EU Start-up and Scale-up Strategy
Consultation response · March 2025
The Negative Emissions Platform (NEP) is a Brussels-based partnership of European and international organisations focused on carbon removals. Our members are technology companies, project developers, investors, marketplaces, and buyers of carbon removals. We welcome the European Commission’s public consultation on the EU Start-up and Scale-up Strategy to take the lead in clean-tech innovation on the global stage.
Permanent CDR technologies remove CO₂ from the atmosphere and durably store it in geological, terrestrial, or ocean reservoirs, or in products. Technologies include direct air capture and storage (DACCS), bioenergy with carbon capture and storage (BECCS), biochar carbon removal, enhanced mineralisation, enhanced rock weathering, and marine CDR.
European startups are leading in developing permanent carbon dioxide removal (CDR) technologies but are nearing the “valley of death”. The EU is home to a vibrant scene of startups and scaleups delivering negative emissions, but they currently face significant barriers, particularly in financing. This is important because countries will have to both reduce emissions and counterbalance residual emissions to safeguard industrial competitiveness in a carbon-constrained economy.
The world must remove up to 10 gigatonnes of CO₂ annually by 2050, yet today we are only a fifth of the way there, with less than 1% of existing removals coming from permanent methods (IPCC, AR6 Synthesis Report, 2023).
The EU has an opportunity to safeguard critical industries and grow the next-generation of clean-tech startups by 2030 which requires urgent action. The Start-up and Scale-up Strategy presents a pivotal opportunity to accelerate the next generation of clean technologies and achieve Europe’s climate and competitiveness goals.
1.We agree that startups and scaleups face significant challenges.
These barriers are more pronounced in the deep-tech space for carbon removal due to the industry’s nascency, capital intensity, and dependency on regulatory frameworks that are still evolving.
Access to finance: The EU’s current funding mechanisms for CDR, including Horizon Europe and the Innovation Fund, remain fragmented, insufficient, and administratively complex. The high capital expenditure required for CDR technologies, combined with long development timelines, creates a severe “valley of death” for mid-readiness technologies (e.g., DACCS, BECCS, enhanced weathering, permanent carbon storage in products through chemical binding and mineralisation). The lack of dedicated funding streams and the aggregation of CDR with CCS/CCU in funding instruments further limits targeted financial support. For instance, Horizon Europe is the EU’s largest R&D funding instrument, yet less than 1% of its budget in the last work programme was allocated to CDR. Greater openness for emerging CDR technologies like marine CDR must be incorporated into funding mechanisms to ensure a more inclusive approach. Expanding dedicated funding streams beyond conventional methods will be critical to fostering innovation and accelerating the development of a broader range of CDR solutions necessary to meet EU's climate goals.
NEP estimates that €25-50 billion in gross funding will be required by 2030 to put CDR on a trajectory that aligns with the EU’s climate neutrality target. Of this, a minimum of €20 billion must come from public sources before 2030. Currently, available funding for CDR is extremely limited. Investments are urgently needed to drive down costs, support learning curves, and enable a market. The EU must offer financial incentives to attract and retain CDR startups and scaleups, driving job creation, economic growth, and climate leadership.
Access to markets: Market demand for CDR is constrained. Voluntary corporate purchases are important and must be incentivised, but are limited. EU and national strategies lack clarity on the role of CDR. Unlike other climate technologies, CDR is not yet integrated into carbon pricing mechanisms or compliance markets, limiting investment incentives. It is essential that policies in the short- to medium-term leverage as far as possible the funding available through the voluntary market.
Access to talent: The CDR sector requires workforce in engineering, chemistry, geology, and environmental science. With the right support, this sector holds potential to create 670,000 jobs in the EU by 2050, offering a pathway for just transition opportunities. For example, STEM professionals currently employed in the oil and gas sector possess a 70% to 90% skills match with roles in BECCS and DACCS.
Access to infrastructure and services: Many CDR methods require enabling infrastructure, such as CO₂ transport and storage, which is underdeveloped in the EU compared to North America.
