Bridging the CDR Funding Gap: policy options and design choices
Author(s): Andrei Marcu, Marino Varicchio, Chiara Cavallera
The European Union faces a critical funding shortfall for scaling CDR to achieve climate neutrality. Scientific assessments, including from the ESABCC and IPCC, indicate the EU will need 400–800 million tonnes of CO₂ removals annually by mid-century to align with 1.5–2°C pathways. Current EU-level funding represents <0.1% of the Green Deal budget, leaving a substantial gap for R&D, pilots, and infrastructure over 15–20 years. National efforts in selected countries provide supplements but remain uneven, exacerbating a “valley of death” at intermediate TRLs.
The report analyzes five funding options to bridge this gap, including CCfDs, Public Purchasing Programmes, VCMs, offtake agreements, and integration into compliance mechanisms.
Design considerations emphasize eligibility under the CRCF’s QU.A.L.ITY criteria, prioritizing permanence and safeguards against reversals. The report weighs technology neutrality (for market-driven efficiency) against strategic prioritization (to address heterogeneous risks and diversify portfolios), recommending neutrality with targeted support for immature pathways.
Policy recommendations advocate a time-limited, fiscally prudent architecture: sequencing public R&D/demonstration grants with performance-based private incentives; using reverse-auctioned CCfDs for procurement; enforcing robust MRV/permanence via CRCF; and incorporate budgetary caps, degression, and sunsets to transition to private-led scale-up.
