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We are excited to announce the launch of the State of Durable Carbon Dioxide Removal (CDR) Financing, in which we share insights from a survey of over 150 durable CDR suppliers and project developers, offering a clear picture of the financing challenges faced by them.
This report is based on the findings of the Carbon Finance Pulse Survey, a collaboration between Planet2050 and CDR.fyi between August and September 2025. The survey was specifically designed to understand the current state and challenges encountered by durable CDR project developers in raising financing.
About Durable CDR
Durable Removals refer to human activities that actively remove carbon dioxide (CO2) from the atmosphere and store it securely and durably for several centuries or longer.
The climate consensus including IPCC is clear: we cannot limit global warming without pursuing carbon removals. These “net negative” solutions contribute to stabilizing global temperatures and eventually reversing the accumulation of historical CO2 in the atmosphere.
Scaling Carbon Removals today can address legacy emissions, balance the risks of temperature overshoot as well as the emissions from hard-to-abate sectors.
CDR State in Q3 2025
The space is growing fast with already 500+ durable CDR project developers - from nascent volumes in 2022 to a staggering 24.5M tonnes CO2 contracted (mostly for future deliveries) in 2025, 3 times more than in 2024, and prices from $800 to $1000+ per tonne.
Source: CDR.fyi Q3 Update
Upfront Capital needs
The critical hurdle for scaling permanent Carbon Dioxide Removal (CDR) technologies lies in the upfront capital required for building complex infrastructure like Direct Air Capture facilities, get more biochar units off the ground, or initial deployment of rocks and MRV activities for Enhanced Rock Weathering.
Carbon financing is essential to overcome this barrier, primarily by converting the future demand for verified CDR credits into immediate investment through equity or project financing instruments.
The core objective was to aggregate confidential insights into the financing expectations and timelines of these companies, along with their most pressing challenges. The results help identify key financing gaps and specific interventions that different CDR stakeholders can take.
Funding Crunch: Most suppliers are racing to raise funds within the next six months, revealing acute near-term pressure to secure capital just to maintain operations and retain staff.
Overreliance on Grants: Grants and subsidies remain the most sought-after funding source, even as availability has tightened — suggesting that many suppliers may be counting on capital that will not materialize at the pace they need.
Structural Mismatch: Traditional debt and venture structures rarely fit the realities of durable CDR, where long timelines, upfront costs, and uncertain revenue clash with investor expectations for quick returns. Innovative models remain rare, but are emerging.
Capital Gaps: A missing “middle layer” of investors — those writing $1–5M checks — leaves early-stage projects stranded between philanthropy and large institutional finance. This gap slows the transition from proof of concept to scale.
We asked suppliers, “What keeps you up at night” regarding company and project financing. In these open-ended sections, five key themes emerged.
Suppliers described a persistent liquidity squeeze that forces hard tradeoffs between paying staff and funding the certification or MRV needed to generate revenue. This “vicious cycle” blocks progress and undermines investor confidence, creating a perception of fragility even for technically solid projects.
Many suppliers report struggling to attract investors who understand the long development cycles, scientific rigour, and community co-benefits of durable CDR. Institutional interest has fallen off after early-stage failures and policy shifts, particularly in the US, and many investors still view the sector as too slow or unproven for venture timelines. The result is a shortage of “aligned capital” willing to back integrity-focused projects, particularly in the Global South or emerging markets.
Respondents reported being stuck between investors demanding confirmed offtakes and buyers seeking proof of financing before committing. This interdependence delays project starts and reinforces a perception of market immaturity. The difficulty of coordinating these moving parts is one of the biggest structural challenges to scaling CDR.
Conventional debt structures rarely fit the realities of CDR operations, which involve high upfront CAPEX, long payback periods, and uncertain revenue timing. While some promising deal structures are emerging, such as the JP Morgan-Schmidt Foundation-Mati or Standard Chartered–British Airways-UNDO deals, most suppliers (especially smaller ones) don’t have access to these opportunities. The industry would benefit from specialized debt or hybrid instruments designed for early-stage project risk, with patient, creative lenders who are open to experimentation.
Between early-stage grants and large-scale project finance, there is a void of mid-sized investors ($1–5M) who can help bridge proof-of-concept to scale. Lengthy diligence timelines, risk aversion, and reliance on intermediaries further strain suppliers’ ability to secure timely and suitable funding. Direct, flexible capital partnerships remain the exception rather than the norm.
Focus on finance readiness.
Prioritize Multi-Revenue Streams: Structure contracts to be debt-ready by formally valuing non-carbon co-benefits (revenue stacking) and use aggregation platforms to lower costs, specifically targeting the mid-sized investor gap ($1M–$5M).
Demand Fair Capital: Seek funding for crucial "first builds", negotiate fair terms, and avoid capital that demands excessive control or unfavorable revenue-sharing.
Apply patient, nuanced capital, moving past perceived risk.
Bridge the Funding Gap: Offer milestone funding to bridge the 12–24 month pre-certification period and use technology-specific risk assessments to avoid applying high-risk premiums to mature pathways with higher delivery rates, such as biochar.
Champion Global Equity: Dedicatedly allocate capital to regional funds to address Global South risk and actively champion CDR success to limited partners to unlock larger institutional pools.
Standardize structures to transform offtakes into bankable collateral.
Standardize Contracts and De-Risking: Standardize offtake contracts for debt financing and mandate an insurance wrapper within them to stabilize future revenue streams and reduce lender risk.
Leverage Public Support: Leverage public guarantees (e.g. EIB) to de-risk debt entry at scale and develop structures for microfinance integration to reach grassroots Global South projects.
Provide the revenue certainty necessary to unlock all other capital.
Provide Immediate Certainty: Offer upfront prepayments and commit to guarantee-backed long-term offtakes (10+ years/price floors) to resolve timing mismatches and secure debt.
Fund Pilot Risk & Co-benefits: Take calculated pilot-phase risk on lower-maturity projects and explicitly pay a premium for verified co-benefits (jobs, land restoration) from Global South projects.
Reduce bureaucracy, provide certainty, and focus support on early stages.
Implement Risk-Sharing and Standards: Introduce Carbon Contracts for Difference (CCfD) or price floor guarantees to stabilize prices, and streamline MRV standards to reduce developer costs.
Focus Grants Equitably: Shift grants toward low-cost feasibility/CAPEX for "first builds" and mandate Global South equity and simplified access paths in all funding initiatives.
