carbon dioxide from the atmosphere at levels consistent with meeting midcentury climate goals.57
DOE’s Research, Development, and Demonstration Activities	CHIPS and Science Act	$1 billion	Funding authorized from 2023-2026.58
Regional Direct Air Capture Hubs	Bipartisan Infrastructure Law	$3.5  billion	The Regional Direct Air Capture (DAC) Hubs program will develop four domestic direct air capture hubs. Each will demonstrate a DAC technology or suite of technologies at a commercial scale with the potential for capturing at least 1 Mtpa of carbon dioxide (CO2) annually from the atmosphere. Once captured, the CO2 will be permanently stored in a geologic formation or converted into new products.59	Lower costs  Access to finance  Ecosystem barriers
Commercial Direct Air Capture Technologies Prize Competitions	Bipartisan Infrastructure Law	$100 million	Reauthorization of program to support large-scale pilot projects and demonstration projects and test carbon capture technologies.60	Cost barrier
Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA)	Bipartisan Infrastructure Law	$2.1 billion (funding covers credit subsidy associated with a loan, meaning that $2.1 billion in appropriations could support $10 billion or more in loan authority)	Program to establish and carry out a carbon dioxide transportation infrastructure finance and innovation program.61	Ecosystem barriers
45Q tax credit	Inflation Reduction Act	For DAC projects, 45Q value is $180/ton for sequestration projects and $130/ton for utilization	Provides a consistent, performance-based revenue source for carbon capture, utilization, and storage as well as direct air capture projects.62	Lower costs  Access to finance  Faster project deployment
Commercial CDR Purchase Pilot Prize		$35 million	Direct purchase of CDR credits by the Federal Government, structured as a competitive process over three phases.63	Cost barrier  Access to finance
Voluntary CDR purchasing challenge		None	Calls on organizations to make ‘bigger and bolder’ voluntary purchases of CDR credits. Creates a public leaderboard to track purchases and helps suppliers find customers.64	Cost barrier  Access to finance

 5.2.2 State policy 

Several states have implemented Low Carbon Fuel Standards (LCFS), which are market-based regulations designed to reduce the GHG emissions of transport fuels and reduce petroleum dependency.⁶⁵ Established in 2010, California’s LCFS first pioneered these initiatives and now represents a key state-level policy that can promote wider deployment of CDR and DACS specifically. The California LCFS places lifecycle carbon intensity (CI) targets on all transportation fuels sold in California, with a current target of decreasing transportation fuel CI by at least 20 percent by 2030.⁶⁶ Low carbon fuels with a CI below the benchmark generate credits, while fuels that are above the benchmark generate deficits; these credits and deficits are denominated in metric tons of GHG emissions. Regulated entities under the LCFS (i.e., importers, processors, and producers of transportation fuels) can meet their obligations under this regulation by either purchasing credits commensurate with their compliance obligation or by undertaking their own credit-generating projects. 

The LCFS is a variable-price instrument and historically credit prices have fluctuated significantly. Prices reached a peak in 2020 of over $200/metric ton and have fluctuated between approximately $60-70/metric ton in 2024.⁶⁷ The LCFS credit price is established by market participants as a function of supply and demand of credits. The California Air Resources Board (CARB) has proposed a rulemaking update to the LCFS⁶⁸ that is expected to apply an upward pressure in LCFS credit prices as the increase in target stringency will increase demand for credits. CARB’s estimated credit price trajectories are captured in Figure 8. 

Figure 8: Estimated LCFS credit price under baseline and proposed amendments scenarios⁶⁹ 

In 2018, the LCFS was amended to include a CCS protocol, opening eligibility for credit generation to direct air capture (DAC) projects around the world⁷⁰ and certain types of CCS projects. DAC projects can generate project-based credits by opting in to the LCFS and are not required to sell transportation fuel into the California market to generate credits. The scheme therefore provides a significant incentive for DAC projects and can be stacked with 45Q tax credits for eligible projects. 

A proposal for dedicated compliance market for CDR was initially put forward in California in 2022 in the form of the Carbon Dioxide Removal Market Development Act⁷¹. This bill would have obligated large emitters in the state to purchase a quantity of CDR credits corresponding to a proportion of their annual emissions (in addition to their existing liability under the state’s cap-and-trade program⁷²). This type of mechanism is discussed further in the policy analysis section. 

5.2.3 Voluntary markets 

The voluntary carbon market (VCM) describes the marketplace for the purchase of carbon credits by corporations and other entities as a means of voluntarily reducing their carbon emissions under voluntary accounting protocols. While these credits mostly consist of emissions reductions and emissions avoidance credits (such as investment in renewables or avoiding deforestation), there is increasing demand by some corporations for higher durability removal-based credits, including biochar, DACS, and BECCS.⁷³ The voluntary market relies on certification bodies, such as Gold Standard⁷⁴ and Verra⁷⁵, which certify that a supplied credit fulfills its claimed impact, as well as registries of credits. Puro⁷⁶ (majority owned by Nasdaq) is a certification body and registry that has focused on credits for higher-durability removals. Some major buyers of carbon removal credits, such as Microsoft, have developed their own criteria⁷⁷ for defining removal projects that meet their strategic requirements; these projects also meet independent standards in order to obtain a registry listing. Table 5 lists some of the recent major corporate buyers of these removal credits, with a focus on permanent removals.  

In 2024, a significant effort to set a coordinated bar for voluntary markets was launched in the form of the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles⁷⁸. The goal of this initiative is to evaluate carbon credit certification guidelines by pathway and approve credits that meet their key quality criteria. Whether this new initiative can meaningfully advance the rigor of the market is yet to be determined, but the process is a step forward in certification harmonization and transparency.  

