Here’s a shocking truth: the biggest hurdle to carbon removal isn’t science—it’s money. And this is the part most people miss: while we’re busy innovating, unstable policies are scaring investors away from climate solutions at the exact moment we need them most. Let me tell you a story that drives this point home.
Recently, a biochar developer we were working with had to shut down their company. They had everything in place—suppliers, a skilled team, and even independent verification of their technology. But here’s where it gets heartbreaking: they failed because they couldn’t secure funding. And they’re not alone.
But here’s where it gets controversial: achieving net zero is impossible without carbon removal, yet it remains the most underfunded area of clean technology. The irony? These projects work—what they lack is the capital to build their first plants. With policy signals becoming increasingly unpredictable, financial institutions need to step up—and fast.
Take the U.S. policy landscape, for example. While President Trump’s ‘One Big Beautiful Bill’ left related tax credits intact, the broader picture is bleak. The Department of Energy recently canceled $7.5 billion in support for clean energy and carbon capture projects, following a $3.7 billion cut in May. This sends a clear message: the ground can shift overnight, and investors are taking notice.
Since January, 56 clean energy manufacturing projects worth over $45.9 billion—and involving more than 51,000 jobs—have been slowed or paused. Investment in renewable energy has dropped by 36% compared to the second half of last year. For the first time, more cleantech projects were canceled last quarter than announced. Why? Because policy instability doesn’t just affect incentives—it reshapes how investors perceive risk. Stable rules lower the cost of capital; unstable rules drive it up. The result? Lenders treat projects as riskier, leading to higher interest rates, tighter terms, or no financing at all.
Here’s the reality: even if we decarbonize as quickly as possible, we’ll still overshoot our carbon budget. That means we need to remove 5 to 10 billion tons of carbon dioxide every year by mid-century—a non-negotiable for net zero. Yet, carbon removal accounts for just 1% of cleantech investment, nowhere near enough to build the infrastructure we need.
And this is where it gets even more contentious: capital is flowing disproportionately to direct air capture. Between 2020 and 2024, investors poured $3.3 billion into this technology, nearly matching the $3.4 billion spread across all other emerging carbon removal methods combined. Why? Because direct air capture fits neatly into federal subsidies, not because it’s the only solution. While it’s not the villain, it’s still years away from delivering at scale.
Meanwhile, solutions like biochar—which turns waste biomass into a charcoal-like material that locks away carbon for centuries—are already delivering verified removals today. Biochar has removed over 700,000 tons of carbon dioxide from the atmosphere, more than any other engineered method. Direct air capture? Less than 10,000 tons. Yet, biochar projects struggle to attract capital because they’re too small for billion-dollar project finance, lack the exponential growth curve venture capital seeks, and are too policy-sensitive for banks to treat as low-risk.
So, how do we fix this? Financial institutions must take the lead in the absence of coherent federal policy. A recent $210 million deal between JPMorgan, Microsoft, and Chestnut Carbon offers a blueprint. In this deal, risks were shared—the developer carried delivery risk, the buyer carried market risk, and the bank carried credit risk—a structure that unlocked financing for solar decades ago. But such deals are still rare and bespoke. How can we make them faster and more replicable?
Banks can fund portfolios of projects instead of single facilities. They can design funds with safety nets, where big buyers or public partners absorb the first losses, lowering borrowing costs for everyone. And they can push for standardized long-term contracts that unlock loans reliably.
Financial institutions have a massive opportunity here. As buyers, brokers, risk managers, and innovators, they can shape—and profit from—what could become one of the world’s largest commodity markets by mid-century. The early movers will gain expertise, relationships, and influence; latecomers will be left with whatever terms remain.
If we want fewer shutdown announcements and more ribbon-cutting ceremonies, we must treat carbon removal as essential infrastructure—just as critical to net zero as clean energy. Fix the financing, and we build the market the climate demands.
Thought-provoking question for you: Should governments prioritize stabilizing policies to attract investment, or is it up to financial institutions to innovate and take the lead? Let’s discuss in the comments.
