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In the early 2020s, a little-known aquaculture company in Portland, Maine, snagged more than $50 million by pitching a plan to harness nature to fight back against climate change. The company, Running Tide, said it could sink enough kelp to the seafloor to sequester a billion tons of carbon dioxide by this year, according to one of its early customers.

Instead, the business shut down its operations last summer, marking the biggest bust to date in the nascent carbon removal sector.

Its demise was the most obvious sign of growing troubles and dimming expectations for a space that has spawned hundreds of startups over the last few years. A handful of other companies have shuttered, downsized, or pivoted in recent months as well. Venture investments have flagged. And the collective industry hasn’t made a whole lot more progress toward that billion-ton benchmark.

The hype phase is over and the sector is sliding into the turbulent business trough that follows, warns Robert Höglund, cofounder of CDR.fyi, a public-benefit corporation that provides data and analysis on the carbon removal industry.

“We’re past the peak of expectations,” he says. “And with that, we could see a lot of companies go out of business, which is natural for any industry.”

The open question is: If the carbon removal sector is heading into a painful if inevitable clearing-out cycle, where will it go from there? 

The odd quirk of carbon removal is that it never made a lot of sense as a business proposition: It’s an atmospheric cleanup job, necessary for the collective societal good of curbing climate change. But it doesn’t produce a service or product that any individual or organization strictly needs—or is especially eager to pay for.

To date, a number of businesses have voluntarily agreed to buy tons of carbon dioxide that companies intend to eventually suck out of the air. But whether they’re motivated by sincere climate concerns or pressures from investors, employees, or customers, corporate do-goodism will only scale any industry so far. 

Most observers argue that whether carbon removal continues to bobble along or transforms into something big enough to make a dent in climate change will depend largely on whether governments around the world decide to pay for a whole, whole lot of it—or force polluters to. 

“Private-sector purchases will never get us there,” says Erin Burns, executive director of Carbon180, a nonprofit that advocates for the removal and reuse of carbon dioxide. “We need policy; it has to be policy.”

What’s the problem?

The carbon removal sector began to scale up in the early part of this decade, as increasingly grave climate studies revealed the need to dramatically cut emissions and suck down vast amounts of carbon dioxide to keep global warming in check.

Specifically, nations may have to continually remove as much as 11 billion tons of carbon dioxide per year by around midcentury to have a solid chance of keeping the planet from warming past 2 °C over preindustrial levels, according to a UN climate panel report in 2022.

A number of startups sprang up to begin developing the technology and building the infrastructure that would be needed, trying out a variety of approaches like sinking seaweed or building carbon-dioxide-sucking factories.

And they soon attracted customers. Companies including Stripe, Google, Shopify, Microsoft, and others began agreeing to pre-purchase tons of carbon removal, hoping to stand up the nascent industry and help offset their own climate emissions. Venture investments also flooded into the space, peaking in 2023 at nearly $1 billion, according to data provided by PitchBook.

From early on, players in the emerging sector sought to draw a sharp distinction between conventional carbon offset projects, which studies have shown frequently exaggerate climate benefits, and “durable” carbon removal that could be relied upon to suck down and store away the greenhouse gas for decades to centuries. There’s certainly a big difference in the price: While buying carbon offsets through projects that promise to preserve forests or plant trees might cost a few dollars per ton, a ton of carbon removal can run hundreds to thousands of dollars, depending on the approach. 

That high price, however, brings big challenges. Removing 10 billion tons of carbon dioxide a year at, say, $300 a ton adds up to a global price tag of $3 trillion—a year. 

Which brings us back to the fundamental question: Who should or would foot the bill to develop and operate all the factories, pipelines, and wells needed to capture, move, and bury billions upon billions of tons of carbon dioxide?

The state of the market

The market is still growing, as companies voluntarily purchase tons of carbon removal to make strides toward their climate goals. In fact, sales reached an all-time high in the second quarter of this year, mostly thanks to several massive purchases by Microsoft.

But industry sources fear that demand isn’t growing fast enough to support a significant share of the startups that have formed or even the projects being built, undermining the momentum required to scale the sector up to the size needed by midcentury.

To date, all those hundreds of companies that have spun up in recent years have disclosed deals to sell some 38 million tons of carbon dioxide pulled from the air, according to CDR.fyi. That’s roughly the amount the US pumps out in energy-related emissions every three days. 

And they’ve only delivered around 940,000 tons of carbon removal. The US emits that much carbon dioxide in less than two hours. (Not every transaction is publicly announced or revealed to CDR.fyi, so the actual figures could run a bit higher.)

Another concern is that the same handful of big players continue to account for the vast majority of the overall purchases, leaving the health and direction of the market dependent on their whims and fortunes. 