Several large-scale CDR projects have relied on value from voluntary markets to reach a positive final investment decision. Examples include 1PointFive’s DAC project in Texas⁷⁹, Orsted’s BECCS project in Denmark⁸⁰ (credits purchased by Microsoft⁸¹), and Climeworks Orca project in Iceland⁸². There appears to be a relatively small, but growing, demand for high-cost credits associated with permanent CDR projects, which is likely to be a key driver in the Early Output phase. The DOE’s Voluntary CDR Purchasing Challenge has sought to maximize the potential of this market demand by helping connect buyers and suppliers and creating a leaderboard of CDR purchases.⁸³ As a technology progresses through the Commercialization phase, the demand for higher-cost removal credits is expected to exceed voluntary demand, requiring compliance markets to stimulate demand across the economy.  

As part of the additionality requirement under certification standards for removal credits, there needs to be sufficient evidence that the removal of atmospheric CO₂ would not have occurred in the absence of the credit purchase. There is therefore a potentially complex interaction between voluntary credits and other project incentives, such as government subsidies.  

Table 5. Significant corporate buyers of permanent CDR credits in the voluntary carbon market

Company/Program Name	Description	Technologies	Metric Tons Purchased
Microsoft	Microsoft has committed to be carbon negative by 2030 and remove the equivalent of its historical emissions by 2050.84	BECCS, DACS, biochar	3,198,103
Airbus	Airbus pre-purchased carbon-removal credits of 400,000 metric tons of CO2 to be delivered over four years.85	DACS	400,000
Frontier (Stripe, Alphabet, Shopify, Meta, McKinsey)	Frontier is a demand aggregator, with an advance market commitment to buy an initial $1B+ of permanent carbon removal between 2022 and 2030.86	Biochar, BECCS, enhanced weathering, biomass burial, DACS, direct ocean capture, ocean alkalinity enhancement	358,594
Amazon	Amazon, committed to be carbon neutral by 2040, has purchased 250,000 metric tons of carbon removal over 10 years from STRATOS, 1PointFive’s first DACS plant.87	DACS	250,000
Next Gen (South Pole and Mitsubishi Corporation, Boston Consulting Group, LGT, Mitsui O.S.K. Lines, Swiss Re, UBS)	NextGen, a demand aggregator and joint venture between South Pole and Mitsubishi, holds the ambition of purchasing over one million certified carbon removal credits by 2025.88	Biochar, BECCS, enhanced weathering, DACS, product mineralization	193,125
BCG	BCG has committed to achieve net-zero emissions by 2030.89	DACS, biochar	141,184
Shopify	Through the Shopify Sustainability Fund, the company has committed $32 million to 22 suppliers.90	Biochar, BECCS, direct ocean removal, enhanced weathering, DACS, mineralization, bio-oil	88,516
JPMorgan Chase	JPMorgan Chase has signed long-term agreements to purchase over $200 million worth of CDR credits intended to remove and store 800,000 metric tons of carbon dioxide equivalent.91	BECCS, DACS, biochar, Bio-oil	63,822
Google	Google has committed to reach net-zero carbon emissions by 2030.92	Biomass storage, DACCS, bio-oil sequestion, enhanced weathering	160,000
Boeing	Boeing plants to invest in more CDR approaches as technologies mature.93	Direct ocean capture	62,000

5.3 Analysis of policy gaps 

5.3.1 Cost 

The cost of DAC today is typically estimated to be in the range of $200 to $700 per metric ton for a hypothetical plant on the scale of a Mt/year, with technology developers suggesting that costs may fall to $200 per metric ton in the 2030s.⁹⁵ The U.S. Department of Energy’s (DOE) Carbon Negative Shot seeks gigaton-scale CDR for less than $100/metric ton by 2030, although this is inclusive of all possible CDR approaches.⁹⁶ For context, it is worth noting that only gravel and sand would be cheaper commodities than CO₂ at this price. Analysis of possible cost reduction pathways for leading DAC technologies has variously projected lower bounds of $226/metric ton at gigaton scale (liquid solvent, see Figure 8) and $100 per metric tontonne in a best-case policy context.⁹⁷  

The cost of BECCS can vary significantly depending on the characteristics of the biomass conversion technology and the cost of biomass, but – as it involves separation of much more concentrated CO₂ streams than DACS – it is likely to fall in the range $80 to $200 per metric ton.⁹⁸ In contrast, CDR credits from afforestation and reforestation can cost as little as $10 per tonne.⁹⁹  

For comparison, the highest price of CO₂ reached by the European Union’s (EU) Emissions Trading System (ETS) is 100 EUR/t in 2023, while the price of CO₂ equivalent in California’s LCFS peaked at $200/t in 2018 and has remained below $80/t since August 2023. Under the federal 45Q tax credit, DACS projects are eligible to receive $185/t of CO₂ geologically stored.

Figure 9. Projected cost trajectories for three leading forms of DACS technology to gigaton scale (log-log scale)¹⁰⁰ 

There is therefore a significant gap between the cost of CDR technologies with high societal value according to the AMPSS criteria and the price which current climate policies are able to pay for carbon reduction or removal. Higher permanence technologies such as DACS face a particular challenge as, in the absence of incentives which adequately distinguish between AMPSS value, lower cost CDR approaches can absorb early demand for CDR and prevent price signals from increasing to the levels required. Owing to this cost gap, currently planned DACS projects in the U.S. tend to rely on ‘stacking’ a combination of different incentives – this is discussed further in the policy analysis section. 

