Advancing Carbon Removal in Europe 2025
Editor's Note
Emerging markets often cultivate an early illusion of inevitability. For years, many spoke of the carbon removal market as a certainty, until this year, when political whiplash in the United States shattered that sense of momentum. With the change in U.S. leadership slowing federal support, certainty collided with reality, leaving the ‘what,’ ‘where,’ and ‘when’ of this sector all the more uncertain.
This report focuses on the European carbon removal market, featuring insights on three core themes, namely, Investment1, Nature-based, and Engineered Solutions2, and Offtake Agreements.3 .
The carbon removal market is maturing, but not as investors had initially hoped it might. The market is not getting simpler; it’s becoming more complex, more probabilistic. And although the market for durable carbon removal credits doubled in 2025, most of what we see today are conceptual bets built on policy tailwinds and investor sentiment, promising on paper but still untested against the realities of delivery, finance, and time.
In editorial terms, 2025 marked a shift in the prevailing vernacular. National markets are no longer trading in proclamations but in patterns, in the subtle, quiet signals that hint at what’s to come.
The lingua franca is no longer one of prediction, but of perception: of the slow, imperfect practice of noticing, interpreting, and moving alongside what is emerging, even before it fully takes shape.
Investor and demand-focused sessions at Carbon Unbound Europe revealed a pattern familiar to anyone who has watched new markets evolve: an obsession with de-risking. Insurance, blended finance, and new contract structures are everywhere, not as guarantees, but as tools to shift or manage risk. Venture capital remains active, yet real maturity in this market boils down to measured risk-taking more so than volume or velocity. Early-stage investors generate activity, but it is fragile: small bets, quick exits, speculative moves. Maturity will hinge on the participation of actors with longer time horizons, i.e, banks, pension funds and institutional investors, willing to deploy substantial capital.
Beyond credits, co-benefits are finding their footing. Real-world case studies are growing more muscular, and methodologies are becoming increasingly specific and varied. The industry is evolving, building on established approaches such as enhanced weathering, ocean-based CDR, biochar, DAC, and mineralisation, each distinct in its own epistemology. This diversification signals progress, even as it underscores the growing complexity of the ecosystem.
The map is expanding too: from the Euro-Atlantic axis to tropical and oceanic geographies. This isn’t just market expansion; it’s geopolitical decentralisation.
All of this is a steady reminder that progress will not arrive as a straight line. It will emerge, stumble, adapt, and only those willing to engage with uncertainty, in a serious way, will shape the market that emerges. This is what transition looks like in this moment. Not smooth or linear, but dialectical as it reconciles innovation and imitation, faith and finance, vision and verification. It’s messy. It’s slow. But it is movement. And perhaps that’s the most honest definition of progress we have right now.
If you are in the business of making bets and have found yourself emerging, stumbling, and adapting this year, and not necessarily in that order, know this: you are in good, resilient company. Keep reading. Stay connected. Keep moving.
From Risk to Returns: The New Economics of Carbon Removal
During your panel discussion at the event, you highlighted several emerging investment themes in the carbon removal space. Which five do you believe are currently having the greatest impact on the market?
There is increasing investment interest in carbon removal, with the market for durable carbon removal credits more than doubling in 2025. Companies have raised significant capital across multiple regions, signalling that carbon removal is quickly becoming a global market.
We are also seeing stronger policy tailwinds driving this growth, such as the EU’s Carbon Removal Certification Framework. At the same time, long-term corporate procurement commitments from initiatives like Frontier and NextGen are helping create predictable demand signals that boost investor confidence.
One key question for finance is how to make first-of-a-kind carbon removal projects bankable. This year, we have seen significant examples of commercial banking support for carbon removal projects, underscoring the sector’s growing maturity. With improved MRV standards, diversified financing mechanisms, and better risk management tools, the foundations for a global, investable carbon removal market are rapidly taking shape.
With more data points and defined investment themes shaping a maturing carbon removal market, where do you see potential for profitability outside the traditional carbon credit model?
There is growing recognition that carbon removal offers not only climate impact, but also meaningful co-benefits that create additional income and value. For example, enhanced weathering can improve soil health and increase crop yields when deployed on farms, while CO₂ captured from direct air capture (DAC) can be stored permanently or used in growth markets like sustainable aviation fuel. These applications help diversify revenue and strengthen the business case for carbon removal.
With capital preservation and long-term returns central to the carbon removal market, insurance is becoming an increasingly important enabler. How do you see new insurance products helping to manage risk and build investor confidence in the sector?
Insurance is essential for de-risking any emerging market. The rise of insurance options tailored for carbon removal is helping to build buyer confidence and attract more investment. Companies like Kita are developing innovative coverage models that hedge against delivery and other potential risks, helping carbon removal mature into a more secure and investable asset class.
Insurers will play a pivotal role in making carbon removal a mainstream, investable asset class. This evolution is crucial for attracting institutional investors who rely on established risk management tools to participate in new markets.