Most glaringly, Microsoft has agreed to buy 80% of all the carbon removal purchased to date, according to  CDR.fyi. The second-biggest buyer is Frontier, a coalition of companies that includes Google, Meta, Stripe, and Shopify, which has committed to spend $1 billion.

If you strip out those two buyers, the market shrinks from 16 million tons under contract during the first half of this year to just 1.2 million, according to data provided to MIT Technology Review by CDR.fyi. 

Signs of trouble

Meanwhile, the investor appetite for carbon removal is cooling. For the 12-month period ending in the second quarter of 2025, venture capital investments in the sector fell more than 13% from the same period last year, according to data provided by PitchBook. That tightening funding will make it harder and harder for companies that aren’t bringing in revenue to stay afloat.

Other companies that have already shut down include the carbon removal marketplace Nori, the direct air capture company Noya and Alkali Earth, which was attempting to use industrial by-products to tie up carbon dioxide.

Still other businesses are struggling. Climeworks, one of the first companies to build direct-air-capture (DAC) factories, announced it was laying off 10% of its staff in May, as it grapples with challenges on several fronts.

The company’s plans to collaborate on the development of a major facility in the US have been at least delayed as the Trump administration has held back tens of millions of dollars in funding granted in 2023 under the Department of Energy’s Regional Direct Air Capture Hubs program. It now appears the government could terminate the funding altogether, along with perhaps tens of billions of dollars’ worth of additional grants previously awarded for a variety of other US carbon removal and climate tech projects.

“Market rumors have surfaced, and Climeworks is prepared for all scenarios,” Christoph Gebald, one of the company’s co-CEOs, said in a previous statement to MIT Technology Review. “The need for DAC is growing as the world falls short of its climate goals and we’re working to achieve the gigaton capacity that will be needed.”

But purchases from direct-air-capture projects fell nearly 16% last year and account for just 8% of all carbon removal transactions to date. Buyers are increasingly looking to categories that promise to deliver tons faster and for less money, notably including burying biochar or installing carbon capture equipment on bioenergy plants. (Read more in my recent story on that method of carbon removal, known as BECCS, here.)

CDR.fyi recently described the climate for direct air capture in grim terms: “The sector has grown rapidly, but the honeymoon is over: Investment and sales are falling, while deployments are delayed across almost every company.”

“Most DAC companies,” the organization added, “will fold or be acquired.”

What’s next?

In the end, most observers believe carbon removal isn’t really going to take off unless governments bring their resources and regulations to bear. That could mean making direct purchases, subsidizing these sectors, or getting polluters to pay the costs to do so—for instance, by folding carbon removal into market-based emissions reductions mechanisms like cap-and-trade systems. 

More government support does appear to be on the way. Notably, the European Commission recently proposed allowing “domestic carbon removal” within its EU Emissions Trading System after 2030, integrating the sector into one of the largest cap-and-trade programs. The system forces power plants and other polluters in member countries to increasingly cut their emissions or pay for them over time, as the cap on pollution tightens and the price on carbon rises. 

That could create incentives for more European companies to pay direct-air-capture or bioenergy facilities to draw down carbon dioxide as a means of helping them meet their climate obligations.

There are also indications that the International Civil Aviation Organization, a UN organization that establishes standards for the aviation industry, is considering incorporating carbon removal into its market-based mechanism for reducing the sector’s emissions. That might take several forms, including allowing airlines to purchase carbon removal to offset their use of traditional jet fuel or requiring the use of carbon dioxide obtained through direct air capture in some share of sustainable aviation fuels.

Meanwhile, Canada has committed to spend $10 million on carbon removal and is developing a protocol to allow direct air capture in its national offsets program. And Japan will begin accepting several categories of carbon removal in its emissions trading system. 

Despite the Trump administration’s efforts to claw back funding for the development of carbon-sucking projects, the US does continue to subsidize storage of carbon dioxide, whether it comes from power plants, ethanol refineries, direct-air-capture plants, or other facilities. The so-called 45Q tax credit, which is worth up to $180 a ton, was among the few forms of government support for climate-tech-related sectors that survived in the 2025 budget reconciliation bill. In fact, the subsidies for putting carbon dioxide to other uses increased.

Even in the current US political climate, Burns is hopeful that local or federal legislators will continue to enact policies that support specific categories of carbon removal in the regions where they make the most sense, because the projects can provide economic growth and jobs as well as climate benefits.

“I actually think there are lots of models for what carbon removal policy can look like that aren’t just things like tax incentives,” she says. “And I think that this particular political moment gives us the opportunity in a unique way to start to look at what those regionally specific and pathway specific policies look like.”

