18 July, 2025

Carbon removal is having a moment. Not long ago, it felt like a niche idea, but it is steadily moving into mainstream climate action. And investors are starting to test new ways of supporting early-stage projects, with both philanthropic backing and growing corporate interest.

Groups like Terraset are working to get catalytic funding into the system before carbon removal becomes fully market driven. By pre-purchasing carbon credits and experimenting with revolving funds, they are helping innovators survive the messy early stages of market development. The aim is to unlock private capital, support project developers, and prove that carbon removal can scale with the right financial backing.

At the same time, a growing market for carbon removal credits is beginning to take shape. Buyer groups like McKinsey’s collaboration with Frontier and platforms such as Cur8, or public non-profit trade associations like Carbon Removal Alliance are emerging to connect early-stage projects with funders. While the approaches vary, this evolving market is becoming a key part of efforts to scale carbon removal alongside technological innovation.

That’s not to say the approach doesn’t come with its share of difficulties. In May, Climeworks, one of the most high-profile direct air capture proponents, announced it would cut more than 10% of its workforce after delays and market hurdles. It is a reminder that scaling carbon removal is anything but straightforward, and that even well-backed companies remain exposed to the twists and turns of an uncertain market and shifting policy landscape. It also highlights why creative funding models like Terraset’s still have a role to play in bridging the gap between innovation and long-term viability.

It is also a reminder that carbon removal works best as part of a bigger climate strategy, not as a substitute for cutting emissions. However promising these projects may be, they need to sit alongside efforts to avoid, reduce, and repair emissions wherever possible. Used in the right way, carbon removal can help address the hardest-to-abate emissions and legacy carbon that cannot be avoided.

This space is growing, attracting funding, and pushing new ideas. But it is just as important to stay realistic about its role. Carbon removal may prove to be a powerful tool – but only if used wisely, in the right place, and at the right time.

By Mariana Garcia