How to Create Long-Term Demand for Carbon Removal in the US

The United States has emerged as a leader in developing innovative ways to remove and store carbon dioxide (CO2) from the atmosphere — using approaches that rely on chemicals, rocks, the ocean and biomass. Known as carbon dioxide removal (CDR), these efforts help remove the excess greenhouse gases in the atmosphere that are already contributing to rising temperatures and extreme weather events.

CDR can help mitigate damaging climate impacts if it’s paired with deep and rapid emissions reductions across all sectors. While development and deployment of CDR technologies and approaches have seen remarkable progress over the past five years through efforts in the public and private sectors, neither the U.S. nor the global community is on track to scale CDR to the level that’s needed to reach climate goals. New policy approaches need to be considered to close this gap.

Discussions in the European Union and the United Kingdom are exploring options for incorporating carbon removal into emissions trading systems. And state-level legislation was introduced (but not passed) in the U.S. to require emitters to purchase increasing levels of CDR. Although these kinds of regulatory policies would face significant political challenges at the federal level in the U.S., there are steps that can be taken now, like better defining what counts as “high-quality” carbon removal, that can pave the way for any potential future regulatory policy.   

Why Is a New Policy Approach Needed to Drive CDR Demand?

Climate modeling estimates indicate that CDR approaches will need to remove roughly 1 billion metric tons (1 gigaton) of carbon dioxide each year by 2050 for the U.S. to reach net zero. Currently, just over 1 million metric tons of durable CDR is being removed annually across all countries in the world. Once net zero is achieved, CDR will be instrumental to achieving net-negative emissions, where the global community is removing more emissions than what’s being added to the atmosphere.

Achieving gigaton scale of CDR in the United States will be challenging. Unlike other clean technologies, CDR is not a consumer product or service, such as electric vehicles or solar PV, which reduce emissions while providing something people need. However, many CDR approaches can generate economic benefits. For instance, some carbon mineralization approaches can be used to extract rare and valuable minerals or reclaim useful chemicals in mining waste. In other cases, CDR can help increase crop yields, reduce fuel for forest fires and provide jobs. Yet, these benefits alone are generally not enough to drive sufficient levels of investment to scale CDR to the level that’s needed.

Some companies have voluntarily purchased carbon removal credits, which has created a limited market for CDR projects. Global voluntary purchases have grown from 0.6 million metric tons CO2 (MtCO2) removal in 2022 to 7.8 MtCO2 in 2024. Although the voluntary market’s demand for CDR is projected to grow, with some estimates highlighting potential global demand of up to 870 MtCO2 by 2040, this would still be insufficient to achieve the scale of CDR needed to reach global climate goals.

Government incentives and procurement could also play a larger role, but the U.S. government is unlikely to directly purchase a gigaton of CDR each year (assuming an ambitious $100 per metric ton of CO2 (tCO2), it would cost $100 billion annually). Creating long-term, consistent demand for CDR may depend on regulation or compliance mechanisms that compel emitters to purchase CDR, alongside their emissions reduction efforts, as part of a portfolio of policies to scale CDR. Such an approach can also provide a level of accountability for emitters to begin addressing the climate impacts of their pollution.

What Are Current and Proposed CDR Policies?

U.S. policy support for CDR, whether for research and development, deployment support or to help create demand, has increased from virtually nothing to billions of dollars in public support over the past five years. Some key funding in the United States includes:

Note: As of April 2025, there is uncertainty associated with the status of some of these funding streams following funding freezes by the Trump administration.

Several bills were introduced, though not passed, in the 118th Congress (January 2023 through January 2025), suggesting growing CDR support. The Federal CDR Leadership Act and the bipartisan CREST Act proposed scaling government procurement of CDR, while the Climate Pollution Standard and Community Investment Act included direct government procurement through a Negative Emissions Activities Fund as part of a larger climate policy. In the 119th Congress, lawmakers introduced the Foreign Pollution Fee Act, which levies a fee on imported industrial products based on their carbon intensity and includes a provision to allow producers to purchase CDR to reduce their liability.

While none were adopted, a handful of noteworthy bills were also introduced in state legislatures. A California bill (SB 308), which passed the state Senate in 2023, would have required companies to purchase CDR to address an increasing fraction of their remaining emissions. This would complement state requirements for net-zero emissions by 2045 and 85% gross emissions reduction by that year. Bills were also introduced in New York in 2021 and Massachusetts in 2023 that would require state government procurement of certain amounts of CDR. While none of these measures advanced, they indicate growing interest in the topic.

Other state legislation is also relevant: Vermont and New York adopted climate change superfund acts in 2024. These require fossil fuel companies to pay for damage caused by their historic GHG emissions. A similar federal bill was introduced in Congress in 2024 and other state bills were introduced in California, Maryland and Massachusetts. While none of these bills direct funds to CDR, they introduce a potential funding mechanism — fees tied to past GHG emissions — that could be used for a variety of climate-related costs, including but not limited to, funding development and deployment of CDR.

What Policy Design Considerations Are Needed?

Scaling CDR in the U.S. to the level needed to meaningfully address climate impacts will be a multi-decade project. Because of limitations on government purchasing capacity and the voluntary market, reaching that goal may require future policies that mandate purchase of CDR in some way by companies that continue to emit greenhouse gases. Before such a policy could become feasible, two key puzzle pieces will need to be in place:

1) CDR policy must be paired with, and complement, deep emissions reductions.

CDR policies cannot exist in a vacuum, but rather, must complement emission reduction requirements to achieve net-zero by 2050. This is important for a few reasons.