The dangers ahead

But even if more nations do provide the money or enact the laws necessary to drive the business of durable carbon renewal forward, there are mounting concerns that a sector conceived as an alternative to dubious offset markets could increasingly come to replicate their problems.

Various incentives are pulling in that direction.

Financial pressures are building on suppliers to deliver tons of carbon removal. Corporate buyers are looking for the fastest and most affordable way of hitting their climate goals. And the organizations that set standards and accredit carbon removal projects often earn more money as the volume of purchases rises, creating clear conflicts of interest.

Some of the same carbon registries that have long signed off on carbon offset projects have begun creating standards or issuing credits for various forms of carbon removal, including Verra and Gold Standard.

“Reliable assurance that a project’s declared ton of carbon savings equates to a real ton of emissions removed, reduced, or avoided is crucial,” Cynthia Giles, a senior EPA advisor under President Biden, and Cary Coglianese, a law professor at the University of Pennsylvania, wrote in a recent editorial in Science. “Yet extensive research from many contexts shows that auditors selected and paid by audited organizations often produce results skewed toward those entities’ interests.”

Noah McQueen, the director of science and innovation at Carbon180, has stressed that the industry must strive to counter the mounting credibility risks, noting in a recent LinkedIn post: “Growth matters, but growth without integrity isn’t growth at all.”

In an interview, McQueen said that heading off the problem will require developing and enforcing standards to truly ensure that carbon removal projects deliver the climate benefits promised. McQueen added that to gain trust, the industry needs to earn buy-in from the communities in which these projects are built and avoid the environmental and health impacts that power plants and heavy industry have historically inflicted on disadvantaged communities.

Getting it right will require governments to take a larger role in the sector than just subsidizing it, argues David Ho, a professor at the University of Hawaiʻi at Mānoa who focuses  on ocean-based carbon removal.

He says there should be a massive, multinational research drive to determine the most effective ways of mopping up the atmosphere with minimal environmental or social harm, likening it to a Manhattan Project (minus the whole nuclear bomb bit).

“If we’re serious about doing this, then let’s make it a government effort,” he says, “so that you can try out all the things, determine what works and what doesn’t, and you don’t have to please your VCs or concentrate on developing [intellectual property] so you can sell yourself to a fossil-fuel company.”

Ho adds that there’s a moral imperative for the world’s historically biggest climate polluters to build and pay for the carbon-sucking and storage infrastructure required to draw down billions of tons of greenhouse gas. That’s because the world’s poorest, hottest nations, which have contributed the least to climate change, will nevertheless face the greatest dangers from intensifying heat waves, droughts, famines, and sea-level rise.

“It should be seen as waste management for the waste we’re going to dump on the Global South,” he says, “because they’re the people who will suffer the most from climate change.”

Correction (October 24): An earlier version of this article referred to Noya as a carbon removal marketplace. It was a direct air capture company.

Over the last century, much of the US pulp and paper industry crowded into the southeastern corner of the nation, setting up mills amid sprawling timber forests to strip the fibers from juvenile loblolly, long leaf, and slash pine trees.

Today, after the factories chip the softwood and digest it into pulp, the leftover lignin, spent chemicals, and remaining organic matter form a dark, syrupy by-product known as black liquor. It’s then concentrated into a biofuel and burned, which heats the towering boilers that power the facility—and releases carbon dioxide into the air.

Microsoft, JP MorganChase, and a tech company consortium that includes Alphabet, Meta, Shopify, and Stripe have all recently struck multimillion-dollar deals to pay paper mill owners to capture at least hundreds of thousands of tons of this greenhouse gas by installing carbon scrubbing equipment in their facilities.

The captured carbon dioxide will then be piped down into saline aquifers more than a mile underground, where it should be sequestered permanently.

Big Tech is suddenly betting big on this form of carbon removal, known as bioenergy with carbon capture and storage, or BECCS. The sector also includes biomass-fueled power plants, waste incinerators, and biofuel refineries that add carbon capturing equipment to their facilities.

Since trees and other plants absorb carbon dioxide through photosynthesis and these factories will trap emissions that would have gone into the air, together they can theoretically remove more greenhouse gas from the atmosphere than was released, achieving what’s known as “negative emissions.”

The companies that pay for this removal can apply that reduction in carbon dioxide to cancel out a share of their own corporate pollution. BECCS now accounts for nearly 70% of the announced contracts in carbon removal, a popularity due largely to the fact that it can be tacked onto industrial facilities already operating on large scales.

“If we’re balancing cost, time to market, and ultimate scale potential, BECCS offers a really attractive value proposition across all three of those,” says Brian Marrs, senior director of energy and carbon removal at Microsoft, which has become by far the largest buyer of carbon removal credits as it races to balance out its ongoing emissions by the end of the decade.

