National and regional policies, laws, and governance frameworks enabling carbon removal and storage

Global CDR Policy & Legal Frameworks

The governance landscape for carbon removal and storage technologies continues to evolve dynamically in mid-2026, reflecting a complex interplay of strengthened regulatory frameworks, innovative market infrastructure, regional policy advances, and persistent challenges that temper near-term scaling prospects. Building on foundational progress achieved since 2025—including critical U.S. federal clarifications under Section 45Q, emerging international collaborations, and technological diversification—the sector now faces emerging signs of capital caution and project-level pauses that underscore the urgency of resolving financing, permitting, and legal uncertainties.

Strengthened Policy and Standards Frameworks Bolster Investor Confidence Amid Legal Risks

Regulatory refinements remain pivotal in shaping market confidence and guiding long-term investments:

The U.S. EPA’s September 2025 proposal to clarify and expand Section 45Q tax credit eligibility continues to underpin federal incentives by explicitly recognizing key pathways such as BECCS and enhanced mineralization. The introduction of more rigorous Measurement, Reporting, and Verification (MRV) protocols has bolstered transparency and credit integrity, directly addressing earlier industry concerns.
Complementing this, Isometric’s extension of crediting periods—up to 30 years for Direct Air Capture (DAC) and 40 years for Bio-CCS—harmonized with the European Union’s Carbon Removal Certification Framework (CRCF), has enhanced revenue predictability, a critical factor for securing financing at scale.
The NIST Carbon Removal Consortium’s expansion, marked by Avantium’s early 2026 membership, strengthens efforts to standardize carbon accounting methods, enhancing cross-technology comparability and investor trust.
Nevertheless, ongoing judicial challenges to the EPA’s greenhouse gas endangerment finding introduce a layer of legal risk that could destabilize the statutory foundation of 45Q incentives. Industry experts warn that adverse rulings may shake regulatory certainty during a critical scaling phase, emphasizing the need for bipartisan legislative support to safeguard these frameworks.

Market Infrastructure and Financing: Innovations Meet Emerging Capital Hesitancy

Innovations in monitoring, risk assessment, and credit rating are enhancing market transparency and operational efficiency, yet financing gaps and investor caution have become increasingly visible:

Verra’s dynamic Monitoring, Reporting, and Verification (dMRV) pilot has reached a key milestone by enabling monthly credit issuance, thereby aligning credit liquidity more closely with real-time project performance and improving transactional efficiency.
The recently launched ClimeFi Due Diligence Coverage platform offers comprehensive risk assessment on permanence, additionality, and verification integrity, strengthening buyer confidence and market stability amid evolving standards.
Mirova’s partnerships with BeZero Carbon and Sylvera to develop independent carbon credit rating frameworks further enhance transparency and investor trust, a critical development in a market facing both growth opportunities and uncertainty.
Despite these advances, the wind-down of Breakthrough Energy’s Catalyst fund has sharpened concerns regarding capital availability for early-stage and innovative carbon removal technologies.
This caution is embodied by Söderenergi’s decision to freeze its BECCS project in Sweden, explicitly citing market uncertainty and financing challenges. Such a move signals that even established operators are reevaluating timelines in light of unclear policy signals and financing gaps.
Corporate strategic recalibrations reflect these dynamics:
- Eni’s ongoing exclusive negotiations to sell a 49.99% stake in its carbon capture business suggest efforts to restructure capital and risk profiles.
- ExxonMobil’s expanded low-carbon operations on the U.S. Gulf Coast, leveraging enhanced 45Q credits (up to $180/ton for DAC), underscore continued commitment where commercial viability is strongest.
- Yet, financing gaps persist, especially for emerging technologies and infrastructure scale-up, driving calls for innovative public-private partnerships and blended finance models to maintain a healthy project pipeline.

