Closing the CDR gap: What the latest State of CDR Report tells us
The CDR Gap between pledged and needed carbon removal is widening. Here's what the State of CDR report says about funding, markets, and policy.
The third edition of the State of Carbon Dioxide Removal (CDR) report, published in June 2026, revealed a new number on the gap between how much CDR is pledged in existing climate strategies and what the science dictates is needed to return to 1.5 C warming by the end of this century.
That gap is large, and if emissions reductions are delayed, it will only get wider. To be precise, global ambition is currently set at 3.6 GtCO2/yr. This is much too low to reach the 8.8 GtCO2 of removals needed per year by 2050, according to the modelled scenarios presented in the report.
This lower ambition puts the gap at 5.2 GtCO2 in 2050.
New estimates from the report show that current CDR removes about 0.002 gigatonnes of CO2 (GtCO2) per year through novel methods and 2.2 GtCO2 through conventional methods including afforestation. This means that it's time for urgent action to scale up CDR.
At the same time, public interest in CDR is falling. Media coverage of CDR has dropped by 24% per year since 2021, and social media attention has fallen by 16% per year since 2023. On the bright side, this means that there is a genuine chance to shape how the general public understands CDR, before the conversation is shaped by others.
To close the gaps, we must pull on three interconnected levers: funding, markets, and policy.
Funding
Research and innovation (R&I) is the first step to getting CDR projects off the ground. Unfortunately, the report shows that, as of this year, the number of issued research grants is falling. However, total funding is on the rise, up 13% each year between 2022 and 2025. This demonstrates a shift towards fewer, but larger and higher-value projects. While patents for broader climate mitigation technologies grew by 2.2% per year, specific CDR patents declined by 4% annually. This difference shows the gap between research and commercialisation or potentially differences in how CDR methods are patented in the first place.
Three countries, the United States, Sweden, and Denmark, account for 85% of government funding for CDR demonstration and pilot projects worldwide. Such a concentration of funding makes the field extremely vulnerable to changes or shocks and shows that the industry has not properly taken off yet.
Looking forward, the new EU budget and Framework Programme needs to ensure:
(a) Sufficient funding streams for CDR.
(b) A higher strategic priority to CDR within the research agenda.
(c) Continuity of support across instruments for early-stage research (such as Horizon Europe), commercialisation and deployment, such as the forthcoming European Competitiveness Fund.
Markets
Some good news in the report is that investor interest in CDR is recovering. Between 2022 and 2026, CDR funding rose from 1.9% of all climate tech investment to 2.6%. Longevity of these projects remains a problem though, as only 59% of projects that promised a 2025 start were under construction or operating by early 2026.
Most novel CDR projects, excluding biochar, remain in the demonstration phase, signalling that international learning and collaboration is especially valuable. It is also well known that investment is highly concentrated, with Microsoft alone buying 82% of total novel CDR credits sold in 2024 and 2025.Four companies account for 72% of all CDR investment. Earlier this year, we saw the potential negative impact of this concentration when it was reported that Microsoft would pause all CDR purchasing. A market so reliant on such a small number of buyers and investors is not a stable one.
In the EU context, the Carbon Removals and Carbon Farming Regulation (CRCF) is one step towards standardising quality in the voluntary space. We advocate for initiatives like the EU CRCF Buyers Club, which will help by pooling corporate demand and sending clearer market signals about the types and volumes of certified units they are prepared to buy so that CDR is not dependent on one company's purchasing decisions. Including removals into compliance markets (ie linking permanent CDR methods to the EU ETS) would also help ensure demand goes far enough.
Policy
The clearest example of policy imbalance is within the EU. It is the only bloc in the G20 with a binding, quantitative land-sector target– requiring 310 MtCO2 of removals by 2030, marking an increase of 42 MtCO2 from 2016 to 2018 levels. However, no G20 member has a binding target for novel CDR. More broadly, out of the 79 countries globally with long-term climate strategies, only 27 intend to use novel CDR or are considering it. Most do not clarify what role it will actually play.
Germany is one exception. Its Federal Climate Change Act includes a mandate to set a 'technical sinks' target for novel CDR. If successful, Germany would become the first Member State to have such a target, paving the way for other countries to follow. This target would strengthen the case for other Member States to set their own targets for novel CDR, distinct from their existing land-based removals targets. By not counting novel CDR towards the same net removal goal as LULUCF, overall ambition is raised. This is magnified .since the EU will soon be updating the national climate framework for 2040.
Before the end of the year, the Commission will publish a legislative proposal for how Member States should jointly achieve the 90% net emissions reduction targets by 2040 – and define each State’s share. However, it is not clear if the new framework will retain the 2030 sectoral targets or propose a more flexible approach. What is clear is that novel CDR will, for the first time, officially make up part of the effort.
On policy, we continue to push for separate targets that distinguish novel CDR from land-based removals, rather than obscuring both under a combined carbon removal target.
Closing the CDR Gap: why the levers must move together
These three levels cannot progress in isolation, and the State of CDR report shows a clear pattern running through them which will be the true test of the CDR landscape over the next few years: progress is real, but it's dangerously concentrated.
Just three countries account for 85% of government funding for CDR demonstration projects, and just four companies make up 72% of all CDR investment, leaving the whole sector vulnerable to a single shock.
Markets and policy need research and innovation behind them, otherwise there is nothing solid to build on. Investment without a real market means promising projects stall at their earliest stages. Markets without policy leave the industry dependent on a handful of corporate buyers, and policy without funding or markets behind it stays just an idea on paper.
At Carbon Gap, we’re already focused on fixing those gaps, and the State of CDR report shows us that our attention is in the right place.