Reducing emissions is generally less expensive than CDR and will play the largest part in reaching global climate goals. Scaling CDR to gigaton level will not make much of a difference if emissions continue at their current rate or only decline slightly; CDR must be paired with deep emissions reductions (around 80% to 85% or more based on various modeling estimates) to avoid the worst impacts of climate change. Reducing emissions by moving away from fossil fuels also reduces other air pollutants which can improve air quality and human health.

Further, CDR is not an unlimited resource. How it is used must be carefully planned so as not to impede sustainability limits on land, water and energy availability as well as societal impacts. Once net zero is achieved, scaling CDR will be necessary to move toward net-negative emissions in the second half of the century. Deeply reducing emissions reduces the need for CDR to achieve net zero but does not eliminate the need to scale up CDR to address legacy emissions once net-zero has been achieved.

Recent legislation such as the Bipartisan Infrastructure Law and Inflation Reduction Act have provided significant incentives for developing and deploying low-carbon infrastructure and projects, while recent regulations have targeted emission reductions for power plants and vehicles. But with President Trump and the Republican-led Congress already moving to redirect funding and roll back regulations, progress on economywide decarbonization is likely to slow — though it’s unlikely to stop.

A federal CDR purchase mandate is therefore currently unlikely and will remain so until significant progress can again be made on emission reduction incentives and requirements. For now, efforts can focus on ensuring that CDR investments and projects meet high standards of quality during the initial stages of deployment.

2) Establish a framework to ensure high-quality CDR is scaled.

Defining what counts as “high-quality” CDR can include a wide range of attributes. While some principles might be specific to certain CDR approaches, others cut across all types of CDR. Criteria included in CDR procurement legislation and those already being used by private buyers to make purchasing decisions can serve as starting points. Across these efforts, general categories of quality criteria include:

• Criteria related to measurement, reporting and verification (MRV): for example, proving or maximizing net-negativity, proving additionality, meeting a certain duration of permanence, sharing data transparently, conducting third-party verification and addressing uncertainty associated with permanence, as well as physical leakage.
• Criteria for impacts on the environment and people: for example, measuring and minimizing environmental harms, using only waste or residue biomass, minimizing negative impacts on people and providing social benefits (e.g., job creation).
• Criteria related to technology development: for example, maximum cost, leveraging private finance, contribution to technological diversification or demonstrated potential to scale.
• Other criteria: for example, prohibition on use of CO2 for enhanced oil recovery or requirements on the use of or investment in renewable energy.

Differences in quality criteria among existing efforts may be attributable to the different objectives within the various policies and corporate purchases. Some focus on increasing technological diversity and supporting industry development, while others focus on supporting approaches with the capacity to scale to the highest level.

What Could a Policy Look Like?

A policy that requires companies that continue to emit GHGs to purchase a proportional amount of CDR could be an important part of a comprehensive set of policies and incentives that also includes emission reduction requirements. Such a package is needed to mitigate climate change and its impacts.

This approach is attractive because it simultaneously generates investment in CDR while incentivizing emissions reductions. If the CDR purchase requirement increases over time, companies would be further incentivized to invest in emissions reduction measures to avoid the increasing CDR obligation. reach certain targets for CDR scaling.

The 2023 version of California’s SB 308 provides one approach to such a CDR policy. California already has in place an important prerequisite that is not yet in place at the national level: targets established for net-zero GHG emissions by 2045 with at least an 85% reduction in gross emissions from 1990 levels by that year. These dual targets help ensure that any CDR policy is additional to significant emission reductions and not in lieu of them. Establishing such requirements in law or regulation at the national level will be a heavy lift but ultimately necessary for the U.S. to achieve net-zero emissions.

SB 308 included three critical elements for scaling CDR to help California achieve net-zero:

• Requiring California’s Air Resources Board to create a process for ensuring that any carbon removal included was durable, together with systems for monitoring, reporting and verification, ensuring financial responsibility and tracking any CDR credits allowed into the system.
• Requiring consideration of the benefits to and impacts on neighboring communities in certifying CDR projects for inclusion in the system.
• Requiring major GHG polluters, including fuel providers covered under California’s cap-and-trade program, to purchase certified CDR credits to cover a percentage of their emissions, with the percentage increasing from 1% in 2030 to 100% in 2045 in line with California’s net-zero emissions target.

In addition, SB 308 included provisions for a two-phase crediting system that would allow temporary credit for some less-durable sequestration methods that would need to be replaced by credits for more durable options. This was included to allow for the use of nature-based credits, which are currently less expensive and often have additional non-climate benefits.

Beyond determining quality considerations and ensuring complementary effort on emissions reduction, federal regulatory policy for CDR would require consideration of other design questions, such as: which emitters are covered, which greenhouse gases are in scope, would historical emissions be covered in addition to current emissions, and how is permanence addressed in the quality requirements (i.e., are nature-based approaches included).

Where Do We Go from Here?

While federal action on is unlikely in the near-term, there are ways to start developing and building support for carbon removal policies that can be implemented in the future. Steps that can be taken now to build a foundation for future regulatory policy include:

• Enacting CDR procurement programs and purchase requirements at the state level, particularly states with net-zero targets.
• Expanding federal government procurement of CDR.
• Assessing and identifying the incentives and regulations that will be needed to reduce emissions as a complement to scaling CDR.
• Establishing strong quality standards for CDR in near-term regulation (e.g., around government procurement for CDR).
• Developing an outline for regulatory policy design, in part based on the first two elements.

Meanwhile, continued dialogue among a diverse set of constituencies can help ensure that CDR is deployed safely and to the benefit of local communities, and can help build a broader base of support. This dialogue can also help pave the way for greater political support.