Rising to the challenge: Funding CDR research, development & innovation for a net zero competitive EU

In 2024, global temperatures exceeded 1.5°C above pre-industrial levels for the first time, making it the hottest year on record. This alarming milestone underscores the urgency of taking bold and immediate action to mitigate climate change. Carbon dioxide removal (CDR), alongside drastic emission reductions, will play a crucial role in fighting climate change and supporting Europe’s path to net zero and beyond. Between 400Mt and 800Mt of CO₂ will need to be removed annually to reach EU climate neutrality by 2050.

To achieve this goal, the EU must prioritise the rapid scale-up of a portfolio of CDR methods. Scaling up the CDR sector also represents a significant economic opportunity for the EU. By 2050, it could become a EUR 220 billion annual market, creating 670,000 high-quality jobs, driving innovation, and positioning Europe as a global leader in the green economy. And yet, this nascent sector is facing a number of challenges that hinder its growth and could even jeopardise its deployment at scale. Many promising CDR methods remain under- researched, and a deeper understanding is needed to optimise them, address risks, explore co-benefits and inform society in order to boost their scale-up and reach EU climate goals. A recently launched database compiled by Carbon Gap reveals over 300 remaining CDR-related questions that lack sufficient research or are underexplored. This ever- evolving tool aims to help target funding where it is most needed to accelerate CDR RD&I.

Public funding is key to unlocking technological development and innovation, especially in early- stage projects. Whilst the EU is widely regarded as a global research powerhouse, its support for CDR so far has been fragmented and insufficiently targeted. Between 2020 and 2023, excluding member state funding, the EU has allocated approximately EUR 657 million to directly support CDR methods through existing programmes such as Horizon Europe (including the European Innovation Council or EIC), the LIFE Programme or the Innovation Fund. This number represents a mere 0.1% of the total projected EU climate action budget between 2021-2027. Moreover, there are no clear CDR-specific funding streams among the EU’s many funding programmes, since existing calls tend to bundle CDR with carbon capture and storage (CCS), a related but distinct technology. As a result, opportunities to advance dedicated CDR research and development in Europe are limited, thereby slowing progress and discouraging innovation.

The development of the CDR sector will depend on the materialisation of a robust and diverse set of CDR methods, hence the urgency of catalysing support by harnessing the potential of a new EU funding cycle. A significant funding gap remains, for which the EU will need to direct around EUR 2.88 to 5.85 billion in the next 15-20 years in order to support the technical development of CDR methods and address cross-cutting research questions to get them ready for deployment.

Building on DG RTD’s analysis of research needs for climate neutrality by 2050, which recognises CDR as a priority EU research area in need of support, the EU must develop a detailed roadmap with concrete actions to address remaining CDR research and funding gaps. Ahead of the negotiations for the EU budget for 2028-2034 as well as the EU’s main funding programme for RD&I (that will follow ‘Horizon Europe’), we propose 4 main recommendations for efficiently allocating the funding resources necessary for bringing the portfolio of CDR methods to scale.

To meet our climate goals, additional RD&I funding must go beyond the EU level. While the Commission must lead by example, success depends on a united effort from member states and the private sector. Now is the time for bold political commitment at all levels to drive this transformation.

1. Increase EU & member state RD&I funding for CDR. At least EUR 2.6 billion should be committed to CDR (not including deployment needs) during the upcoming EU 7-year financial cycle 2028-2034 through the next RD&I Framework Programme and other EU funding mechanisms, as well as member states’ funding schemes.

2. Make RD&I funding for CDR more visible, accessible and secure by designing comprehensive funding calls that clearly and directly target a portfolio of CDR methods.

3. Leverage the full spectrum of RD&I funding schemes to address all the research priorities, channelling resources in a coordinated way across different funding mechanisms, ensuring continuity in support across a project’s lifecycle and strengthening EU CDR research communities.

4. Go beyond the technical aspects of CDR. The scale-up of CDR also hinges on innovation in areas like governance and societal readiness which should either be embedded in funding calls addressing technical questions, or addressed in specific calls.