But experts have raised a number of concerns about various approaches to BECCS, stressing they may inflate the climate benefits of the projects, conflate prevented emissions with carbon removal, and extend the life of facilities that pollute in other ways. It could also create greater financial incentives to log forests or convert them to agricultural land. 

When greenhouse-gas sources and sinks are properly tallied across all the fields, forests, and factories involved, it’s highly difficult to achieve negative emissions with many approaches to BECCS, says Tim Searchinger, a senior research scholar at Princeton University. That undermines the logic of dedicating more of the world’s limited land, crops, and woods to such projects, he argues.

“I call it a ‘BECCS and switch,’” he says, adding later: “It’s folly at some level.”

The logic of BECCS

For a biomass-fueled power plant, BECCS works like this:

A tree captures carbon dioxide from the atmosphere as it grows, sequestering the carbon in its bark, trunk, branches, and roots while releasing the oxygen. Someone then cuts it down, converts it into wood pellets, and delivers it to a power plant that, in turn, burns the wood to produce heat or electricity.

Usually, that facility will produce carbon dioxide as the wood incinerates. But under both European Union and US rules, the burning of the wood is generally treated as carbon neutral, so long as the timber forests are managed in sustainable ways and the various operations abide by other regulations. The argument is that the tree pulled CO₂ out of the air in the first place, and new plant growth will bring that emissions debt back into balance over time. 

If that same power plant now captures a significant share of the greenhouse gas produced in the process and pumps it underground, the process can potentially go from carbon neutral to carbon negative.

But the starting assumption that biomass is carbon neutral is fundamentally flawed, because it doesn’t fully take into account other ways that emissions are released throughout the process, according to Searchinger.

Among other things, a proper analysis must also ask: How much carbon is left behind in roots or branches on the forest floor that will begin to decompose and release greenhouse gases after the plant is removed? How much fossil fuel was burned in the process of cutting, collecting, and distributing the biomass? How much greenhouse gas was produced while converting timber into wood pellets and shipping them elsewhere? And how long will it take to grow back the trees or plants that would have otherwise continued capturing and storing carbon?

“If you’re harvesting wood, it’s essentially impossible to get negative emissions,” Searchinger says.

Burning biomass, or the biofuels created from it, can also produce other forms of pollution that can harm human health, including particulate matter, volatile organic compounds, sulfur dioxide, and carbon monoxide.

Preventing carbon dioxide emissions at a given factory may necessitate capturing certain other pollutants as well, notably sulfur dioxide. But it doesn’t necessarily filter out all the other pollution floating out of the flue stack, notes Emily Grubert, an associate professor of sustainable energy policy at the University of Notre Dame who focuses on carbon management issues and the transition away from fossil fuels. 

Driving demand

The idea that we might be able to use biomass to generate energy and suck down carbon dates back decades. But as global temperatures and emissions both continued to rise, climate modelers found that more and more BECCS or other types of carbon removal would be needed to prevent the planet from tipping past increasingly dangerous warming thresholds.

In addition to dramatic cuts in emissions, the world may need to suck down 11 billion tons of carbon dioxide per year by 2050 and 20 billion by 2100 to limit warming to 2 °C over preindustrial levels, according to a 2022 UN climate panel report. That’s a threshold we’re increasingly likely to blow past.

These grave climate warnings sparked growing interest and investments in ways to draw carbon dioxide out of the atmosphere. Companies sprang up offering to sink seaweed, bury biomass, develop carbon-sucking direct air capture factories, and add alkaline substances to agricultural fields or the oceans. 

But BECCS purchases have dwarfed those other approaches.

For companies with fast-approaching climate deadlines, BECCS is one of the few options for removing hundreds of thousands of tons over the next few years, says Robert Höglund, who cofounded CDR.fyi, ​​a public-benefit corporation that analyzes the carbon removal sector.

“If you have a target you want to meet in 2030 and you want durable carbon removal, that’s the thing you can buy,” he says.

That’s chiefly because these projects can harness the infrastructure of existing industries. At least for now, you don’t have to finance, permit, and develop new facilities.

“They’re not that hard to build, because it’s often a retrofitting of an existing plant,” Höglund says. 

BECCS is also substantially less expensive for buyers than, say, direct air capture, with weighted average prices of $210 a ton compared with $490 among the deals to date, according to CDR.fyi. That’s in part because capturing the carbon dioxide from, say, a pulp and paper mill, where it makes up around 15% of flue gas, takes far less energy than plucking CO₂ molecules out of the open air, where they account for just 0.04%.

Microsoft’s big BECCS bet

In 2020, Microsoft announced plans to become carbon negative by the end of this decade and, by midcentury, to remove all the emissions the company generated directly and from electricity use throughout its corporate history. 

