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The UK government has announced a series of measures to “double down on clean power” in response to the energy crisis sparked by the Iran war.

The conflict has caused a spike in fossil-fuel prices – and the high cost of gas is already causing electricity prices to increase, particularly in countries such as the UK.

In response, alongside plans to speed the expansion of renewables and electric vehicles, the UK government says it will “move…to break [the] link between gas and electricity prices”.

Ahead of the announcement, there had been speculation that this could mean a radical change to the way the UK electricity market operates, such as moving gas plants into a strategic reserve.

However, the government is taking a more measured approach with two steps that will weaken – but not completely sever – the link between gas and electricity prices.

  • From 1 July 2026, the government will increase the “electricity generator levy”, a windfall tax on older renewable energy and nuclear plants, using part of the revenue to limit energy bills.
  • The government will encourage older renewable projects to sign fixed-price contracts, which it says will “help protect families and businesses from higher bills when gas prices spike”.

There has been a cautious response to the plans, with one researcher telling Carbon Brief that it is a “big step in the right direction in policy terms”, but that the impact might be “relatively modest”.

Another says that, while the headlines around the government plans “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”.

Why are electricity prices linked to gas?

The price of electricity is usually set by the price of gas-fired power plants in the UK, Italy and many other European markets.

This is due to the “marginal pricing” system used in most electricity markets globally.

(For more details of what “marginal pricing” means and how it works, see the recent Carbon Brief explainer on why gas usually sets the price of electricity and what the alternatives are.)

As a result, whenever there is a spike in the cost of gas, electricity prices go up too.

This has been illustrated twice in recent years: during the global energy crisis after Russia invaded Ukraine in 2022; and since the US and Israel attacked Iran in February 2026.

Notably, however, the expansion of clean energy is already weakening the link between gas and electricity, a trend that will strengthen as more renewables and nuclear plants are built.

The figure below shows that recent UK wholesale electricity prices have been lower than those in Italy, as a result of the expansion of renewable sources.

The contrast with prices in Spain is even larger, where thinktank Ember says “strong solar and wind growth [has] reduced the influence of expensive coal and gas power”.

Chart showing that renewables are 'decoupling' power prices from gas in some countries
Wholesale electricity prices in the UK, Spain and Italy, € per megawatt hour. Source: Ember.

The share of hours where gas sets the price of power on the island of Great Britain (namely, England, Scotland and Wales) has fallen from more than 90% in 2021 to around 60% today, according to the Department of Energy Security and Net Zero (DESNZ). (Northern Ireland is part of the separate grid on the island of Ireland.)

This is largely because an increasing share of generation is coming from renewables with “contracts for difference” (CfDs), which offer a fixed price for each unit of electricity.

CfD projects are paid this fixed price for the electricity they generate, regardless of the wholesale price of power. As such, they dilute the impact of gas on consumer bills.

The rise of CfD projects means that the weeks since the Iran war broke out have coincided with the first-ever extended periods without gas-fired power stations in the wholesale market.

This shows how, in the longer term, the shift to clean energy backed by fixed-price CfDs will almost completely sever the link between gas and electricity prices.

The National Energy System Operator (NESO) estimated that the government’s target for clean power by 2030 could see the share of hours with prices set by gas falling to just 15%.

What is the government proposing?

For now, however, about one-third of UK electricity generation comes from renewable projects with an older type of contract under the “renewables obligation” scheme (RO).

It is these projects that the new government proposals are targeting.

The government hopes to move some of these projects onto fixed-price contracts, which would no longer be tied to gas prices, further weakening the link between gas and electricity prices overall.

When RO projects generate electricity, they earn the wholesale price, which is usually set by gas power. In addition, they are paid a fixed subsidy via “renewable obligation certificates” (ROCs).

This means that the cost of a significant proportion of renewable electricity is linked to gas prices. Moreover, it means that, when gas prices are high, these projects earn windfall profits.

In recognition of this, the Conservative government introduced the “electricity generator levy” (EGL) in 2022. Under the EGL, certain generators pay a 45% tax on earnings above a benchmark price, which rises with inflation and currently sits at £82 per megawatt hour (MWh).

The tax applies to renewables obligation projects and to old nuclear plants.

The current government will now increase the rate of the windfall tax to 55% from 1 July 2026, as well as extending the levy beyond its previously planned end date in 2028.

