MANDATORY AGENCY INNOVATION ALLOCATIONS
Lever last updated: 14 September 2026
A legal requirement that public agencies reserve budget share for qualifying innovation.
Cost
Low to High
A narrow agency allocation can direct EUR1–10 million annually to research awards; several agencies can require EUR10–100 million, and a broad programme across major funders EUR100 million–1 billion. The cost includes the awards and administration. Reserving existing appropriations changes their use but does not remove this gross expenditure from the assessment.
Complexity
Medium to High
An established research agency needs a spending-base calculation, eligibility rules, award procedures and compliance reporting. A new compulsory allocation across agencies also requires legal authority, consistent accounting and coordinated oversight. Research-institution partnership requirements add checks on work shares, intellectual property and the recipient's responsibility for delivery.
Timeline
Short to Medium
Agencies with functioning award systems could begin funded CDR work within one to two years of a formal budget decision. Establishing a statutory allocation, aligning several agencies and completing initial competitions can take two to five years. The endpoint is an award that starts research activity, not publication of the percentage rule.
Integrity, Transparency & MRV
Innovation & Cost Reduction
Social & Environmental Safeguards
Energy, Transport & Storage Infrastructure
Inputs & Capacity
Demand Formation
Bankability and Cost of Capital
Policy Architecture & Coordination
Overview
Legislators or budget authorities can require public agencies to reserve a defined share of their research or development budgets for qualifying innovation. Agencies then award that money through grants, research contracts or other permitted instruments and report whether they met the allocation. A CDR application could require relevant agencies to support removal technologies, measurement or specialist suppliers through their existing missions.
Key Considerations
The allocation needs a precise denominator, meaning the spending base to which the required percentage applies. Authorities should define whether it covers all research spending, only research awarded outside government, or particular programmes, and which agencies must participate. They should also decide whether the reserved funding targets CDR itself, smaller suppliers or a specific partnership model. Rules need to distinguish new awards from relabelled existing activity, prevent the same award satisfying several requirements without permission, and specify treatment of unspent funds. Research contracts can answer an agency's own needs, while grants may support useful technologies that the agency will never purchase.
Opportunities
A recurring allocation can make innovation support less dependent on individual officials choosing to protect it each year. Distributed across relevant agencies, it could open more routes for CDR developers working on energy, land management, materials, waste or measurement. Clear access for smaller firms can help research-intensive suppliers build prototypes and technical teams without immediately selling equity. A partnership allocation can connect those firms with university expertise and laboratories. The resulting technology development still needs a deliberate route into demonstration, verification and later commercial demand.
Risks
Agencies may meet the percentage by renaming routine work, narrowing the spending base or making weak awards near the year's end. A rigid formula can also divert money from higher-value research when there are too few suitable applicants. Eligibility rules may exclude capable firms as they grow or favour businesses organised to win repeated awards rather than commercialise. Fragmented agency calls can duplicate technical work, and partners may dispute ownership of inventions. Most importantly for CDR, early research funding can produce promising prototypes without the removal purchases or infrastructure needed to sustain deployment.
Monitoring and Evaluation
Budget authorities should compare each agency's eligible spending base, required allocation, actual awards and unspent balance, with audits of what was counted. Evaluation should examine which firms and research partners participate, whether projects reach technical milestones, and whether subsequent finance, demonstrations or purchases follow. CDR portfolios should report evidence on net-removal potential, durability, resource use and measurement improvements appropriate to the research stage. Results should inform topic selection, award sizes, application requirements and any revision of the allocation, rather than treating expenditure of the full percentage as success.
Stakeholder Engagement
Legislators and finance ministries should agree the allocation formula and the agencies responsible for it. Agency mission teams should identify research problems they can usefully support, while grant and procurement officers choose lawful award routes. Small firms and research institutions can test eligibility, application burden and partnership terms. Technology-transfer specialists should clarify ownership and commercialisation rights. CDR experts, verifiers and prospective users should help define meaningful technical milestones, with communities and environmental specialists contributing before funded work progresses to field demonstrations.
Governance Levels
The implementing authority must control the budgets and obligations of the agencies covered. National legislatures have a clear precedent in the US Small Business Innovation Research and Technology Transfer requirements. Supranational budget authorities, regional or state governments and municipalities can apply the same rule to research and innovation budgets they control, subject to their appropriation powers. Subnational allocations would usually cover fewer agencies or narrower operational needs. Recipient firms and research institutions implement funded projects but cannot impose the agency allocation.