However, DACS will also need to reach the Take-off Point by the 2030s if global climate goals are to be met. Energy system modeling indicates that much higher carbon prices (associated with forcing demand reduction in carbon intensive activities) may ultimately be needed should the achievable rate of deployment of CDR technologies become limiting.¹⁰¹ 

5.3.2 Standards and certification 

Currently, there are a set of disparate rules and standards, created by various independent bodies, governing the accounting and MRV of carbon removal activities. The VCM is fragmented, which can lead to confusion and inefficiency, making it difficult for carbon removal buyers to compare and choose between different carbon credits originating from different standards. The lack of a unified standard can undermine trust and deter participation in the market – potential buyers may be unsure of the environmental impact of their purchase or fearful of public relations repercussions if these credits are found out to have issues associated with them. While this has mostly been an issue for avoided emissions and nature-based removals, risks also exist for permanent CDR depending on the technology used. 

This lack of harmonization in standards and quality leads to an unnecessary duplication of efforts and increased transaction costs, as project developers often must choose between varying methodologies. More novel CDR techniques are not accounted for in national GHG accounting, and having harmonized MRV will be crucial to ensure that carbon removals can count towards national mitigation and eventually net-negative targets. 

5.3.3 Access to infrastructure  

Another major ecosystem barrier facing early carbon management projects – including DACS and BECCS – is access to CO₂ infrastructure and geological storage sites. The cost of transporting and storing CO₂ can vary significantly according to factors including the distance to storage, the mode of transport used, and the geology of the storage site. DACS projects have the advantage of being relatively flexible in their location (not dictated by point source location) and can therefore be more easily situated close to high-quality geological storage. CDR projects that rely on biogenic emission sources are more constrained and may require significant build out of CO₂ pipeline infrastructure to access storage. In addition to the costs associated with transport and storage, this kind of infrastructure brings several other barriers to project development, including challenges of coordination between multiple developers and investors.  

5.3.4 Access to finance 

Insufficient access to project finance poses a significant challenge for permanent carbon removal projects, and especially so for DACS projects, hindering their deployment. This issue stems from various factors, including the high initial costs associated with DACS projects, the uncertain business case, perceived risks, inadequate policy support, and limited awareness among potential investors. The substantial upfront investment required for research, development, and deployment of DACS presents a formidable barrier to entry. Investors are often wary of committing capital to projects with extended timelines for return on investment, particularly in the absence of a stable and predictable market for permanent CDR. Moreover, DACS projects are perceived as high-risk endeavors due to their innovative nature and the inherent uncertainty surrounding their success, further dampening investor confidence. For example, in the EU there are no commercial DACS facilities that are planned or operational, mirroring the lack of financial incentives generating demand for removals.  The absence of financial incentives makes it difficult for permanent carbon removal initiatives to attract the necessary funding to move forward.  

5.3.5 Speed of project development 

Large-scale DACS projects can face long project lead times as a direct result of the cost gap and ecosystem barriers outlined above. The cost gap in the current policy and market context means that projects often depend on a complex business case in which several incentives or revenue streams are stacked (see further discussion below). These often include relatively slow-activating incentives such as applications to dedicated government grants. The need for CO₂ transport and storage infrastructure, which can take several years to develop, also imposes longer lead times on first-mover projects. 

5.4 Policy analysis and recommended strategies 

In this section, we provide a brief overview of existing policy tools for permanent CDR deployment and identify our primary policy recommendations, including further actions that are outside the scope of this report.  These primary policy recommendations will cover two factors: (1) cost barriers and (2) ecosystem barriers, with a particular focus on costs as the principal barrier facing the deployment of high-permanence technologies such as DACS. This section will highlight the importance of developing a strong market signal that drives private sector interest in CDR, and the need to develop a basket of policies that can reach the Take-off Point and, ideally, move beyond it. 

The table below summarizes the principal categories of existing and proposed policy mechanisms that could address the cost gap for CDR technologies. Many also have diverse positive impacts on access to finance and the speed of project development. These policies can be usefully assessed in terms of their applicability to the Early Output and Commercialization phases; successful policy strategy should aim to be responsive to the evolving challenges faced by technologies. 

Table 6. Potential policy options to support permanent CDR and their applicability to key deployment phases 