It says it will use some of the additional revenue to “support businesses and households with the impacts of the conflict in the Middle East on the cost of living”. Chancellor Rachel Reeves said:

“This ensures that a larger proportion of any exceptional revenues from high gas prices are passed back to government, providing a vital revenue stream so that money is available for government to support businesses and families with the impacts of the conflict in the Middle East.”

The increase in the windfall tax may also help to achieve the government’s second aim, which is to persuade older renewable projects to accept new fixed-price contracts.

Simon Evans on Bluesky: Details of UK govt plans to break influence of gas on electricity prices

Reeves made this aim explicit in her comments to MPs, saying the higher levy “will encourage older, low-carbon electricity generators, which supply about a third of our power, to move from market pricing to fixed-price contracts for difference”.

(This is an adaptation of a proposal for “pot zero” fixed-price contracts, made by the UK Energy Research Centre (UKERC) in 2022, see below for more details.)

As with traditional CfDs, the new fixed-price contracts would not be tied to the price of gas power. Instead of earning money on the wholesale electricity market, these generators would take a fixed-price “wholesale CfD”. In addition, they would be exempted from the windfall tax and would continue to receive their fixed subsidy via ROCs.

The government says this will be voluntary. It will offer further details “in due course” and will then consult on the plans “later this year”, with a view to running an auction for such contracts next year.

It adds: “Government will only offer contracts to electricity generators where it represents clear value for money for consumers.”

Leo Hickman on Bluesky: UK energy secretary Ed Miliband appearing on BBC Breakfast

(It is currently unclear if the proposals for new fixed-price contracts would also apply to older nuclear plants. Last month, the government said it intended to “enable existing nuclear generating stations to become eligible for CfD support for lifetime-extension activities”.)

What is not being proposed?

Contrary to speculation ahead of today’s announcement, the government is not taking forward any of the more radical ideas for breaking the link between gas and electricity prices.

Many of these ideas had already been considered in detail – and rejected – during the government’s “review of electricity market arrangements” (REMA) process.

This includes the idea of creating two separate markets, one “green power pool” for renewables and another for conventional sources of electricity.

It also includes the idea of operating the market under “pay as bid” pricing. This has been promoted as a way to ensure that each power plant is only paid the amount that it bid to supply electricity, rather than the higher price of the “marginal” unit, which is usually gas.

However, “pay as bid” would have been expected to change bidding behaviour rather than cutting bills, with generators guessing what the marginal unit would have been and bidding at that level.

Finally, the government has also not taken forward the idea of putting gas-fired power stations in a strategic reserve that sits outside the electricity market.

Last year, this had been proposed jointly by consultancy Stonehaven and NGO Greenpeace. In March, they shared updated figures with Carbon Brief showing that – according to their analysis – this could have cut bills by a total of around £6bn per year, or about £80 per household.

However, some analysts argued that it would have distorted the electricity market, removing incentives to build batteries and for consumers to use power more flexibly.

What will the impact be?

The government’s plan for voluntary fixed-price contracts has received a cautious response.

UKERC had put forward a similar proposal in 2022, under which older nuclear and renewable projects would have received a fixed-price “pot zero” CfD.

(This name refers to the fact that CfDs are given to new onshore wind and solar under “pot one”, with technologies such as offshore wind bidding into a separate “pot two”.)

In April 2026, UKERC published updated analysis suggesting that its “pot zero” reforms could have saved consumers as much as £10bn a year – roughly £120 per household.

Callum McIver, research fellow at the University of Strathclyde and a member of the UKERC, tells Carbon Brief that the government proposals are a “big step in the right direction in policy terms”.

However, he says the “bill impact potential is lower” than UKERC’s “pot zero” idea, because it would leave renewables obligation projects still earning their top-up subsidy via ROCs.

As such, McIver tells Carbon Brief that, in his view, the near-term impact “could be relatively modest”. Still, he says that the idea could “insulate electricity prices” from gas:

“The measures are very welcome and, with good take-up, they have the potential to insulate electricity prices further from the impact of continued or future gas price shocks, which should be regarded as a win in its own right.”

In a statement, UKERC said the government plan “stops short of the full pot-zero proposal, since it will leave the RO subsidy in place”. It adds:

“This makes the potential savings smaller, but it will break the link with gas prices. The devil will be in the detail, but provided the majority of generators join the scheme, most of the UK’s power generation fleet will have a price that is not related to the global price of gas.”