Venture capital in carbon removal is still relatively limited, with only a handful of funds focused specifically on the sector, and total investment to date still in the low billions globally. How do you see the role of VCs evolving alongside other sources of finance, like bank loans, particularly for first-of-their-kind projects that traditional lenders may view as risky?
The carbon removal market benefits from multiple sources of finance being in play, including venture capital, private equity, pension funds, and project finance. Philanthropic funding and government grants have also played an important role for some carbon removal companies, and this funding is typically non-dilutive. As projects scale, combining these different sources will be key to lowering overall capital costs and accelerating deployment.
We are starting to see public-private partnerships and multilateral development banks explore ways to finance carbon removal infrastructure. At the same time, new models are emerging that allow investors to fund portfolios of projects rather than individual facilities. Together, these innovations are helping bridge the gap between early-stage venture funding and the larger, lower-cost capital needed for wide-scale deployment.
While many institutional investors are currently exposed to carbon removal indirectly through venture capital, how can the sector attract larger, direct allocations? What steps are needed to normalise carbon removal as an investable asset and unlock greater flows of institutional capital?
Creating enabling public policy for carbon removal is critical to growing the sector. Predictable regulatory frameworks and verified demand signals, from both the private sector and governments, will help make projects more bankable and attract larger capital flows.
Carbon removal is forecast to become a trillion-dollar market, and institutional investors are beginning to recognise its potential as both a climate solution and a long-term growth opportunity. The next stage of market maturity will depend on bridging policy certainty, financial innovation, and investor education to make carbon removal a natural part of the global investment landscape.
Ed Whittingham, Co-Host, Energy vs. Climate
Beyond Nature vs. Engineered: Rethinking Carbon Removal and Financing Its Next Phase
The traditional split between ‘nature-based’ and ‘engineered’ carbon removal seems increasingly outdated, given that many methods, like biochar and BECCS, span both categories. How are you thinking about the continuum of carbon removal solutions, and what criteria do you use to assess which approaches are most viable to scale?
I agree that a sharp distinction can be somewhat unhelpful, not so because some technologies span both categories, but rather because CDR solutions vary across several different aspects rather than a binary nature versus tech distinction.
There are numerous aspects to consider when evaluating CDR pathways. For example, each pathway sits somewhere along the continuum when considering durability (i.e. how permanent the storage is), scalability (e.g. physical and logistical ceilings), TRL (i.e. how mature the technology is), and so forth. Further, when looking at pathways at Klimate, we also consider aspects such as current cost and expected cost trajectory, MRV maturity and viability, and of course, co-benefits and inherent risks. Our assessment framework scores projects across those four overall dimensions and weights them by buyer priorities (e.g., price versus long-term durability).
Practically, this means that, given the current environment, many of our buyers favour high-TRL, deliverable solutions for near-term needs (i.e. biochar, ARR), while we see some clients look to secure smaller forwards for capital-intensive, high-durability technologies like BECCS, ERW and DAC, which we expect to scale significantly later on. We also filter for supply constraints, such as biomass availability or land use, governance risk, and contractual chain-of-custody, as traceability and low delivery risk underpins buyer willingness to pay.
How are you assessing the relative potential of nature-based and engineered carbon removal in 2025, in terms of impact?
In 2025, we see clients seeking to secure impact through higher-TRL nature and biogenic solutions for immediate tonnes. This basically means biochar and ARR, as these provide immediately deliverable removals, while being cheaper per tonne today and carrying strong co-benefits on, for example, biodiversity and livelihoods, which many clients appreciate.
We are aware that these solutions face absolute ceilings, hence the need to focus some capital on forwards for engineered removals (BECCS, DAC, ERW), which currently deliver fewer tonnes but represent credible pathways to multi-hundred-megatonne and gigatonne scales by 2040–2050, given their permanence and more limited land constraints.
So our near-term portfolios prioritise deployable nature-based and biomass carbon removal pathways, while using various contractual instruments (forwards, AMCs) to catalyse engineered capacity growth, essentially hedging near-term reporting needs against long-term climate goals.
The Nordics benefit from supportive policy, robust biomass energy systems, and a strong tradition of public-private partnerships. How do you see the region leveraging these strengths to advance both nature-based solutions, and engineered carbon removal technologies?
The Nordics are well-positioned to be a testbed and export platform for CDR.
Along with CarbonGap, I helped co-found the Nordic Carbon Removal Association, as we saw that the region is endowed with a range of factors that allow it to be a leader in CDR. Policy certainty, strong public-private partnerships, geological and natural resource endowments, and a well-educated, wealthy population. Further, it is home to several large industries which can benefit from the CDR sectors’ growth, and it has large biomass and energy industries, which lower project risk for BECCS and biochar.
The work under the NCRA is aimed at helping to leverage these strengths, for example, through policy signals (procurement commitments, tax/subsidy frameworks) to de-risk long-term CAPEX, demand generation (procurement instruments and buyer coalitions that aggregate demand across Nordic corporates), and public and private R&D to co-finance to accelerate technologies. The region’s collaborative governance culture also makes it easier to pilot integrated solutions and to replicate successful models across jurisdictions.