Policy Type	Description	Early Output Stage	Commercialization Stage	Post Take-Off Point Stages
Co-investment support	Support collaborative investments among multiple government and private entities.	Y	N	N
Project performance insurance	Government-backed insurance against underperformance of CDR project, similar to New Energy Risk.	Y	N	N
Community engagement and public acceptance initiatives	Meaningful community engagement during project selection and development; transparency; provision of local benefits.	Y	Y	Y
Loan guarantees	Government loan guarantees to reduce risk for private lenders.	Y	N	N
Loans	Government loans to projects where private capital is insufficient.	Y	N	N
Market facilitation	Governments and private entity commercialization support by distributing information (e.g., about trends in market demand, regulations, technology; or assistance with structuring financing).	Y	N	Y
Reverse auctions	Form of procurement of tonns. Government or private entities compete to offer a number of CDR tonnes at lowest cost.	Y	Y	N
Carbon contracts for difference	Form of procurement of tons. Government cost guarantees for tons of CO2 removed or avoided based on difference from carbon price in an established market (e.g., the VCM or an ETS).	Y	Y	N
Penalties and liability	Establish penalties and liability mechanisms to prevent fraud and misrepresentation regarding the quantity and quality of tons removed.	Y	Y	Y
Production tax credits	Per-ton tax credits (or direct payment) to all CDR developers meeting particular criteria.	Y	Y	N
Investment tax credits	Tax credits provided based on a percentage cost of a CDR project.	Y	Y	N
Accelerated authorizations	Shorten environmental review and permitting timelines.	Y	Y	Y
Tax-advantaged financing structures	Establish or make available advantageous tax structures for CDR projects, such as private activity bonds, master limited partnerships, or real estate investment trusts.	Y	Y	Y
Carbon tax or emissions trading system	An obligation to pay for carbon emissions, including the option to satisfy all or part of the obligation through CDR credits.	Y	Y	Y
Carbon Takeback Obligation (CTBO)	Producers of fossil fuels are required to “take back” carbon to geological storage, via point source capture and CDR.	Y	Y	Y
Regulations	Emission regulations or permit conditions that enable or require CDR (e.g.,. residual emissions).	Y	Y	Y
Government market for removals	Government market for CDR established through law or regulation.	Y	Y	Y
Carbon Central Bank	A regulatory authority procures CDR credits on behalf of the State. These credits can then be issued into an emissions trading system as negative emissions, according to price signals or other triggers.	N	Y	Y

This section examines the policy options in Table 6 in the context of two overarching and contrasting strategies for driving permanent CDR through the S-curve phases. In the most basic approach, a single overarching policy tool would address the cost gap for projects during both the Early Output and the Commercialization phase. An alternative strategy would be to design an evolving suite of policies that can meet the distinct challenges of these phases, with a focus on drivers that can be effectively implemented in the near term.   

5.4.1 Strategy 1: Implement a single regulatory policy driver for CDR 

A single policy approach to CDR scale up would need to have key characteristics compatible with rapid project deployment during the Commercialization phase, including a fast, self-activating incentive, and should avoid an excessive reliance on direct government funding. As shown in Table 6, policy drivers with these characteristics are typically regulatory mechanisms such as carbon pricing, a carbon takeback obligation, or a dedicated removal requirement on specified liable entities. 

A. Integrating CDR with carbon pricing systems 

Most jurisdictions with existing carbon pricing mechanisms do not have the option to use CDR credits to reduce the liability of emitting entities, with the notable exception of the New Zealand emissions trading system, where several CDR activities are eligible.¹⁰² In the EU, the most recent revision of the emissions trading system (ETS) requires the European Commission to investigate approaches to integrating certain forms of CDR within the system, which could allow emitters in the EU to offset some of their ETS liability with CDR credits as an alternative to emissions reduction (see Box 3).¹⁰³ Approaches to CDR integration within the United Kingdom (UK) ETS are also under government consultation.¹⁰⁴ Given that the declining emission cap in these ETSs could lead to very high and potentially volatile prices for the emission allowances required by remaining emitters, the eventual inclusion of CDR credits could also act to relieve this pressure. Integration can serve a dual purpose of bringing liquidity and stability to the market for emissions, while also acting as a long-term driver for CDR deployment.  

There are several different approaches proposed for integration of CDR credits within an ETS, characterized by varying levels of integration. In its simplest form (direct integration), any suitably certified credits could be used to reduce the ETS liability of an emitter. Alternatively, restrictions can be placed on what types of CDR credits qualify (i.e., a minimum level of permanence and measurability) or how many credits are introduced, for instance, by setting a maximum proportion for each company. A “Carbon Central Bank” has also been proposed to regulate the usage of CDR credits in the system. Under one model, this institution could act on behalf of the state to procure CDR in advance and then release credits into the ETS (via auction) when the price of emissions reaches a pre-determined level.¹⁰⁵  

In jurisdictions where a carbon tax applies rather than an emissions trading system, CDR credits could similarly be used to reduce an emitting entity’s liability. 

While some form of integration is likely necessary to enable emissions trading to continue functioning well as emissions approach zero, this policy alone may be quite limited in its ability to drive CDR scale up to the Take-off Point and beyond. First, the level of carbon price is unlikely to cover the whole cost gap for high-permanence CDR technologies in the near term, meaning that project-targeted subsidies or some other incentive would also be required in the Early Output phase. A Carbon Central Bank could be used to cover this gap by purchasing credits in advance, or a portion of revenue from the ETS could be directed towards project funding (as is currently the case in the EU). Second, use of an ETS confines the funding of CDR deployment to emitting entities, which becomes increasingly limited as the number of emitters declines and it becomes less applicable for driving net negative emissions.  

B. Removals trading systems 

A related approach would be to create a separate trading system for CDR credits. This would need to stipulate the obligated entities and the quantity of removals targeted, which could increase on an annual basis. A standalone removals trading system may be more politically viable in the U.S., where there is no federal emissions trading system or carbon tax. California’s proposed Carbon Removal Market Development Act (S.B. 308)¹⁰⁶ was an example of this approach, requiring large emitters to purchase a growing proportion of CDR credits. Under the proposed bill, which was not enacted when considered in 2024, credits were to be associated either with “durable carbon sequestration method[s]”,¹⁰⁷ or with less durable removals together with an obligation to replace with durable methods in future. 

A separate CDR trading system can effectively address the cost gap for high-durability CDR from an early stage in the development curve, as it does not compete with lower-cost emissions reductions. However, to safeguard the primacy of emissions reductions, the target quantities should be adaptable and linked to regular assessment of the projected need for CDR. The approach could also face challenges as fewer remaining emitters are burdened with a potentially growing need for removals and net negative targets. Obligations could potentially be linked to historical emissions, broadened to additional polluting sectors (particularly in likely ‘residual emission’ sectors such as agriculture, aviation, or shipping), or even include federal or state governments as a buyer of credits. 