Marc Hedin, head of research for Western Europe and Africa at consultancy Aurora Energy Research, tells Carbon Brief that, while the headlines “suggest a decisive shift” in terms of “breaking the link” between gas and power, “the reality is more incremental”. He adds:

“In principle, moving a larger share of generation onto fixed prices would reduce consumers’ exposure to gas‑driven price spikes and aligns well with the direction already taken for new build [generators receiving a CfD].”

However, he cautioned that “poorly calibrated [fixed] prices would transfer value to generators at consumers’ expense, while overly aggressive pricing could result in low participation”.

In an emailed statement, Sam Hollister, head of UK market strategy for consultancy LCP, says that the principle of the government’s approach is to “bring stability to the wholesale market and avoid some of the disruption that a more radical break might have caused”.

However, he adds that the reforms will not “fundamentally reduce residential energy bills today”.

Johnny Gowdy, a director of thinktank Regen, writes in a response to the plans that while both the increased windfall tax and the fixed-price contracts “have merit and could save consumers money”, there were also “pitfalls and risks” that the government will need to consider.

These include that a higher windfall tax could “spook investors”. He writes:

“A challenge for policymakers is that, while the EGL carries an investment risk downside, unless there is a very significant increase in wholesale prices, the tax revenue made by the current EGL could be quite modest.”

Gowdy says that the proposed fixed-price contracts for older renewables “is not a new idea, but its time may have come”. He writes:

“It would offer a practical way to hedge consumers and generators against volatile wholesale prices. The key challenge, however, is to come up with a strike price that is fair for consumers and does not lock future consumers into higher prices, given that we expect wholesale prices to fall over the coming decade.”

Gowdy adds that it might be possible to use the scheme as a way to support “repowering”, where old windfarms replace ageing equipment with new turbines.

On LinkedIn, Adam Bell, partner at Stonehaven and former head of government energy policy, welcomes the principle of the government’s approach, saying: “The right response to yet another fossil fuel crisis is to make our economy less dependent on fossil fuels.”
However, he adds on Bluesky that the proposals were “unlikely to reduce consumer bills”. He says this is because they offered a weak incentive for generators to accept fixed-price contracts.

The post Q&A: How the UK government aims to ‘break link between gas and electricity prices’ appeared first on Carbon Brief.

Q&A: How the UK government aims to ‘break link between gas and electricity prices’

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Colorado River Faces ‘Devastating Consequences’ If Another Dry Winter Lands, Experts Warn

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Even a huge snowpack during the coming winter would only give the river basin states less than two years of storage before reservoirs returned to historic lows.

Another warm, arid winter could leave Colorado River reservoirs nearly dry.

Colorado River Faces ‘Devastating Consequences’ If Another Dry Winter Lands, Experts Warn

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Q&A: The current state of ‘carbon dioxide removal’ around the world

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Carbon dioxide removal (CDR) technologies will need to be deployed at rates even faster than those seen for solar power, if the world is to have a chance of limiting global warming to 1.5C by 2100, says a new report.

Nearly all pathways to meeting the Paris Agreement’s highest ambition of keeping global temperatures to 1.5C above pre-industrial levels in 2100 involve CDR techniques – ranging from tree-planting to sucking CO2 from air with machines.

This is in addition to steep and immediate emissions cuts.

Scientists expect carbon emissions to push warming beyond 1.5C in the decade ahead, meaning that the target can only be achieved “from above” via large-scale CDR that brings down global temperatures.

These temperature trajectories are known as “overshoot” pathways.

The third “state of CDR” report, written by more than 50 scientists, says that countries’ current CDR plans would fall short of what is needed to limit warming to 1.5C by more than 5bn tonnes of CO2 (GtCO2) per year by 2050.

Global CDR would have to increase fourfold – from 2.2GtCO2 in 2026 to 8.75GtCO2 by 2050 – to have a chance of meeting the 1.5C target by 2100, according to the report.

It adds that deploying CDR can be a “gradual process”, making the period 2026-30 “crucial” for “establishing CDR’s role in limiting climate damages” in the future.

Below, Carbon Brief covers the key findings of the third state of CDR report. (This follows from Carbon Brief’s coverage of the first report in 2023 and second report in 2024.)