It’s leaning particularly heavily on BECCS to meet those climate commitments, with the category accounting for 76% of its known carbon removal purchases to date.

In April, the company announced it would purchase 3.7 million tons of carbon dioxide that a paper and pulp mill, located at some unspecified site in the southern US, will eventually capture and store over a 12-year period. It reached the deal through CO280, a startup based in Vancouver, British Columbia, that is forming joint ventures with paper and pulp mill companies in the US and Canada, to finance, develop, and operate the projects. 

It was the biggest carbon removal purchase on record—until four days later, when Microsoft revealed it had agreed to buy 6.75 million tons of carbon removal from AtmosClear, CDR.fyi noted. That company is building a biomass power plant at the Port of Greater Baton Rouge in Louisiana, which will run largely on sugarcane bagasse (a by-product of sugar production) and forest trimmings. AtmosClear says the facility will be able to capture 680,000 tons of carbon dioxide per year.

“What we’ve seen is a lot of these BECCS projects have been very helpful, if not transformational, for providing investment in rural economies,” Marrs says. “We look at our BECCS deals, in Louisiana with AtmosClear and some other Gulf State providers, like CO280, as a real means of helping support these economies, while at the same time promoting sustainable forestry practices.”

In earlier quarters, Microsoft also made substantial purchases from Orsted, which operates power plants that burn wood pellets; Gaia, which runs facilities that convert municipal waste into energy; and Arbor, whose plants are fueled by “overgrown brush, crop residues, and food waste.” 

Don’t let waste go to waste

Notably, at least three of these projects rely on some form of waste, a category distinct from fresh-cut timber or crops grown for the purpose of fueling BECCS projects. Solid waste, agricultural residues, logging leftovers, and plant material removed from forests to prevent fires present some of the ripest opportunities for BECCS—as well as some difficult questions of carbon accounting.

A 2019 report from the National Academy of Sciences estimated that the US could achieve more than 500 million tons of carbon removal a year through BECCS by 2040, while the world could exceed 3.5 billion tons, by relying just on agricultural by-products, logging residues, and organic waste—without needing to grow crops dedicated to energy.

Roger Aines, chief scientist of the energy program at Lawrence Livermore National Laboratory, argues we should at least be putting these sources to use rather than burning them or leaving them to decompose in fields. (Aines coauthored a similar analysis focused on California’s waste biomass and contributed to a 2022 lab report prepared for Microsoft to evaluate costs and options for carbon removal purchases.)

He stresses that the BECCS sector can learn a lot from using that waste material. For example, it should help to provide a sharper sense of whether the carbon math will work if more land, forests, and crops are dedicated to these sorts of purposes.

“The point is you won’t grow new material to do this in most cases, and won’t have to for a very long time, because there’s so much waste available,” Aines says. “If we get to that point, long into the future, we can address that then.”

Wonky accounting

But the critical question that emerges with waste is: Would it otherwise have been burned or allowed to decompose, or might some of it have been used in some other way that kept the carbon out of the atmosphere? 

Sugarcane bagasse, for instance, is or could also be used to produce recyclable packaging and paper, biodegradable food packaging and cutlery, building materials, or soil amendments that add nutrients back to agricultural fields.

“A lot of the time those materials are being used for something else already, so the accounting gets wonky really quickly,” Grubert says. 

Some fear that the financial incentives to pursue BECCS could also compel companies to trim away more trees and plants than is truly necessary to, say, manage forests or prevent fires—particularly as more and more BECCS plants create greater and greater demand for the limited supplies of such materials.

“Once you start capturing waste, you create an incentive to produce waste, so you have to be very careful about the perverse incentives,” says Danny Cullenward, a researcher and senior fellow at the Kleinman Center for Energy Policy at the University of Pennsylvania who studies carbon markets.

Due diligence 

Like other big tech companies, Microsoft has lost some momentum when it comes to its climate goals, in large part because of the surging energy demands of its AI data centers. 

But the company has generally earned a reputation for striving to clean up its direct emissions where possible and for seeking out high-quality approaches to carbon removal. It has consulted extensively with critically minded researchers at advisory firms like Carbon Direct and demonstrated a willingness to pay higher prices to support more credible projects.

Marrs says the company has extended that scrutiny to its BECCS deals.

“We want as much positive environmental impact as possible from every project,” he says.

“We’re doing months and months of technical due diligence with teams that visit the site, that interview stakeholders, that produce a report for us that we go through in depth with a third-party engineering provider or technical perspective provider,” he adds.

In a follow-up statement, Microsoft stressed that it strives to validate that every BECCS project it supports will achieve negative emissions, whatever the fuel source.

“Across all of these projects, we conducted substantial due diligence to ensure that BECCS feedstocks would otherwise return carbon to the atmosphere in a few years,” the company said. 