C. Carbon takeback obligations 

A carbon takeback obligation (CTBO) places a regulatory obligation on hydrocarbon producers to store a growing proportion of the fossil carbon they have extracted – either by storing it themselves or by purchasing certificates that demonstrate proof of storage.¹⁰⁸ The proportion required would start at a relatively low level and increase to 100 percent in the year targeted for net zero carbon emissions – potentially continuing to fractions above 100 percent to deliver net negative emissions. As originally proposed by Allen et al. in 2009, the CO₂ stored to meet the obligation could be captured from any source, including point sources associated with fossil fuel combustion.¹⁰⁹ Obligated entities would likely initially store CO₂ from concentrated sources where the cost of capture is low, before progressing to higher cost sources and CDR, including DACS. CDR would necessarily be required to fulfill the obligation on production of hydrocarbons that are used in applications such as transport, where direct carbon capture is costly or impossible. It would also be the only route to fulfilling an obligation that extends beyond 100 percent.  

Implementation of a CTBO requires several design choices, including the sectoral and geographical coverage of the obligation and the growth rate of the obligated proportion. If the policy were initially implemented on a national scale, or within a cooperating bloc of countries, the obligation would also need to be placed on importers of hydrocarbons. CTBO implementation also requires a system of certificates for each unit of geologically-stored carbon, which could be exchanged and acquire their own market value.   

Several variants on a CTBO are possible, with the potential to target the policy more directly at CDR deployment. A proportion of the full obligation could be mandated to comprise permanent CDR, or DACS specifically. Targeting the obligation on the oil sector could also lead to a focus on engineered removals, given the dominance of dispersed transport emissions. Less permanent, nature-based removals could also be incorporated to meet the obligation in the near term, provided there is a requirement to progressively transition to balancing all fossil emissions with geologic storage.¹¹⁰  

A CTBO would satisfy many of the requirements of an enduring policy driver for CDR, particularly if designed to include a proportion of CDR early in the obligation. It would be a self-activating regulatory mechanism, in which the cost of deployment is placed on hydrocarbon producers and would thus ultimately be borne by all fossil fuel consumers. In its earliest stages, where the obligated proportion of carbon storage is small, this would represent a relatively small cost to individual consumers. A key element of the CTBO is that it requires from its inception a low level of deployment of a relatively high-cost action (point source CCS or engineered CDR) – in contrast to a carbon price, which only triggers these actions once relatively high prices are reached.  

Disadvantages of the CTBO include potential complications from its interaction with other climate policies such as carbon pricing. For example, CDR used to fulfill the CTBO obligation may receive a double incentive in jurisdictions that also plan to credit CDR through emissions trading systems. There are also concerns from some stakeholders that it could promote lock-in of fossil fuel use or at least that it would not provide sufficient incentive alone to phase out fossil fuel use.  

5.4.2 Strategy 2: Combining stacked incentives and a phased long-term driver 

A. Stacking incentives in the Early Output phase 

Many high-permanence CDR projects today rely on stacking of several incentives to cover the prevailing cost gap, as existing policies are insufficient when taken alone (see Figure 9). For example, the U.S. section 45Q tax credit provides $180 per ton for DACS,¹¹¹ still well short of likely costs for the first iteration of large DACS plants. In Canada, an investment tax credit (ITC) can be used to offset 60 percent of the capital cost of DACS projects.¹¹² Although these policies are currently insufficient to drive CDR deployment alone, they may drive deployment if and when technology costs fall or when stacked with other policies or actions, such as voluntary market demand for credits, or low carbon fuel standards. 

Figure 10. An illustrative example of stacked revenue streams for a DACS project

Many of the policies described in the review of current federal and state policy have important limitations. For example: the value could be too low; the policy sunsets; the value declines with time, and market volatility makes it difficult for projects to reach financial closure. Stacking sufficient diverse revenue streams can mitigate against the risk of individual policy limitations, but also creates a complex business case that may inhibit access to finance. 

In the U.S., early DACS projects have been able to access a range of potential funding streams to cover high costs, including the 45Q production tax credit, low carbon fuel standards, voluntary markets and, most recently, direct government funding for DAC hubs. Developed by 1PointFive using Carbon Engineering technology, the STRATOS DACS project under construction in western Texas aims to capture 500,000 tpa beginning in 2025.¹¹³ The project plans to benefit from the $185/ton tax credit for DACS under 45Q, as well as sales of carbon removal credits on the voluntary market, with advanced purchases already made by Airbus, Shopify and ThermoFisher.¹¹⁴ Federal grant funding under the DOE’s DAC Hub program has allocated $1.2 billion to two large-scale DACS projects, selecting Project Cypress in Louisiana (Batelle, Climeworks, Heirloom) and an additional project led by 1PointFive in South Texas.¹¹⁵ When stacking revenue streams to fund CDR development, there needs to be a robust assessment of the additionality provided by each incentive, particularly in the context of the voluntary carbon market.  

B. Production tax credits 

Tax credits linked to a unit of a delivered quantity, known as production tax credits (PTC), have been widely used in the U.S. as a policy tool for climate technologies. Self-activating policies like production tax credits provide certainty and timing advantages to help alleviate the challenges around access to finance. Examples include the production tax credit for wind power¹¹⁶ and the 45Q credit for CO₂ storage.¹¹⁷ The Carbon Dioxide Removal Investment Act is a recently proposed federal bill that would introduce a PTC for CDR, crediting projects on the basis of net metric tons removed.¹¹⁸ The proposed credit is technology-neutral, but eligible techniques need to satisfy AMPSS criteria, and robust LCA and MRV protocols would be required to verify the quantity and quality of the credited removals. The credit would not be stackable with other clean energy credits, such as 45Q. 