Regional and International Policy Developments: Progress and Persistent Complexity

Governance landscapes across regions reveal a mixture of policy momentum, social license challenges, and international collaboration:

In the United States, federal regulatory momentum contrasts with state-level permitting bottlenecks, particularly around CO₂ pipeline infrastructure in agricultural and rural regions such as Iowa. Heightened community resistance and environmental justice concerns amplify the need for transparent, early stakeholder engagement and more streamlined permitting to mitigate costly delays and reputational risks.
Canada continues to lead in governance innovation and project deployment:
- Quebec’s legal framework now clearly defines ownership rights, liability, and long-term stewardship for underground CO₂ storage, providing a replicable governance model.
- Climeworks’ new Calgary headquarters and Canada’s first dedicated DAC facility—a public-private partnership with Nikkiso Clean Energy & Industrial Systems—signal growing market confidence and operational maturity.
- These developments leverage Alberta’s existing energy infrastructure and supportive regulatory environment.
The European Union advances governance and market instruments amid volatile carbon markets:
- The Carbon Border Adjustment Mechanism (CBAM) explicitly incentivizes importers to acquire verified carbon removal credits, aligning industrial supply chains with net-zero goals.
- The CRCF’s rigorous standards on additionality, permanence, and transparency continue to elevate credit integrity.
- A targeted Market Stability Reserve (MSR) amendment, supported by EU ambassadors from Nordic countries and Luxembourg, proposes releasing 20 million emission allowances if ETS prices exceed €45/tonne—a threshold critical for DAC economics—to stabilize prices and restore investor confidence.
- The European Commission’s evaluation of phasing out free carbon permits as part of the ETS overhaul signals a shift toward a more stringent emissions regime, though balancing industrial competitiveness remains contentious.
- Technological diversification is highlighted by EU support for a Dutch Direct Ocean Capture (DOC) start-up, addressing atmospheric CO₂ removal alongside ocean acidification mitigation.
On the international cooperation front:
- Saudi Arabia’s Royal Commission for Jubail and Yanbu (RCJY) has deepened its DAC collaboration with Climeworks, advancing feasibility studies powered by abundant renewable energy resources.
- Australia and Germany have expanded bilateral partnerships, focusing on technology transfer and integrated DAC market development.
- However, fragmentation challenges endure: a recent policy brief titled “Defragmenting European Union Climate Policy” highlights the need for harmonized governance frameworks to reduce transaction costs and bolster scalability.
- Global coalitions continue advocating for non-binding agreements on standards and credit interoperability, aiming to minimize market fragmentation and investment barriers.

Technological Diversification and Supply Chain Governance Gain Traction

The sector’s technology portfolio broadens with increasing emphasis on resource governance and investment de-risking:

Policy guidance now prioritizes long-term crediting and capital transparency for mineralization pathways, including enhanced weathering techniques using minerals such as olivine and serpentine.
Updated criteria for Afforestation, Reforestation, and Revegetation (ARR) projects demand demonstrable capital deployment and improved integrity metrics, crucial for securing financing and favorable pricing.
The emerging nexus of stable long-term offtake agreements combined with policy-conditioned access to critical minerals is recognized as vital to:
- De-risk investments in mineralization technologies
- Ensure reliable mineral supply chains
- Align industrial mineral demand with sustainable policy incentives
New project-level activity continues to diversify regional engagement, exemplified by Pilot Energy’s recently announced carbon capture initiative in Western Australia. This development highlights ongoing momentum in project deployment despite broader financing caution, underscoring the importance of regional diversification in the global carbon removal ecosystem.

Persistent Barriers and Governance Priorities: Addressing Legal Risks, Permitting Delays, and Fragmentation

Despite progress, several critical challenges threaten to impede near-term scaling:

Permitting delays for CO₂ pipeline infrastructure remain a significant bottleneck, driven by community opposition, environmental justice concerns, and procedural complexity. Effective governance requires transparent, early community engagement and streamlined permitting pathways.
Political volatility in the United States continues to threaten the durability of foundational incentives like Section 45Q. Securing bipartisan legislative support is essential to protect these programs from partisan shifts and maintain investment certainty.
Policy fragmentation across federal, state, regional, and international levels increases transaction costs and operational complexity, reinforcing calls for harmonized governance frameworks to enable efficient scale-up.
Clear, enforceable rules on liability and long-term stewardship remain vital to uphold environmental integrity, preserve investor confidence, and maintain community trust, especially as project portfolios expand.

