California Bets $50M on Carbon Removal – and Sends a Global Market Signal
California is once again setting the pace in climate policy. With the bill “CA SB643”, the state will launch a $50 million Carbon Dioxide Removal (CDR) Purchase Program starting July 2026. It will take the form of a “a competitive grant process administered by the California Air Resources Board (CARB)”.
The goal: create long-term demand for technologies that remove CO₂ from the atmosphere and prove they can work at scale.
At Planet2050, we see this as a pivotal step that will accelerate the transition of carbon removal from pilot projects into large-scale, investable infrastructure.
Why the SB 643 Bill Matters
1. A Clear Market Signal
By allocating state funds to purchase and permanently retire CDR credits, California is directly investing in the future of clean technology.
This creates durable demand for breakthrough approaches such as Direct Air Capture (DAC), enhanced mineralization, Biomass Carbon Removal and Storage (BiCRS), and marine CDR.
2. It’s Setting Quality Standards
The bill sets strict quality standards. Eligible projects must:
Be located in California
Deliver permanence of at least 100 years
Undergo third-party verification under guidelines to be finalized by CARB by June 30, 2026
Provide community benefits as part of their design.
These provisions align with what the voluntary market increasingly demands: credits that are measurable, durable, and equitable.
3. Climate Leadership in a Divided Nation
With federal climate policy under pressure, California is doubling down.
The state has a long track record—from its economy-wide cap-and-trade system to its 2045 Nnet -Zzero target. The Bill is a clear, needed instrument to help achieve this target by “developing and scaling innovative carbon removal technologies while ensuring environmental and community benefits” (BillTrack50).
SB 643 demonstrates how public procurement can catalyze innovation, offering a model for other jurisdictions worldwide. It’s also a reminder that climate action is not only essential for the planet—it is a strategic economic advantage.
Beyond CDR: An Integrated Policy Package
SB 643 did not emerge in isolation. It is part of a broader energy and climate package passed in Sacramento this September. Alongside the CDR program, lawmakers approved measures to curb soaring electricity costs (SB 254), extend California’s cap-and-trade system to 2045 (AB 1207/SB 840), and channel public financing into the state’s transmission build-out.
Taken together, these policies send a powerful signal: California is working to ensure that the clean energy transition is not only ambitious but also affordable, socially equitable, and backed by long-term market mechanisms.
Our Take at Planet2050
This bill shows what is possible when policy, finance, and technology align. SB 643 sets a precedent: carbon removal is not a distant aspiration, but a present-day investment class.
As the market matures, public programs like this will provide the backbone of demand, helping private investors and project developers scale with confidence. For us, it underscores the core of our mission: making climate impact investable.
Not only California is moving fast. In Europe, ambitious frameworks are also reshaping the carbon market.
Read our EU Policy Series and stay ahead on how the EU is integrating carbon removals into compliance markets!