Carbon Removal Market Waits on Policy Clarity
Companies are prepared to increase spending on carbon dioxide removal, but uncertainty over policy and reporting frameworks is holding back meaningful near-term investment, according to new research commissioned by the Carbon Business Council.
The findings, based on in-depth interviews with senior sustainability leaders at Fortune 1,000 companies across the United Kingdom, United States, Germany and France, show that while carbon removal is widely regarded as essential to achieving net zero commitments, many organisations are adopting a cautious, delayed approach. None of the companies involved in the research currently have formal carbon removal purchasing strategies in place, despite their stated climate targets.
A consistent theme across respondents was concern over regulatory uncertainty. In Europe, companies pointed to ambiguity surrounding the Corporate Sustainability Reporting Directive and the Green Claims Directive, warning that carbon removal credits purchased today may not be recognised under future compliance or disclosure regimes. In the United States, political volatility and the absence of a clear federal framework were cited as key factors reinforcing a “wait-and-see” stance.
Despite this hesitation, many corporate leaders indicated that mandatory purchasing requirements, even at modest initial levels, could provide the stable demand signal needed to unlock investment. Financial incentives such as tax relief and subsidy schemes, similar to those used to support the early growth of wind and solar energy, were also highlighted as important mechanisms to improve cost competitiveness and stimulate market development.
Ben Rubin, Executive Director of the Carbon Business Council, said clearer rules and guidance were essential to accelerate progress and unlock private sector capital. He added that policy leadership would be critical in enabling earlier and more consistent investment, helping to scale carbon removal technologies in the near term.
The research also emphasised the growing influence of corporate frameworks in shaping investment behaviour. Alongside government policy, initiatives such as the Science Based Targets initiative and evolving sustainability reporting standards are increasingly defining what counts as credible climate action, embedding expectations into corporate strategy and influencing procurement decisions.
With further updates expected to the European Union Emissions Trading System and the Science Based Targets initiative’s Corporate Net Zero Standard, the report suggests that the current moment represents a pivotal window for policy intervention. Analysts warn that the speed at which carbon removal scales from an emerging sector into a mainstream climate solution will depend heavily on how quickly governments and standard-setters provide clarity and consistent demand signals.