What is CDR?

According to the report, the definition of CDR is:

“Human activities capturing CO2 from the atmosphere and storing it durably in geological, terrestrial or ocean reservoirs, or in products. This includes human enhancement of natural removal processes but excludes natural uptake not directly caused by anthropogenic [human-caused] activities.”

In addition to this, the report includes “three key principles” for CDR, which are:

  1. The captured CO2 must come from the atmosphere, not from “fossil sources”.
  2. The subsequent storage “must be durable”, so that the CO2 is not soon reintroduced to the atmosphere.
  3. The removal must result from human intervention that is in addition to Earth’s natural processes.

In this report, a CDR method is considered durable if it is able to lock up carbon for “decades or more”.

The report classifies CDR techniques as either “conventional” or “novel”.

“Convential” CDR techniques are “well established, already deployed at scale and widely reported by countries as part of [land-use] activities”.

The methods included in this group are tree-planting, ecosystem restoration, agroforestry (trees in agriculture), improving soil carbon in croplands and natural lands, and durable wood production.

“Novel” CDR techniques have “lower level of readiness for deployment and, as a consequence, are currently deployed at smaller scales”, says the report.

Some examples of different CDR methods are listed on the graphic below.

The graphic also shows whether carbon is captured through biological or chemical processes, as well as how “ready” the method is and for how long it can store carbon, among other features.

CDR techniques and their characteristics. Credit: Edwards et al. (2026)

The report says that CDR is “needed alongside deep and rapid emissions reductions” to give Earth a chance of limiting global warming to 1.5C. It continues:

“It should play a smaller role than emissions reductions given uncertainty around the feasible levels of scaling, sustainability limits, storage availability and the risk of reversal, among other constraints.

“In general, CDR should be seen as a limited resource that will need to be used prudently.”

It adds that CDR can “fulfil three major functions”.

In the near term, CDR can help reduce “net emissions”, it says.

In the medium term, CDR can “counterbalance residual emissions” to achieve net-zero CO2 or net-zero greenhouse gas emissions, the report continues.

(“Residual emissions” are those that cannot be eradicated through technologies or societal changes, such as methane emissions from rice production.)

Research suggests that global warming is likely to stop, more or less, once net-zero is achieved globally.

In the long term, CDR can “help achieve net-negative emissions”, a state where CO2 removal exceeds emissions, says the report.

In this state, humans could lower global temperatures. This may allow the world to limit global warming to 1.5C by 2100, even if the temperature target is surpassed earlier on in the century.

Future trajectories where temperatures exceed the 1.5C limit before being brought back down again through CDR techniques are known as “overshoot” pathways.

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What are current levels of CDR?

The report says that, at present, “99.9%” of existing CDR is conventional, land-based techniques such as tree-planting and ecosystem restoration.

The world currently removes 2.2GtCO2 per year, equivalent to around 5% of gross global CO2 emissions, it continues.

The largest contributors to removing CO2 from the atmosphere are China, the US, the EU, Brazil and Russia.

The chart below shows the amount of CO2 removed each year over 2014-23 by the largest contributors, through tree-planting (afforestation) and forest restoration (reforestation).

Chart showing country-level CDR through afforestation and reforestation
CO2 removed via afforestation and reforestation each year by the world’s largest contributors to current CDR. Credit: Edwards et al. (2026)

“Novel” CDR, such as biochar and direct air capture, currently removes just 2m tonnes of CO2 annually at present, according to the report.

However, these methods have been growing at a rate of 40% per year – “similar to successful technologies like solar energy, but insufficient for the scale-up required to meet the Paris temperature goal”, says the report.

The graphic below illustrates how the contribution of conventional CDR currently dwarfs novel CDR, but how the latter techniques are quickly growing.

Infographic showing current CDR are almost entirely from conventional, but novel methods are growing
A graphic illustrating the contribution of “conventional” and “novel” to current CDR methods. Credit: Edwards et al. (2026)

The report says that investment in CDR companies recovered in 2025 following a dip – and its “share of all climate-tech funding” grew to 2.6%.

The report also notes that, at present, most CDR efforts are unevenly distributed across the world.