Likewise, Jonathan Rhone, the cofounder and chief executive of CO280, stresses that they’ve worked with consultants, carbon market registries, and pulp and paper mills “to make sure we’re adopting the best standards.” He says they strive to conservatively assess the release and uptake of greenhouse gases across the supply chain of the mills they work with, taking into account the type of biomass used by a given plant, the growth rate of the forests it’s harvested from, the distance trucks drive to ship the timber or sawmill residues, the total emissions of the facility, and more.

Rhone says its typical projects will capture and store away on the order of 850,000 to 900,000 tons of carbon dioxide per year. How much that would make up of the plant’s total emissions would vary, based in part on how much of the facility’s energy comes from by-product biomatter and how much comes from fossil fuels. For its first projects, the company will aim to capture 50% to 65% of the CO₂ emissions at the pulp and paper mills, but it eventually hopes to exceed 90%. 

In a follow-up email, Rhone said the carbon capture equipment at the mills it works with will also prevent “substantial levels” of particulate matter and sulfur dioxide emissions and might reduce emissions of other pollutants as well.

The company is in active discussions with 10 pulp and paper mills in the Gulf Coast and Canada. Each carbon capture and storage project could cost hundreds of millions of dollars. 

“What we’re trying to do at CO280 is show and demonstrate that we can create a stable, repeatable playbook for developing projects that are low risk and provide the market with what it wants, with what it needs,” Rhone says. 

Proponents of BECCS say we could leverage biomass to deliver substantial volumes of carbon removal, so long as appropriate industry standards are put in place to prevent, or at least minimize, bad behavior.

The question is whether that will be the case—or whether, as the BECCS sector matures, it will veer closer to the pattern of carbon offset markets. 

Studies and investigations have consistently shown that loosely regulated or poorly designed carbon credit and offset programs have allowed, if not invited, companies to significantly exaggerate the climate benefits of tree planting, forest preservation, and similar projects. 

“It appears to me to be something that will be manageable but that we’ll always have to keep an eye on,” Aines says. 

Magic

Even with all these carbon accounting complexities, BECCS projects can often deliver climate benefits, particularly for existing plants.

Adding carbon capture to an operating paper and pulp mill, power plant, or refinery is at least an improvement over the status quo from a climate perspective, insofar as it prevents emissions that would otherwise have continued.

But ambitions for BECCS are already growing beyond existing plants: Last year Drax, the controversial UK power giant, announced plans to launch a Houston-based division tasked with developing enough new BECCS projects to deliver 6 million tons of carbon removal per year, in the US or elsewhere.

Numerous other companies have also built or proposed biomass power plants in recent years, with or without carbon capture systems—decisions driven in part by policies that classify them as carbon neutral.

But if biomass isn’t carbon neutral, as Searchinger and others argue it can’t be in many applications, then these new unfiltered power plants are just adding more emissions to the atmosphere—and BECCS projects aren’t drawing any out of the air. And if that’s the case, it raises tough questions about corporate climate claims that depend on its doing so and the societal trade-offs involved in building lots of new plants dedicated to these purposes.

That’s because crops grown for energy require land, fertilizer, insecticides, and human labor that might otherwise go toward producing food for an expanding global population. And greater demand for wood invites the timber industry to chop down more and more of the world’s forests, which are already sucking up and storing away vast amounts of carbon dioxide and providing homes for immense varieties of plants and animals.

If these projects are merely preventing greenhouse gas from floating into the atmosphere but not drawing any down, we’re better off adding carbon capture and storage (CCS) equipment to an existing natural-gas plant instead, Searchinger argues.

Companies may think that harnessing nature to draw carbon dioxide out of the sky sounds better than cutting the emissions of a fossil-fuel turbine. But the electricity from the latter plant would cost dramatically less, the carbon capture system would reduce emissions more for the amount of same energy generated, and it would avoid the added pressures to cut down trees, he says.

“People think some magic happens—this magic combination of using biomass and CCS creates something bigger than its parts,” Searchinger says. “But it’s not magic; it’s simply the sum of the two.”

The US Department of Energy appears poised to terminate funding for a pair of large carbon-sucking factories that were originally set to receive more than $1 billion in government grants, according to a department-issued list of projects obtained by MIT Technology Review and circulating among federal agencies.

One of the projects is the South Texas Direct Air Capture Hub, a facility that Occidental Petroleum’s 1PointFive subsidiary planned to develop in Kleberg County, Texas. The other is Project Cypress in Louisiana, a collaboration between Battelle, Climeworks, and Heirloom.

The list features a “latest status” column, which includes the word “terminate” next to the roughly $50 million award amounts for each project. Those line up with the initial tranche of Department of Energy funding for each development. According to the original announcement in 2023, the projects could have received $500 million or more in total grants as they proceeded.

