Funding for research, development and innovation (RD&I) (often referred to as research, development, and demonstration, or RD&D in the United States) plays a key role in supporting the development of a wide variety of CDR methods across different TRLs, bringing them from concept to pilot (TRL 3) to first-of-a-kind demonstration commercial project (TRL 8). While conventional CDR methods based on enhancing land carbon sinks sit at higher TRLs on average, most novel CDR methods are still nascent, with generally lower TRLs overall. Several enabling factors for the successful deployment of CDR methods must be researched and developed, such as monitoring, reporting and verification (MRV) methods and CO₂ transport and storage infrastructure.   

Carbon removal is largely a public good. At their early phases of development, public goods are often supported by government investment in basic and applied research, as the private sector is often unwilling to take financial risks on such early-stage innovations.  As such, government support for RD&I is critical both in the EU and the US, as it is the key to developing these technologies further. 

In the European Union, RD&I funding for CDR is scattered across multiple funding sources. At the EU level, Horizon Europe and the Innovation Fund provide the bulk of the funding, while at the EU member state level, Germany has the most advanced CDR research programmes, with the Nordic countries in second place with some dedicated funding for specific CDR methods. However, other member states fall behind and will need to develop dedicated CDR RD&I programmes. Among other European countries, the UK boasts the most complete national RD&I programme fully dedicated to CDR, the CO₂RE Hub. 

In the US, research, development and demonstration (RD&D) funding mainly comes through annual budget appropriations for government agencies, as well as through other pieces of standalone legislation. In recent years, the Bipartisan Infrastructure Law (BIL) provided billions of dollars for demonstration funding for fiscal years 2022-2026. The CHIPS and Science Act also authorised (but did not yet appropriate) additional funding for RD&D for carbon dioxide removal technologies.  

Furthermore, the EU has issued a new call for proposals under the LIFE funding programme, with EUR 28.5 million earmarked for novel CDR projects. The deadline to apply is 17 September 2024 and results will be announced in March 2025. The latest call for projects under the Innovation Fund, which closed in April 2024, provided extra points for CDR projects during the evaluation process. The results will be published in October 2024. 

In the United States, the annual budget appropriations process for the 2025 fiscal year is underway and should be finalised by September 2024 but is expected to overrun its deadline. Organisations and companies can submit appropriations requests to lawmakers requesting certain levels of funding for certain topics, but ultimately, lawmakers will propose and vote on the coming year’s budget and funding levels for various topics. 

Funding for CDR RD&D provided in the 2021 Bipartisan Infrastructure Law is still being awarded. For example, the Department of Energy (DOE) has made award decisions on USD 1.2 billion of the total USD 3.5 billion to the DAC hubs programme funding, meaning the remaining USD 2.3 billion has yet to be awarded. Negotiations with awardees of the first USD 1.2 billion are also still underway for most projects, with funding given out over time as projects reach certain benchmarks.   

In a more recent programme, the DOE announced USD 100 million for pilot-scale testing of several CDR approaches including small-scale biomass carbon removal and storage pilots, small-scale mineralisation pilots and multi-pathways carbon dioxide removal testbed facilities. The decision around applicant selections is expected to be shared around August 2024. 

The US has launched a new prize focused on pilot projects for DAC. A total of USD 52.5 million is available. Applications for Phase 1 are due February 7, 2025. Phase 2 is also an open round that will allow newly qualifying teams to enter the competition and compete for larger prize amounts in subsequent phases with a currently expected application deadline of June 6, 2026. This prize will be a continuation of DOE’s efforts to create the foundation of the DAC ecosystem in the United States.

European Union: 

In the EU, funding for RD&I relevant to CDR is scattered across many funding programmes, including Horizon Europe, the Innovation Fund and the European Innovation Council, for a total of EUR 613 million on RD&I projects directly related to CDR between 2020 and 2023, according to recent Carbon Gap calculations.  

Figure 1: Breakdown in amounts of direct funding for CDR between 2021 and 2024, based on a total funding amount of EUR 613 million. 

Horizon Europe is the EU’s flagship funding programme for RD&I, with a total budget of EUR 95.5 billion allocated for 2021-2027. In the 2021-2022 work budget, 1.1% of funding went to projects directly related to CDR (specific CDR projects) and 1.8% went to projects directly and indirectly related (such as CCUS projects). In the 2023-2024 work budget, the shares were 0.9% and 3.5% respectively. Some directly related projects include NegEm and SeaO2 CDR. 

Figure 2: Overview of Horizon Europe funding for directly and indirectly related projects in the 2021/2022 and 2023/2024 work programmes. 