For example, two-thirds of conventional CDR in voluntary carbon markets is in Latin America, according to the report. (Voluntary carbon markets are where companies can buy credits for carbon-reducing or removing projects, such as tree-planting, to claim that they have “offset” some of their own emissions.)

In addition, most pilot projects that aim to demonstrate novel CDR methods are located in only a few countries, such as Sweden, Denmark and the US, says the report.

The chart below shows the location and timeline of demonstration projects that have been announced, are under construction or in operation globally.

Chart showing demonstration projects announced, under construction or in operation 2020-2030
Location and timeline of demonstration projects that have been announced, are under construction or in operation globally. Credit: Edwards et al. (2026)

The report continues:

“While first-movers play important roles, if their actions do not diffuse more widely, vulnerability emerges, as evidenced by the impact of US climate policy dismantling.”

(For more, see: How is policy impacting CDR demand?)

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How much CDR is needed to reach net-zero goals?

The report examines three scenarios where global temperature rise is limited to “well below” 2C by 2100:

  • A current ambition scenario, based on national climate pledges (but omitting the US);
  • A highest-possible ambition scenario;
  • A delayed ambition scenario, which is consistent with current targets until 2035 and then switches to the highest ambition scenario.

The pledges considered in the report are “nationally determined contributions”, or NDCs, which countries submit periodically to the UN Framework Convention on Climate Change (UNFCCC). NDCs lay out a country’s climate ambition.

Under the current ambition scenario, the report projects a total of 5.9GtCO2 of CDR by 2050 and 12GtCO2 by 2100.

This scenario would result in end-of-century warming of 1.7-2.7C. Importantly, the report says, this scenario does not result in the world reaching net-zero CO2 levels, “meaning that global temperatures would continue to rise, albeit at a much more gradual pace, beyond 2100”.

Under the highest-possible ambition scenario, CDR scales up to 8.8GtCO2 by mid-century and 15.3GtCO2 by the end of the century.

This scenario assumes “full buy-in by all nations”, with economics, scale-up and sustainability providing the main constraints on CDR deployment, the report says.

The highest ambition scenario results in global temperatures peaking at 1.7-1.8C around 2050 and the world achieving net-zero emissions around that time.

Under the delayed ambition scenario, CDR would scale up to 7GtCO2 by 2050 and 23.6GtCO2 by 2100. This scenario shows global temperatures peaking between 1.7C and 2.0C.

This scenario requires larger CDR deployment in the long term than the highest-ambition scenario does, due to the larger cumulative emissions caused by delaying deep emissions reductions.

In both the high ambition and delayed ambition scenarios, the world reaches “deeply net-negative CO2 emissions” by 2100, the report says. This continued deployment of CDR will further draw CO2 from the atmosphere, lowering global temperatures back down to 1.5C.

The chart below shows annual global greenhouse gas emissions through the end of the century under current ambition (red), highest ambition (green) and delayed ambition (blue) scenarios.

Annual emissions, in GtCO2e per year, for the three scenarios: current ambition (red), highest ambition (green) and delayed ambition (blue). Source: Edwards et al. (2026)
Annual emissions, in GtCO2e per year, for the three scenarios: current ambition (red), highest ambition (green) and delayed ambition (blue). Source: Edwards et al. (2026)

While global CDR capacity scales up more slowly in the first and third scenarios, the report notes that, in all three cases, “novel CDR reaches gigatonne-scale deployment by 2050”.

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What does the science say about the potential and costs of CDR?

There is a wide range of both carbon-removal potential and associated costs between different methods of CDR, according to the report.

However, it also notes that these numbers “range widely” in the scientific literature.

The discrepancies in estimates of carbon-removal potential are due to a number of factors, the report says, including a lack of available scientific data, inconsistencies in the assumptions made in assessing technical feasibility and a lack of agreement on what, exactly, “potential” means.

These elements also influence the cost of different CDR methods, but additional factors – such as deployment costs in different areas, technological approaches and scope – also play a role in establishing price differences. Because of this, the report says, “cost estimates are often difficult to compare across methods, complicating design and policy decisions”.

The chart below shows the reported range of mitigation potential (left) and reported range of costs (right) for different CDR methods. The top four rows indicate conventional CDR methods, while bottom 11 rows show novel CDR methods. The chart refers to “mitigation potential”, rather than removal potential, because some estimates do not distinguish between removals and avoided emissions.