It’s not clear if the termination of the initial grants would mean the full funding would also be canceled.

“It could mean nothing,” says Erin Burns, executive director of Carbon180, a nonprofit that advocates for the removal and reuse of carbon dioxide. “It could mean there’s a renegotiation of the awards. Or it could mean they’re entirely cut. But the uncertainty certainly doesn’t help projects.”

A DOE spokesman stressed that no final decision has been made.

“It is incorrect to suggest those two projects have been terminated and we are unable to verify any lists provided by anonymous sources,” Ben Dietderich, the department’s press secretary, said in an email, adding: “The Department continues to conduct an individualized and thorough review of financial awards made by the previous administration.”

Last week, the DOE announced it would terminate about $7.5 billion in grants for more than 200 projects, stating that they “did not adequately advance the nation’s energy needs, were not economically viable, and would not provide a positive return on investment of taxpayer dollars.”

Battelle and 1PointFive didn’t respond to inquiries from MIT Technology Review.

“Market rumors have surfaced, and Climeworks is prepared for all scenarios,” Christoph Gebald, one of the company’s co-CEOs, said in a statement. He added later: “The need for DAC is growing as the world falls short of its climate goals and we’re working to achieve the gigaton capacity that will be needed.”

“We aren’t aware of a decision from DOE and continue to productively engage with the administration in a project review,” Heirloom said in a statement.

The rising dangers of climate change have driven the development of the direct-air-capture industry in recent years.

Climate models have found that it may be necessary to suck down billions of tons of carbon dioxide per year by around midcentury, on top of dramatic emissions cuts, to prevent the planet from warming more than 2 °C over preindustrial levels.

Direct air capture is considered one of the most reliable ways of drawing the greenhouse gas out of the atmosphere, but it also remains one of the most expensive and energy-intensive methods.

Under former president Joe Biden, the US began providing increasingly generous grants, subsidies, and other forms of support to help scale up the nascent sector.

The grants now in question were allocated under the DOE’s Regional Direct Air Capture Hubs program, which was funded through the Bipartisan Infrastructure Law. The goal was to set up several major carbon removal clusters across the US, each capable of sucking down and sequestering at least a million tons of the greenhouse gas per year.

“Today’s news that a decision to cancel lawfully designated funding for the [direct-air-capture projects] could come soon risks handing a win to competitors abroad and undermines the commitments made to businesses, communities, and leaders in Louisiana and South Texas,” said Giana Amador of the Carbon Removal Alliance and Ben Rubin of the Carbon Business Council in a joint statement.

This story was updated to include additional quotes, a response from the Department of Energy, and added context on the development of the carbon removal sector.

MIT Technology Review’s reporters and editors faced a dilemma as we began to mull nominees for this year’s list of Climate Tech Companies to Watch.

How do you pick companies poised to succeed in a moment of such deep uncertainty, at a time when the new Trump administration is downplaying the dangers of climate change, unraveling supportive policies for clean technologies, and enacting tariffs that will boost costs and disrupt supply chains for numerous industries? 

We as a publication are focused more on identifying companies developing technologies that can address the escalating threats of climate change, than on businesses positioned purely for market success. We don’t fancy ourselves as stock pickers or financial analysts.

But we still don’t want to lead our readers astray by highlighting a startup that winds up filing for bankruptcy six months later, even if its demise is due to a policy whiplash outside of its control.

So we had to shift our thinking some.

As a basic principle, we look for companies with the potential to substantially drive down greenhouse gas emissions or deliver products that could help communities meaningfully reduce the dangers of heatwaves, droughts, or other extreme weather.

We prefer to feature businesses that have established a track record, by raising capital, building plants, or delivering products. We generally exclude companies where the core business involves extracting and combusting fossil fuels, even if they have a side business in renewables, as well as those tied to forced labor or other problematic practices.

Our reporters and contributors add their initial ideas to a spreadsheet. We ask academics, investors, and other sources we trust for more nominees. We research and debate the various contenders, add or subtract from our list, then research and debate them all some more. 

Starting with our first climate tech list in 2023, we have strived to produce a final mix of companies that’s geographically diverse. But given the particular challenges for the climate tech space in the US these days, one decision we made early on was to look harder and more widely for companies making strides elsewhere.  

Thankfully, numerous other nations continue to believe in the need to confront rising threats and the economic opportunities in doing so.

China, in particular, has seized on the energy transition as a pathway for expanding its economy and global influence, giving rise to some of the world’s largest and most innovative clean tech companies. That includes two on this year’s list: the sodium-ion battery company HiNa and the wind-turbine giant Envision.