C. Carbon contracts for difference 

Carbon contracts for difference (CCfDs) and reverse auctions are becoming increasingly used in Europe to close the funding gap for large-scale permanent CDR projects.¹¹⁹ These approaches are highly suitable for driving a small number of plants through the Early Output phase. For example, a government agency could negotiate several CCfDs for CDR projects or hold a reverse auction for eligibility among several plants. Collaboration among countries, each using CCfDs or reverse auctions, could help achieve cost reductions (learning by doing) that would help advance CDR approaches to the Commercialization stage. In theory, these policies could also extend into the Commercialization stage, but funding or staffing constraints could impose practical limits on the size of the program.  

For example, the UK government’s business model for greenhouse gas removals will award successful projects with 15-year contracts which guarantee payments to cover the difference between the project ‘strike price’ and a reference price.¹²⁰ The strike price represents the project costs (capex and opex) and some return on investment, while the reference price is based on an approved market value of negative emissions in the voluntary market. The UK has yet to select any projects under this scheme, and the selection process and terms of the contracts are likely to be through bilateral negotiations, making this policy targeted at the Early Output stage.  

Denmark has also implemented a form of CCfD that will be used to allocate a fixed pool of government funds towards both fossil CCS and BECCS projects.¹²¹ Any project that can provide a net reduction in Denmark’s national emissions inventory is eligible, with minimum volumes required for each funding round. Funding is allocated via a more competitive process than the UK model, based primarily on the cost of the bid (i.e., a reverse auction). The first contract awarded under this scheme is notable as it selected two biomass-fired combined heat and power plants (owned by energy utility Orsted) that will also receive significant revenue from the voluntary market for CDR.¹²² Microsoft has agreed to purchase 2.76 million metric tons of carbon removal over 11 years, while the government CCfD provides the balance of costs over a 20-year contract.¹²³ In this case, the revenue from the voluntary market has allowed the project to provide a more competitive bid to government by reducing the size of the remaining subsidy required.¹²⁴  

D. Commercialization phase: Phased cost support from regulatory incentives 

There are political and economic limits to how much of the cost gap to CDR deployment can be covered through direct government support, in the form of reverse auctions, CCfDs, production tax credits, or direct grants. Government budgets for deployment of clean technologies are limited and best focused on the Early Output phase of development, in which projects face highly project-specific costs and risks. As a result of governmental priorities to ensure and demonstrate appropriate spending of public funds, some of these funding mechanisms are also dependent on relatively slow allocation processes, which extend deployment times. Voluntary demand for high quality CDR is also not expected to increase at the rate necessary to drive these technologies alone during the Commercialization phase.  

As CDR enters the Commercialization phase, there is therefore a need to phase in alternative policy drivers that provide an enduring mechanism for covering the cost gap and which are also sufficiently self-activating to allow rapid project development. This will likely take the form of a regulatory approach that can distribute the cost of CDR deployment across society, such as those outlined under Strategy 1. These policies often share a quality that they become more stringent with time. 

The shape of this graph reflects political reality (for instance, it is easier to pass a tax that is lower at the start than later in time) and feasibility (a standard can be stricter with time to force technology development). These regulatory drivers are therefore well suited to progressively covering more of the project cost gap and taking on the burden initially covered more by government subsidies and other stacked revenue. 

Taking phased support together with declining technology costs and stacking, project costs can reach a point where they are offset entirely over time, as shown in Figure 11. 

Figure 11. An illustrative schematic of Strategy 2, in which the cost gap for project deployment is progressively closed via falling technology costs and growing support from a long-term regulatory incentive

5.4.3 Policies to address ecosystem barriers 

A. Developing standards and certification 

To address the ecosystem barrier posed by fragmented and disparate standards and certification, it is imperative to develop or fortify standards for voluntary, compliance, and jurisdictional carbon removal projects, particularly where carbon credits are utilized to make claims of offsetting emissions, achieving neutrality, or meeting net-zero targets. As outlined above, clear regulatory frameworks are essential to appropriately allocate liability and facilitate access to finance for carbon removal projects by raising the trust of carbon removal buyers and the public. These frameworks should transparently quantify the tons of carbon removed through rigorous MRV processes that buyers can trust—for example, through the efforts of the European Commission to develop the Carbon Removal and Carbon Farming Regulation (CRCF), with EU-developed methodologies and an EU-run carbon unit registry.¹²⁵ Standardization of MRV protocols will be increasingly important for carbon removal sales that cross jurisdictions; if carbon credits are accounted for and certified in different ways across jurisdictions, this will create market barriers. Establishing strong and standardized (to the extent possible) MRV protocols not only informs regulatory structures and procurement pathways but also provides clarity to potential users regarding eligibility criteria. Trust can be further built through the establishment of open-access public registries documenting the entire chain of custody, ownership, and liability. 

In the CDR Purchase Prize Pilot Program, DOE requires applicants to have an approved implementation partner for MMRV (measuring, monitoring, reporting, and verification), submit a rigorous MMRV guidance document that would enable a third-party to measure and verify the CDR, and provide a testimonial from the implementation partner committing to the project.¹²⁶ For its Voluntary CDR Purchase Challenge, the DOE sets norms for what qualifies as high-quality CDR credits and approved MRV methods. These efforts to ensure some alignment and minimum acceptable quality from existing protocols are welcome. However, going forward, the DOE should establish an interagency task force to oversee MRV efforts, drawing on the expertise of relevant agencies such as the USDA, NOAA, and EPA. This would provide guidance and continuously review and certify third-party standards in a transparent manner. 