(Avoided emissions refers to the difference in emissions from carrying out a project, compared to a hypothetical alternative – such as the reduced emissions from halting deforestation.)

The darker colours indicate estimates that are more constrained, meaning that they are either based on stricter assumptions or there is more agreement between different estimates.

Annual mitigation potential (left) and cost range per tonne of CO2 (right) for conventional and novel CDR methods. Orange bars indicate the range of values reported, with darker colours indicating less uncertainty about the estimates. Source: Edwards et al. (2026)
Annual mitigation potential (left) and cost range per tonne of CO2 (right) for conventional and novel CDR methods. Orange bars indicate the range of values reported, with darker colours indicating less uncertainty about the estimates. Source: Edwards et al. (2026)

The report notes that for most removal methods, the low end of the potential is around 1GtCO2 per year, while the upper limit of costs is more than $200/tCO2.

The least expensive CDR approaches are forestry-based methods, soil-carbon sequestration and biomass burial. For forestry-based methods, the report puts the cost of CDR at $5-$53 per tonne of CO2 removed. Soil-carbon sequestration costs reach as high as $150 per tonne of CO2 removed, but could have negative overall costs “when accounting for crop yield increases potentially resulting” from changed farm-management practices, the report says.

However, it adds that “these CDR methods are typically associated with lower levels of permanence” than other methods.

Other relatively low-cost methods include coastal wetland restoration, biochar, bioenergy with carbon capture and storage (BECCS) and enhanced rock weathering, while ocean alkalinity enhancement is a medium-cost option.

The most expensive methods include direct air carbon capture and storage (DACCS) and direct ocean carbon capture and storage (DOCCS).

The report also notes that a total estimate of CDR removals cannot be obtained by adding up the removal potential of all of the separate methods, since different methods can compete for scarce resources. For example, BECCS, biochar, biomass burial and biomass sinking all rely on the same base input – biomass – and therefore cannot all be maximised at the same time.

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What have governments pledged on CDR?

While many countries include some amount of CDR in their national climate plans, there is currently a large gap between the amount of CDR pledged in these plans and the amount that will be needed to limit global temperature rise to 1.5C by the end of the century, says the report.

This quantity is referred to as the “CDR gap” – the difference between what is pledged and what is needed.

The size of the CDR gap is dependent not just on the pledges made by countries, but also the choice of the “benchmark” scenario against which the pledges are measured. Lower – or delayed – emissions reductions lead to larger shortfalls in the long term, meaning “CDR must subsequently be scaled to very high levels”, says the report.

Current NDCs and other country submissions to the UNFCCC total 2.5GtCO2 per year of removals in 2030, 2.7GtCO2 per year in 2035 and 3.6GtCO2 per year in 2050.

This gives a CDR gap of 0.3GtCO2 in 2030, 1.2GtCO2 in 2035 and 5.2GtCO2 in 2050, according to the report. These figures are obtained using assumed “immediate, ambitious action at all levels to reduce emissions” and the most-ambitious estimates of CDR set out in national pledges. Together, this provides a “lower bound” for the CDR gap, says the report.

By comparison, a 10-year delay in implementing ambitious emissions reductions will result in the need to remove at least an additional 150GtCO2 from the atmosphere, compared to the most ambitious scenario. (See: How much CDR is needed to reach net-zero goals?)

The report says that the CDR gap has widened since the second state of CDR report was released in 2024, due to the US leaving the Paris Agreement. It adds that other countries have “not delivered a step change in ambition” in their latest round of climate pledges.

It also cautions that “credibility issues with national pledges may mean that the CDR gap is actually larger than what we assess here”.

The report notes that current CDR pledges by companies are “substantially higher than country pledges”, at 5GtCO2 per year in 2050. However, it adds, “credibility in these announcements is low”.

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What is the current funding and research landscape for CDR?

Funding of CDR research and development – as well as investment in CDR companies – has continued to increase in recent years.

In total, there has been around $5.6bn in grant funding distributed to CDR research since 2005, according to the report’s analysis. Roughly one-third of this has come in the past three years.

Funding for CDR research grants grew 13% each year between 2022 and 2025, the report says, and the corresponding number of research publications grew at a similar rate.

Funding was largely targeted at a handful of key areas, notably soil carbon sequestration, biochar and forest-based CDR.