Similarly, the European Union’s increasingly strict emissions mandates and cap-and-trade system are accelerating efforts to clean up the energy, heavy-industry, and transportation sectors across that continent. We highlighted two promising companies there, including the German electric truck company Traton and the Swedish clean-cement maker Cemvision.

We also determined that certain businesses could emerge relatively unscathed from the shifting conditions in the US, or perhaps even benefit from them. Notably, the fact that heightened tariffs will boost the cost of importing critical minerals could create an advantage for a company like Redwood Materials, one of the US’s biggest recyclers of battery materials.

Finally, the boom in AI data center development is opening some promising opportunities, as it spawns vast demands for new electricity generation. Several of our picks are well positioned to help meet those needs through carbon-free energy sources, including geothermal company Fervo Energy and next-generation nuclear startup Kairos Power. Plus, Redwood Materials has launched a new microgrid business line to help address those demands as well.

Still, it was especially challenging this year to produce a list we felt confident enough to put out into the world, which is a key reason why we decided to narrow it down from 15 companies to 10. 

But we believe we’ve identified a solid slate of firms around the world that are making real strides in cleaning up the way we do business and go about our lives, and which are poised to help us meet the rising climate challenges ahead.

We hope you think so too.

Climate change will make it increasingly difficult to grow crops across many parts of the world. Pairwise is leveraging CRISPR gene editing to develop plants that can better withstand adverse conditions.

Pairwise uses cutting-edge gene editing to produce crops that can withstand increasingly harsh climate conditions, helping to feed a growing population even as the world warms.

The seven-year-old startup was cofounded by several gene editing pioneers, including MIT’s Feng Zhang and Harvard’s David Liu, who helped invent and improve the breakthrough CRISPR tool.

Last year, the company delivered the first food to the US market, that was developed with the precise genetic scissors, a less-bitter–tasting mustard green. It’s now working to produce crops with climate-resilient traits, through partnerships with two of the world’s largest plant biotech companies, Bayer and Corteva.

Pairwise says its technology enables the company and its customers to efficiently introduce and fine-tune new plant traits. The toolkit includes a proprietary CRISPR enzyme (the part of the technology that snips off bits of DNA), as well as a base editor, a second-generation CRISPR technology that can alter a single DNA letter. Co-founder Liu first developed it with his research team.  

Among its early efforts, the company is developing and field testing shorter, sturdier types of corn, blackberries and other crops that could survive high winds and other extreme weather events amplified by climate change. 

The company believes that these dwarf plants can be grown closer together, potentially enabling farmers to produce higher yields with less fertilizer and fewer insecticides. Growing more plants on a given area of land, or shrinking fruit trees closer to bush size, also means it could be more economical to grow their crops in agricultural hoop houses. These temporary, movable greenhouses can be covered with plastic or shade cloth to control growing conditions. That, in turn, could enable more farmers, particularly in poorer parts of the world, to protect their crops from heatwaves and other severe weather. 

In addition, Pairwise is working with the Gates Foundation to create new varieties of high-yield yams in Nigeria. It has also licensed its suite of genetic tools to Mars to help the confectionary giant develop cacao plants that would be more resilient to plant diseases and shifting climate conditions. The cacao trees, which farmers predominantly grow in West Africa, are coming under increasing stress from rising temperatures and erratic rainfall patterns. 

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Key indicators

• Industry: Food and agriculture 
• Founded: 2018 
• Headquarters: Durham, North Carolina, US
• Notable fact: The company was cofounded by several scientists who were instrumental in inventing and improving CRISPR, including MIT professor Feng Zhang and Harvard professor David Liu, both of whom also have appointments at the Broad Institute.

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Potential for impact

As climate change fuels more extreme weather and creates otherwise harsher conditions such as drought, the ability to grow crops with the same or higher yields than are seen today could help sustain farmers and feed communities. Particularly in some of the hottest and poorest parts of the world, climate-adapted crops promise to prevent hunger and starvation.

Caveats

To date, Pairwise hasn’t delivered any climate-adapted foods to the market. So it remains to be seen how big of a difference such plants will make in the fields and on store shelves.

There’s a general, if untested, hope that consumers and regulators will be more accepting of CRISPR-edited crops, which involve editing the plant’s own DNA, than many have been of transgenic crops, which are created by swapping in genes from another species. 

Next steps

Pairwise representatives say the company, which has raised $155 million to date, is evaluating short-stature blackberries in field trials now. If those tests go well, it intends to work on squatter fruit trees as well, such as cherry or peach. 

On its website, the company says it has successfully demonstrated edits in 14 crops, and completed field trials for at least two more: unspecified varieties of corn and soy.

Pairwise hasn’t announced any specific timelines, but the company says it expects to deliver a variety of “climate-adapted, delicious and consumer-loved crops” in the coming years.