Emerging Risks to Near-Term Scaling: Capital Hesitation and Project Freezes Signal Uncertainty

New evidence points to increasing capital caution, particularly for early-stage and less-commercial carbon removal projects:

The freeze of Söderenergi’s BECCS plans in Sweden exemplifies how market uncertainty and financing gaps can cause established operators to reconsider project timelines.
A recent analytical report, “Where Capital Is Hesitating in Early 2026,” highlights that while capital continues to flow robustly into energy infrastructure and electrification projects with clearer commercial pathways, investments in carbon removal are becoming more selective and conditional. This reflects ongoing concerns about policy durability, market demand visibility, and technology readiness.
These dynamics raise the risk that compliance demand for carbon credits may soon outpace voluntary market supply before 2030, potentially leading to credit shortages, price volatility, and market distortions.
Addressing these risks requires urgent, coordinated action to:
- Finalize durable regulatory and standardization frameworks
- Streamline permitting with meaningful community engagement
- Secure bipartisan political support for key incentives
- Advance international coordination on verification and credit interoperability
- Define and enforce liability and stewardship obligations

Conclusion: Navigating Complexity to Unlock Carbon Removal’s Climate Potential

The carbon removal and storage sector stands at a pivotal juncture. Recent policy refinements—such as the EPA’s clarified 45Q rules and Isometric’s extended crediting periods—combined with market innovations like Verra’s dMRV pilot and ClimeFi’s due diligence platform, have laid essential groundwork. International collaborations involving Saudi Arabia, Australia, Germany, and Canada further signal growing commercial and policy confidence. The addition of new projects like Pilot Energy’s carbon capture initiative in Western Australia exemplifies ongoing regional diversification despite financing caution.

However, emerging signs of capital hesitation and project freezes, notably Söderenergi’s BECCS pause, highlight that governance, financing, and social acceptance challenges remain significant. The sector’s ability to navigate regulatory clarity, market infrastructure, community engagement, and international coordination will be decisive in realizing carbon removal and storage as indispensable tools for achieving global climate goals.

Selected Recent Highlights

Sept 16, 2025: EPA proposes clarified Section 45Q regulations expanding eligibility and tightening MRV.
Isometric extends crediting periods for DAC (30 years) and Bio-CCS (40 years), aligning with EU CRCF standards.
NIST Carbon Removal Consortium adds Avantium, enhancing standardization.
Verra issues first credits under dMRV pilot, enabling monthly credit issuance.
ClimeFi launches Due Diligence Coverage platform, improving buyer risk management.
Breakthrough Energy winds down Catalyst fund, exposing early-stage financing gaps.
Söderenergi freezes BECCS project development, citing market uncertainty.
Eni negotiates sale of nearly 50% stake in carbon capture business, reflecting capital restructuring.
ExxonMobil expands DAC-focused low-carbon operations on U.S. Gulf Coast, leveraging enhanced 45Q credits.
EU backs Dutch Direct Ocean Capture (DOC) start-up targeting atmospheric CO₂ and ocean acidification.
EU ambassadors endorse MSR amendment to release 20 million allowances if ETS prices exceed €45/tonne.
European Commission evaluates phasing out free ETS permits, signaling stricter emissions regime.
Saudi Arabia’s RCJY deepens DAC cooperation with Climeworks, advancing feasibility studies.
Mirova partners with BeZero Carbon and Sylvera to strengthen carbon credit ratings.
Reports warn compliance demand may outpace voluntary carbon credit supply before 2030.
Climeworks establishes new headquarters in Calgary, Alberta, signaling Canadian market growth.
New policy guidance on ARR selection and mineralization offtake agreements highlights capital transparency and resource governance.
Policy brief calls for defragmenting EU climate policy to enhance market efficiency.
Pilot Energy announces new carbon capture initiative in Western Australia, underscoring ongoing project-level activity amid financing caution.

In this high-stakes environment, the sector’s capacity to integrate regulatory clarity, financial innovation, social license, and international cooperation will be pivotal to unlocking the full climate mitigation potential of carbon removal and storage technologies.

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