The Innovation Fund (IF) is financed by the auctioning of emission allowances under the EU Emissions Trading System (EU-ETS), with an estimated budget of EUR 40 billion between 2020 and 2030. Although CDR projects can benefit from the IF, CDR is not listed as a targeted area, whereas CCU and CCS are. The IF projects directly related to CDR that received funding in 2021 were Stockholm Exergi’s BECCS project, which received EUR 180 million and Carbfix’s Silverstone, which received EUR 3.8 million. In 2022 however, only one project out of 16 was related to CDR, the Coda Terminal, which received EUR 115 million. In 2023, 41 projects were awarded a total of EUR 3.6 billion, yet none of these were directly CDR-related. Another call for projects amounting to EUR 4 billion closed in April 2024, with results expected at the end of 2024. 

The European Innovation Council, which focuses on promoting breakthroughs, deep tech and innovation, has allocated about 0.4% of its 2022-2023 budget to projects directly and indirectly related to CDR, amounting to about EUR 16 million.  

Additionally, the Connecting Europe Facility for Energy (CEF-E) supports CO₂ transport and storage infrastructure and renewable energy projects, with a total budget of EUR 5.84 billion for 2021-2027. As of April 2024, EUR 641 million has been allocated to CO₂ infrastructure projects, corresponding to indirect funding for CDR.  

CDR funding at the country-level 

At the member-state level, Germany is leading the way in the EU with its twin projects CDR Terra and CDR Mare. Nordic countries have some targeted RD&I programmes, such as for BECCS or biochar. Other EU countries are lagging behind and have yet to substantially develop CDR programmes. 

Outside of the EU, in 2020, the UK government provided GBP 100 million for RD&I for CDR, including a central hub for carbon removal and five land-based CDR demonstrators. The programme also included a competition on Direct Air Capture and other Greenhouse Gas Removal technologies.  

In Switzerland, DemoUpCarma runs a pilot project on CO₂ transport and exportation abroad. Additionally, a new call for projects worth EUR 18 million was launched in April 2024 to explore how CDR can address residual emissions.  

In Norway, the Longship CCS project has some CDR components, with a budget of EUR 2.4 billion. Enova, a state-owned enterprise, has also provided around EUR 5 million for RD&I funding for DACCS projects (Removr and Climeworks).  

United States:  

Research, development and demonstration (RD&D) funding in the United States generally comes from annual budget appropriations for government agencies and from other standalone pieces of legislation. For CDR, the DOE has been the main recipient of increasing budget appropriations for CDR RD&D funding over the past few years. This funding has increased from less than USD 10 million cumulatively before FY19 to USD 140 million in FY23. In FY24, it fell slightly to USD 118 million. 

Small amounts of CDR funding are also provided to other agencies. The National Oceanographic Partnership Program, which includes NOAA and other agencies, used appropriations and other funding to provide USD 24.3 million to 17 projects and in 2023 to advance ocean CDR research. Funding for nature-based solutions is also provided to the US Forest Service (USFS) and US Department of Agriculture (USDA), but this funding is more often for deployment rather than earlier stage research and development.  

Aside from annual appropriations, the 2021 Bipartisan Infrastructure Law (BIL) provided several billion dollars to support demonstration projects for direct air capture and to support the buildout of enabling infrastructure like geologic sequestration and CO₂ pipelines.   

 Figure 3. A breakdown of US funding for CDR. Note that this chart includes funding from annual budget appropriations for CDR provided to Departments of Interior (DOI), Agriculture (USDA), Commerce (DOC), Defense (DOD), and Energy (DOE). It also includes funding for DAC Hubs and DAC Prize provided through the Bipartisan Infrastructure Law (BIL). Source: Bipartisan Infrastructure Law, Carbon180 Carbon Removal Funding Tracker  

BIL provided USD 3.5 billion to fund the Regional Direct Air Capture Hub Program, which requires the construction of four DAC hubs that each must have the capacity to capture and sequester and/or utilise one million metric tons of CO₂ per year. An additional USD 115 million was provided in FY22 for a DAC Technology Prize Competition, with the funding divided among two pre-commercial prizes and one commercial prize. 

BIL has also provided funding for carbon transport and sequestration infrastructure, including USD 2.5 billion for carbon storage validation and testing to fund new or expanded large-scale carbon sequestration facilities and USD 2.1 billion for transport of captured CO₂, via the CO₂ Infrastructure Finance and Innovation Act. 

The Inflation Reduction Act, which is the second major climate law passed in recent years, mainly provided deployment support for carbon removal, rather than RD&D funding, which principally came through expansion to the 45Q tax credit that supports DAC and BECCS. However, on nature-based CDR solutions, while most of the funding is focused on deployment, some provisions were focused on RD&D. For example, the US Department of Agriculture received USD 300 million to improve measurement, reporting and verification for carbon sequestration in climate smart agriculture and forestry.  

Lastly, the CHIPS and Science Act, which was signed into law in late 2022, includes USD 1 billion in authorised funding for carbon removal research, development and demonstration activities for fiscal years 2023-2026. While this funding has not yet been provided – Congress would still need to pass a bill to fund CDR RD&D at this level – it provides a basis for future increases.