Denmark is developing significant geological CO₂ storage and supporting large-scale CCS infrastructure, while Sweden is advancing one of the world’s largest planned BECCS projects, capturing 800,000 tonnes of biogenic CO₂ annually. How can these countries best collaborate to maximise the deployment and impact of engineered and nature-based carbon removal?
There are ample examples of these kinds of partnerships across the region. Biomass from Sweden with storage in Denmark or Norway; minerals from northern Sweden and Norway to use on agricultural soils in Denmark and southern Sweden, DACCS in Norway and Iceland, and so forth. The region has massive opportunities, but can only realise these opportunities through increased collaboration.
Overall, it’s important to treat engineered CDR as a regional endeavour and collaborate across multiple aspects of the supply chain: shared transport and storage infrastructure (common trunk pipelines, shipping), standardised permitting frameworks to reduce project timelines, joint offtake consortia to aggregate demand and make projects bankable, and harmonised MRV and contractual standards so credits are fungible across borders. Operationally, Sweden’s and Finland’s capture capacity can be matched with Denmark’s and Norway’s storage and port infrastructure; jointly financed pilot hubs reduce unit costs and speed learning. Public co-funding for connecting infrastructure and clear, coordinated policies will be the multiplier that helps the region become a leader in CDR.
When funding multiple carbon removal projects, how do intermediaries and banks decide where to allocate capital, and what trade-offs come with spreading investments across a portfolio?
I can’t really speak to how banks and other lenders decide on this, but as an intermediary representing the buyers in this space, we seek to balance risk, return, and impact, as well as overall project factors (additionality, co-benefits, durability, etc.).
The former factors include aspects such as payment terms and cash-flow, technology TRL, regulatory risk, MRV credibility, counterparty strength, and relative cost. Direct investments and portfolio allocation both have relative strengths and weaknesses. Diversification reduces single-project failure and delivery risk, but dilutes the capital per project, potentially slowing the scale at which projects can reach commercial viability.
We generally strive to pool buyers together to enable multiple buyers to help fund individual projects, trying to reduce the risk on each individual party while increasing the likelihood that a project gets off the ground. This also naturally means that relatively more of our capital gets allocated to low-risk, high-TRL projects such as biochar.
Ludovic Chatoux, Co-founder & CEO, Rainbow
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Bridging Finance and Climate Policy: Structuring Debt for a Dual Pathway to Carbon Removal
When deploying debt in both nature-based and engineered carbon solutions, one of the key challenges is the time lag between the upfront capital investment and repayment, especially in nature projects, which tend to be more affordable but slower to deliver returns.
How do you navigate those financing challenges and structure debt to balance affordability with longer payback periods?
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Given the UK government is operating in a challenging fiscal environment, where do you see it taking the lead in supporting carbon projects, and how far can it go in shaping policy, standards, and co-investment strategies for both nature-based and engineered solutions?
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Engineered projects are much larger and often more predictable, while nature-based projects are smaller but carry unique risks. How does this funding and risk difference influence both government support and a bank’s approach to financing these projects?
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Nature-based projects currently lack reliable revenue streams. How can tools like revenue guarantees or co-investment structures help unlock private investment, and what role should the government play in enabling these mechanisms?
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The recent 10 New Insights in Climate Science report highlights that nature-based carbon removal alone is unlikely to meet climate targets, as weakened natural sinks, biodiversity trade-offs, and land competition pose major risks.
How can policy and market design evolve to balance investment between nature-based and tech-based solutions while ensuring both integrity and impact?
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Olga Gassan-Zade, Member, Article 6.4 Supervisory Body, UNFCCC
The (Event) Showdown
SHOWDOWN: Who Will Lead The Race To Scale CDR - Voluntary Or Compliance Markets?
The race to scale carbon removal is on – but which market will get us there first? Voluntary buyers are moving billions, experimenting, and taking early risks. Compliance markets promise scale, rigor, and integration into national climate strategies.
At Carbon Unbound Europe, join the first-ever live CDR Policy Scoop Showdown Debate in a hybrid format — on stage and streamed on LinkedIn Live. Tito Jankowski will make the case for voluntary markets, Eve Tamme will champion compliance markets, and Sebastian Manhart will moderate as the two sides go head-to-head. Expect sharp arguments, live audience interaction, and fresh insights into where the world should place its bets on our path to net zero.
Chair
Sebastian Manhart - Co-Host, The CDR Policy Scoop
Speakers
Eve Tamme - Co-Host, The CDR Policy Scoop
Tito Jankowski - CEO & Co-Founder, AirMiners
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We are a mission-driven company of scientists, technologists, and entrepreneurs. Working together to restore the earth's carbon balance by storing organic carbon in the deep anoxic bottom of the Black Sea.