Implementation Strategies
The budget authority should define the spending base, allocation percentage, covered agencies and qualifying recipients. It should specify whether CDR has its own reserved share or competes within a broader innovation allocation, so nominal eligibility is not mistaken for dedicated funding.
Agencies should translate their missions into research needs and select grant or contract instruments accordingly. Calls should explain whether the agency expects to use the result, whether further development is possible and whether any later purchase requires separate funding or competition.
The programme should offer award sizes and evidence requirements suited to technology maturity. Feasibility work should test a credible removal pathway; later awards should require stronger evidence on net removal, durability, operating costs and practical deployment constraints.
Where partnerships are required, agencies should define minimum work shares, access to research facilities, invention ownership and the small firm's rights to commercialise results before making awards. Reporting should verify actual collaboration rather than nominal attachment of a university partner.
A coordinating authority should reconcile allocation calculations and publish comparable award data across agencies. Reviews should detect relabelling, repeated funding for unchanged projects and gaps between successful research and the demonstration or procurement programmes meant to follow.
Case Studies
United States Small Business Innovation Research allocations
The Small Business Innovation Research policy directive requires federal agencies with more than USD100 million in research and development awarded outside government to allocate at least 3.2% of that spending to qualifying small-business awards. Agencies select projects within their missions, while the Small Business Administration coordinates the programme and monitors compliance. The current programme description, including award guidance updated for April 2026, confirms a continuing agency-operated funding system. The requirement reserves money, but does not predetermine each technology or purchase a finished product. Its third phase uses private capital or ordinary federal funding outside the reserved programme. For CDR, the transferable lesson is to combine a recurring allocation with relevant topics and a separate route to deployment, rather than treating the budget percentage as assured removal demand.
Small Business Technology Transfer and the research-partner requirement
The related Small Business Technology Transfer requirement applies to agencies with more than USD1 billion in externally awarded research and development and reserves at least 0.45% for qualifying awards. Unlike the broader small-business programme, it requires a partnership with a nonprofit research institution. The National Institutes of Health explains its operational partnership rules, including minimum work shares of 40% for the company and 30% for its research partner, while funding is awarded to the business. This biomedical application illustrates a distinct allocation design that obliges agencies to support commercialisation partnerships, rather than merely making collaboration eligible. A CDR version could connect young suppliers with measurement expertise or laboratory facilities. The NIH programme is not a CDR case and explicitly notes that the agency is generally not the final technology purchaser.
More System and Capacity Enablers

Cross-Border CO₂ Networks
Coordinated legal and technical rules letting CO₂ pipelines cross national borders.
Cost
Medium to Very high
Complexity
Medium to Very high
Timeline
Short to Long
Integrity, Transparency & MRV
1–2Innovation & Cost Reduction
1–2Social & Environmental Safeguards
1–3Energy, Transport & Storage Infrastructure
3–4Inputs & Capacity
N/ADemand Formation
N/ABankability and Cost of Capital
2–4Policy Architecture & Coordination
2–3
Permitting Process Streamlining
Reorganising how permitting authorities receive and decide project applications.
Cost
Very low to Medium
Complexity
Low to High
Timeline
Very short to Medium
Integrity, Transparency & MRV
1–2Innovation & Cost Reduction
1–2Social & Environmental Safeguards
1–3Energy, Transport & Storage Infrastructure
1–3Inputs & Capacity
1–2Demand Formation
N/ABankability and Cost of Capital
2–3Policy Architecture & Coordination
2–4
Infrastructure Hubs
A shared site bringing electricity, water and CO₂ transport together for several users.
Cost
Medium to Very high
Complexity
Medium to High
Timeline
Medium to Long
Integrity, Transparency & MRV
1–2Innovation & Cost Reduction
2–3Social & Environmental Safeguards
2–3Energy, Transport & Storage Infrastructure
3–4Inputs & Capacity
2–3Demand Formation
N/ABankability and Cost of Capital
2–4Policy Architecture & Coordination
2–3©2026 Alexander Mäkelä and Carbon Gap.
Except where otherwise indicated, this work is licensed under the Creative Commons Attribution–NonCommercial–ShareAlike 4.0 International Licence.
Headline and barrier scores based on Carbon Gap analysis.