2. Carbon removal startups and scaleups face additional challenges.
Lack of lead markets for CDR: Unlike other green technologies, there is no EU-wide mechanism for large-scale public procurement of durable removals, reducing early market opportunities and bankability for CDR companies.
Lack of price support mechanisms: The CDR industry’s expansive growth potential is constrained by the price certainty gap: uncertainty and volatility in carbon credit pricing. The lack of price and demand support mechanisms, such as carbon contracts for difference (CCfDs) and advance market commitments, deters long-term institutional investment and raises capital costs for CDR suppliers.
Limited cross-border coordination: Given that CDR solutions (e.g., geological storage, biomass supply chains, transport and storage infrastructure) require cross-border collaboration, misaligned policies between Member States create inefficiencies and delays in project development. Permitting processes for infrastructure (e.g., geological storage, biomass supply chains) are slow and inconsistent across Member States.
3.Recommendations for EU/Member States to support the next generation of clean-tech Startups and Scaleups.
Europe can lead in industrial competitiveness and innovation with a Startup and Scaleup Strategy that promotes the carbon removal industry. The EU and its Member States should implement a combination of financial, regulatory, and talent-focused measures to enable startups and scaleups for the next-generation of clean technology.
a. Make use of demand-pull and supply-push incentives to mobilise private investments in both early-stage projects as well as scale ups.
Increase research, development, and innovation support through the Horizon Europe, European Innovation Council: DG RTD identifies CDR technologies as a priority in need of research and innovation support to achieve climate neutrality by 2050. Carbon Gap estimates that funding for CDR R&D should amount to at least €2.6 billion in the Multiannual Financial Framework for 2028-2034. To support the diverse range of permanent CDR methods, the Commission should significantly increase dedicated R&D funding, covering projects at various stages of technological readiness. The Commission should also make dedicated efforts to increase openness to a myriad of CDR solutions, such as mCDR, to foster innovation and support EU-based startups and scaleups.
Earmark a portion of the Innovation Fund for CDR: To secure long-term financing, the European Commission should allocate a specific percentage of the Innovation Fund to a broad range of CDR methods at varying levels of technological readiness, ensuring sustained support for scaling up removal technologies.
Leverage the Industrial Decarbonisation Bank to drive EU purchasing programme for permanent carbon removals to create demand signals, and attract investment in early-stage CDR projects. By committing to large-scale purchases, the programme would provide certainty to investors, ensuring private capital flows into the sector and accelerating scale-up.
Leverage the European Competitiveness Fund to drive public-private investment in CDR by establishing competitive incentives to scale up projects and infrastructure.
Establish compliance markets for CDR start-ups and scale-ups to grow self-sufficiently. The EU should integrate carbon removal into compliance frameworks, ensuring removals complement abatement efforts in a cost-effective manner. This could include an intermediated long-term integration with the Emission Trading System, additional sector-specific mandates, and/or upstream carbon takeback obligations that progressively require producers and suppliers of fossil fuels to pay for removals. In doing so, the EU would encourage private investments, accelerating the scale up of startups in this clean-tech industry.
b. Streamline Permitting Processes
The current lengthy and bureaucratic permitting procedures are a major deterrent for companies looking to establish operations in Europe. Simplifying these procedures would make the EU a more attractive destination for CDR projects and other clean technologies, accelerating the deployment of essential climate solutions.
c. Invest in workforce development
Develop education and training programmes to equip the workforce with the necessary skills for the growing CDR sector. Facilitate the recognition of qualifications and simplify work permits for skilled professionals, contributing to a just transition for workers from traditional industries.
Conclusion
The EU Start-up and Scale-up Strategy is a key opportunity to grow the carbon removal sector, supporting climate goals and economic growth. The Negative Emissions Platform urges the Commission to boost financing through an EU CDR purchasing programme, increased R&D funding, a dedicated share of the Innovation Fund, and the European Competitiveness Fund. Streamlining permitting and investing in workforce development are also essential. NEP stands ready to support these efforts to scale the sector responsibly.