The U.S. Commodity Futures Trading Commision recently issued guidance on listing voluntary carbon credits as contracts in derivatives market that set out high level criteria related to additionality, permanence, transparency, quantifcation, governance, monitoring, and accounting and verification.¹²⁷ These criteria are an important attempt to bring consistent standards to the voluntary market, although they rely on external bodies to provide operative definitions.¹²⁸ 

B. Deploying shared infrastructure 

As outlined in Table 4.1, the U.S. has implemented a number of policies targeted at developing CO₂ transport and storage infrastructure, which will be essential for the deployment of both point source CO₂ capture and DACS. These policies include the CarbonSAFE initiative launched in 2016, aimed at funding and de-risking the development of storage sites with over 50 million metric tons of total CO₂ capacity over 30 years.¹²⁹ In 2021, the Infrastructure Investment and Jobs Act (IIJA) authorized $12.1 billion across the CO₂ value chain, including $2.1 billion in low interest loans and grants for shared CO₂ transport infrastructure (the CIFIA program) and $2.5 billion in grant funding towards a CO₂ Storage Commercialization Program.¹³⁰ This program builds on the work of CarbonSAFE by funding the development of new or expanding storage projects. 

Investment in carbon management infrastructure can be a promising, high-impact area for direct government funding towards decarbonization. It can help stimulate investment in CO₂ capture and enable larger-scale shared infrastructure that may not emerge from the coordination of private sector actors alone. Compared to point source capture, DACS plants have the advantage of flexibility in location, and can relatively easily co-locate with promising storage sites. However, sharing storage sites with other sources of CO₂ can bring down the operational cost for all users of the site and help address part of the cost barrier for DACS. While CarbonSAFE and the CO₂ storage Commercialization Program have been successful in driving many storage sites towards a final investment decision, policy support for shared transport infrastructure has been more challenging. 

One current deployment challenge is delays in receiving Class VI well permits, which are required for CO₂ storage. Long approval timelines – due to staffing constraints, for example – can deter potential investors in carbon capture and storage and projects, including DACS and BECCS. While the EPA has signaled its intent to make determinations on completed applications within two years of receipt,¹³¹ the process can take longer. To accelerate the deployment of carbon capture and storage technologies, the EPA should aim to issue construction permits within 12 months of receiving an application that is deemed administratively complete. States may also seek Class VI primacy to expedite the permitting process by taking pressure off the federal agency, and EPA has recently approved primacy application for Louisiana, where many well permits are sought, and is considering other state applications. When properly implemented, states with Class VI primacy can achieve more stringent oversight and more efficient permitting than under federal implementation. Compared to the EPA, states also may better understand their geology and the needs of local communities, developers, and landowners. 

Developing CO₂ transport also faces challenges_. Pipelines are the most cost-effective method for transporting CO₂, although the siting and permitting of CO₂ pipelines has faced obstacles in recent years largely due to local opposition driven by concerns about safety risks. A notable incident occurred in 2020 in Satartia, Mississippi, when a CO₂ pipeline leak hospitalized 45 people,¹³² intensifying concerns about pipeline safety. In response, the Pipeline and Hazardous Materials Safety Administration (PHMSA) announced a rulemaking to update CO₂ safety standards. In January 2025, PHMSA announced that it sent the rulemaking to the Office of the Federal Register, but it has not been published pending the regulatory freeze.¹³³  

A federal option for siting interstate CO₂ pipelines, combined with more states obtaining primacy of the Class VI well program and a renewed focus on processing Class VI permits by the federal EPA in states without primacy, would lower the costs for deploying DACS and BECCS and accelerate project final investment decisions. 

5.5 Chapter summary and policy recommendations 

There are several possible options for a single regulatory approach towards scaling up DACS, including integration with carbon pricing, carbon removals markets, or a carbon takeback obligation. However, these mechanisms face a number of limitations, particularly for the Early Output phase of technology deployment, progressing from FOAK to NOAK projects, during which the cost barrier is highest and projects face specific risks and challenges that may require bespoke business models. Some regulatory incentives can play a role even in the near term, if appropriately designed to drive investment in some deployment of higher-cost, permanent removals from their inception, for instance, in a CDR obligation market or carbon takeback obligation with a DACS requirement. Perhaps most significantly, regulatory mechanisms with such broad societal impact are politically challenging to implement and could face delays detrimental to their ability to stimulate DACS investment within the necessary timeframe. This can be seen in the slow or stalled efforts to implement a carbon removal market in California, or a CTBO in the Netherlands. 

A combined approach to incentivizing DACS would initially rely on stacking multiple revenue streams to establish a business case for Early Output projects, while progressively phasing in a long-term regulatory driver. Most permanent CDR projects in the U.S. today rely on stacking revenues such as production tax credits, low carbon fuel standard credits, and demand from the voluntary market. EU projects have adopted a similar strategy, typically with CCfDs or reverse auctions in the place of tax credits. These incentives can be slow to activate and rely on political choices around government funding – as such they need to be appropriately designed to minimize cost to the state. They can also be tailored to meet the high-cost barriers and risks associated with early projects, and stimulate projects to find additional revenue streams such as voluntary CDR demand. As part of the combined approach, an effective regulatory mechanism for CDR deployment would then be phased in, designed to take on an increasing proportion of the project cost barrier. This progressively reduces the fiscal burden associated with direct subsidies and provides government with a clear ‘end game’ for the subsidized phase, making this phase more politically viable. A regulatory mechanism such as a removals or storage obligation is well suited to the commercialization phase, provided they are self-activating, bankable policies with clear trajectories – enabling both fast project deployment and access to finance. Further policy analysis is required to determine the optimum characteristics of a regulatory mechanism for CDR in the U.S. context. 

