It’s been a turbulent few months for the carbon dioxide removal sector. While momentum for CDR surged in recent years—driven by escalating climate urgency, new technologies, and a groundswell of scientific consensus—recent developments have cast a long shadow over this progress.

As of mid-2025, the CDR sector stands at a precarious crossroads. Political will is fraying, public investment is weakening, and markets are stalling. Companies on the frontier of carbon removal innovation now find themselves scrambling to survive, and despite growing scientific clarity that CDR is essential to achieving net zero and ultimately reversing climate damage, the world’s response remains timid, fragmented, and under-resourced.

Here are four troubling signs:

  1. US climate funding collapses, taking CDR with it: In its zeal to reduce the role of government, the Trump Administration has decimated the country’s landmark climate funding programs, established under the Inflation Reduction Act (IRA). Several core programs supporting CDR, including the DOE’s Carbon Negative Earthshot Initiative and the 45Q tax credit expansion, are now either frozen, slashed, or stalled in bureaucratic uncertainty.

    This funding collapse comes at a bad time for our planet. The US was the world leader in CDR, and had created impressive scaffolding for public-private consortia, prize mechanisms, demonstration hubs, and early-stage market investment. Now, much of this is collapsing or gone. For example, the DOE canceled $3.7 billion in carbon capture project awards in June 2025, and the EPA paused the Greenhouse Gas Reduction Fund, a $20 billion IRA-supported investment program that could have helped scale CDR-related infrastructure.

    US shortsightedness isn’t just a domestic problem. The US had been serving as a global catalyst, demonstrating that serious national investment in carbon removal was possible. Its sudden retreat is sending ripple effects through ministries and markets worldwide, reinforcing doubts that governments are ready to back CDR at the scale and speed required.

  2. A limping market, frayed confidence, and fragile businesses: Despite years of bold forecasts, the CDR market remains anemic. Voluntary carbon credit purchases—especially those focused on removals—have stagnated, with most corporate buyers pulling back or delaying commitments. High prices, unclear standards, long delivery timelines, and a lack of policy clarity have all played a role.

    According to CDR.fyi, only a few million tons of durable CDR credits are purchased globally every year—a minuscule figure compared to what’s needed. Of those, most credits are purchased by one buyer—Microsoft—and even fewer are delivered (most credits are for long-term removals). Credit prices also remain stubbornly high, typically in the range of $400–$1,000 per ton.

    Some CDR startups, seeing their funding decline and markets stagnate, are now quietly shifting their focus—diversifying into lower-risk or adjacent segments of the carbon market, such as MRV services, consulting, or credit aggregation—while others are merging or shutting down altogether. Meanwhile, carbon removal credit buyers are adopting a “wait and see” posture. Many want better verification, more regulatory clarity, or lower prices before they step back in. This creates a vicious cycle: buyers hesitate because the market isn’t mature, but the market can’t mature without buyers.

  3. Europe sets a 2040 climate target—with no role for CDR: On July 2, 2025, the European Commission released its much-anticipated climate proposal for 2040: a 90% net reduction in greenhouse gas emissions compared to 1990 levels. But conspicuously missing from the document was any binding target—or even strategic roadmap—for carbon dioxide removal.

    While the proposal does reaffirm the EU’s commitment to achieving net zero by 2050 and carbon negativity thereafter, this interim silence on CDR raises concerns. Scientists and policymakers alike have long emphasized that net zero requires both emissions reductions and removals. Without an explicit 2040 removal target, it becomes harder to spur investment in permanent CDR pathways that need a decade or more of development before they can scale.

    The omission may reflect political realities. Public discourse in Europe remains wary of CDR, often mischaracterized as a fossil fuel lifeline. But the result is a troubling policy gap at the heart of one of the world’s most influential climate regions. As Carbon Gap noted in a July policy brief, failure to clearly distinguish removals in the 2040 target risks making them politically invisible—despite being scientifically indispensable. If Europe hesitates on CDR while the US pulls back, who will lead?

  4. The global landscape: A growing gap between science and action: These developments come at a time when the scientific case for CDR has never been clearer or more urgent. The IPCC has repeatedly emphasized that keeping warming under 1.5°C or even 2°C will require substantial deployment of CDR, particularly in the second half of this century (IPCC AR6 Synthesis Report). Most modeled mitigation pathways rely on 5-10 gigatons of additional carbon dioxide removal annually by 2050. But today, only a tiny fraction of that is being delivered—largely through nature-based approaches like reforestation and soil management. Engineered removals, such as direct air capture and BECCS, account for well under 0.01 gigatons per year globally. And these engineered removals remain in the early stages of deployment, still years from scaling to million-ton capacity.

    The need for rapid progress in CDR is evident, but outside a few national programs and philanthropic efforts, most countries still treat CDR as a fringe consideration—an add-on to climate policy, not a core pillar. There are a few bright spots: Australia has committed to developing a national strategy for CDR; Canada continues to fund large-scale carbon management infrastructure; and Singapore is investing in ocean-based removal methods. But these are isolated signals, not a coherent response. The gap between what the science requires and what the global policy environment delivers remains wide.

So what happens next? Despite these gloomy headlines, this is not the end of the story for carbon removal. In some ways, it is the beginning of a necessary reckoning.

The CDR sector must grow up, and fast. This means building durable coalitions that include companies, communities, and national, state and local governments. It means distinguishing between short-term hype and long-term value. It means investing not just in startups, but in standards, infrastructure, governance, and equity. And most of all, it means embracing the truth that carbon dioxide removal is not optional, but a foundational part of our climate efforts. The longer the world continues to delay this reckoning, the higher our costs will be in terms of climate instability, economic disruption, and preventable suffering. Conversely, if we face this challenge with clarity, urgency, and global cooperation, we can get the CDR market off the rocks and begin making real strides to save our planet while there’s still time.