DACCS and BECCS only make up a small number of active grants, but together account for around two-fifths of all funding due to “substantially larger” project sizes.

Despite the growth of research grants and scientific publications, the report concludes that early-stage innovation in CDR is “uneven” and says there is “no strong evidence of a step-change”.

It notes that much of the support for CDR has come from projects with a broader focus, rather than those that focus specifically on CDR.

The authors also point to a decline in “inventive activity”, as measured by patenting of CDR-related innovations. While patenting for emissions-cutting technologies in general has been on an upward trajectory, CDR patenting peaked in 2011.

Meanwhile, the report highlights the “remarkable” sustained investment in CDR companies, against a backdrop of falling investment in climate-related technologies. It notes that CDR now accounts for around 3% of overall “climate-tech funding”.

Yet, again, it says future developments remain “uncertain”. Since the previous 2024 “state of CDR” report, companies have scaled back their ambitions and policy reversals – notably in the US – “underscore that funding uncertainty remains a key barrier”. (See: How is policy impacting CDR demand?)

An upward tick in funding in 2025 was driven primarily by a “surge” in grants from predominantly public institutions, as well as $0.5bn in debt financing for a single BECCS project in Sweden.

Reliance on such funding sources “highlight[s] the volatility of the CDR innovation ecosystem”, according to the report.

The report also has a chapter focusing on the voluntary carbon market, which it describes as “propelling most of the current demand for novel CDR”.

The scale of this market remains fairly small, with contracts for 0.04GtCO2 of removals signed last year.

Moreover, the concentration of sales within a small number of buyers – particularly Microsoft – remains a “critical vulnerability”, the authors note.

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How is policy impacting CDR demand?

The report analyses CDR policies in G20 nations – which together account for three-quarters of global emissions – to assess how they are acting to support CDR across their economies.

In total, 140 countries have announced net-zero targets, including virtually all of the world’s major emitters. In doing so, the report points out that the governments of these nations have “implicitly included a role for CDR in their climate plans”.

However, this does not always translate into measures specifically designed to scale up CDR.

Only the EU has adopted a binding, quantified removals target into law – namely, the goal to reach 310m tonnes of CO2 equivalent (MtCO2e) of annual net removals in the land sector by 2030.

Overall, conventional CDR is the main focus of policy, with various governments focusing on tree planting to absorb CO2 from the atmosphere.

Among G20 nations, only the UK and Australia have set specific goals to scale up novel CDR, such as BECCS and DACCS, over the coming decade.

The report highlights some nations, including Canada, Germany, Switzerland and the UK, as taking proactive steps to incentivise CDR.

The authors point to national strategies, financial support for CDR and efforts to integrate it into emissions trading systems (ETS) as examples of effective policy making.

(The report also stresses that the US, which was previously a “leader” on CDR, has now “frozen or dismantled funding and support” for CDR under the Trump administration.)

Most of the successful policies highlighted in the report focus on supporting the supply of CDR, with “less attention so far on creating demand”.

This is significant because CDR “generally lacks a natural market”, meaning there are not automatically buyers willing to spend money on emissions removals. Therefore, the authors say, policy interventions are important to create markets and boost demand.

“Compliance” carbon creditsreferring to credits that can be used to meet legally mandated emissions targets – provide a way to support demand, according to the report authors.

Only some ETSs, such as those used in New Zealand and Australia, allow the use of credits based on forest-related removals for compliance. (It is worth noting that such credits are controversial, as removals by forests are not always permanent.)

The report also highlights the need for “foundational policies to create a governance framework for CDR, including rules for quantification of removal, guidelines for community engagement and the minimisation of negative environmental impacts”.

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Q&A: The current state of ‘carbon dioxide removal’ around the world

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Alligator Alcatraz Emissions Threaten Human Health, Violate Clean Air Act, Lawsuit Claims

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The air pollution is associated with the more than 200 diesel-burning generators powering the Everglades migrant detention facility, along with 100 diesel-burning lighting towers.

A new federal lawsuit contends emissions at the Everglades migrant detention site known as Alligator Alcatraz, associated with more than 200 diesel-burning generators and 100 diesel-burning lighting towers, are harmful to human health and the environment and violate the Clean Air Act.

Alligator Alcatraz Emissions Threaten Human Health, Violate Clean Air Act, Lawsuit Claims

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