Robust standards and certification methodologies for CDR are a prerequisite for any effective policy strategy targeted at DACS scale up. The variation in value across CDR solutions – as characterized by the AMPSS criteria outlined in Chapter 2 – needs to be taken into account by both subsidies and regulatory mechanisms in order for higher-cost, high-permanence options to be appropriately incentivized from the earliest stage. Complementary support for infrastructure including CO₂ transport and storage, and access to low-carbon energy, is also required to establish an enabling ecosystem for DACS and BECCS. 

5.5.1 Policy recommendations 

• Supportive funding and DOE standardization of MRV should help crowd-in further private investment for high-quality CDR credits from the voluntary market. 

• The overarching policy strategy for addressing the funding gap for permanent CDR in the Early Output and Commercialization phases should progress from more bespoke, stacked incentives (e.g., tax credits, fuel standards, VCM revenue), towards a faster self-activating, regulatory driver. This approach needs to ensure that costs are also driven down over time. 

• Implement a technology-neutral production tax credit for permanent CDR to help cover the Early Output phase for technologies beyond DACS and BECCS. 

• DOE should commit to purchases from a range of CDR approaches that can meet the AMPSS criteria and are cost competitive with other scalable options. Procurement criteria should be announced well in advance of when the procurement decisions will be made. 

• Develop and examine a portfolio of possible long-term drivers for CDR, such as a removal trading system or obligation on emitting entities, consistent with achieving net-zero and net-negative emissions trajectories. 

• The DOE should establish an interagency task force with complementary technical expertise (USDA, NOAA, EPA) to oversee MRV efforts and certify third-party standards. 

• EPA should issue CO₂ storage construction permits within 12 months of receiving an administratively complete application, which would accelerate the deployment of carbon capture technologies and reduce investor uncertainty. States with the requisite geology, and whose agencies have or can develop the requisite knowledge, expertise, and capacity should seek primacy over Class VI wells. 

• Congress should consider federal siting authority for interstate CO₂ pipelines to streamline the permitting process. 

Chapter 6: Conclusion and a Path Forward 

This report presents a framework for developing policies that stimulate an industry capable of permanently removing on the order of a metric gigaton of carbon dioxide by the year 2050. By setting lower costs, stringent integrity criteria, and scalability as primary parameters, we aim to position CDR as a more actionable solution than currently envisioned in mainstream models. 

The overarching conclusions of this report are twofold:  

• There is a clear need to increase the investment driven by existing policies towards R&D efforts for permanent CDR; and  

• There is a clear need to design and implement longer-term policies in parallel that lay the groundwork for the sustained growth and scalability of these technologies.  

For the latter, innovation is only one side of the coin; long-term policies must concurrently address infrastructure needs and establish a market that is fit-for-purpose to scale CDR technologies, once they achieve economic viability. By strategically aligning policy interventions with the trajectory required to achieve gigaton-scale CDR capacity, policymakers can ensure a seamless transition towards meeting ambitious climate targets. 

For CDR policy advocates, this report offers a novel analytical tool to guide policy development and justification. Central to this tool is a quantifiable deployment target for CDR policies, derived from rigorous analysis. Additionally, our framework outlines developmental stages to steer policies towards achieving this deployment target and provides a comprehensive roadmap to scale CDR, while ensuring adherence to high-quality standards outlined in AMPSS criteria. This report uses the S-curve to demonstrate how strategic mapping can expedite progress through R&D, Early Output, and Commercialization phases, culminating in the crucial Take-off Point where technology adoption accelerates. Through this framework, readers gain deeper insights into CDR technologies, their inherent challenges, and the requisite policy solutions for overcoming barriers to their deployment.  

Policymakers should engage with this report due to the pivotal role of CDR in shaping the trajectory of climate action. As governments worldwide grapple with the urgent need to address climate change, understanding the strategic policy interventions outlined herein is essential. This report is intended as a resource for crafting effective climate policy by equipping policymakers with a nuanced understanding of the challenges and opportunities inherent in scaling CDR technologies from R&D to commercialization.  

To build on the policy development foundation this report provides through the Innovation Technology Framework, CATF intends to develop a policy matrix that characterizes options for enabling and scaling CDR deployment and model different combinations of policy pathways that will achieve mid-century CDR targets. The modeling exercise will consider a variety of policy levers such as but not limited to grants, public loans, research funding, public procurement, advance market commitments, environmental modeling, and tax mechanisms. Following this modeling exercise, CATF will convene an advisory board to analyze the policy modeling and advise on modeling outcomes, advocacy strategies, and how to best communicate the findings with policymakers and other stakeholders in the CDR ecosystem. The goal of this study is to provide a long-term policy framework that will enable a portfolio of CDR technologies to commercially scale and help meet economy-wide decarbonization targets. 

By embracing innovation, collaboration, and strategic policymaking, governments can pave the way for a sustainable future characterized by robust carbon removal solutions. It is our hope that this report serves as a catalyst for informed decision-making and meaningful progress towards achieving our collective climate goals. 

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