Policy Pathways and Investment Opportunities from Carbon Removal Day 2025
Canadaʼs carbon removal sector reached an inflection point at Carbon Removal Day 2025, where policymakers, industry leaders, and Indigenous representatives convened to address the dual imperatives of scaling technological innovation and solidifying regulatory frameworks.
Hosted by Carbon Removal Canada at Ottawaʼs National Arts Centre, the event underscored Canada’s progress in establishing itself as a global CDR hub while acknowledging critical gaps in financing, demand signals, and inclusive project development.
With over 70 domestic CDR companies now operational and federal procurement programs gaining momentum, the discussions revealed a sector poised for exponential growth—but only if strategic policy interventions accelerate commercialization and address systemic barriers.
Current State of Canadaʼs Carbon Removal Sector
Canadaʼs CDR landscape has evolved from theoretical modeling to tangible project deployment, with direct air capture DAC, enhanced rock weathering ERW, and ocean alkalinity enhancement dominating recent announcements, including CarbonRun’s river alkalinity project in Nova Scotia, UNDO’s ERW pilots in Ontario, and Phlair’s DAC project in Alberta
· Deep Skyʼs Innovation and Commercialization Centre in Alberta and Terrafixingʼs DAC pilot in northern Quebec show that the sector is moving beyond 1 beyond traditional oil sands regions .
· The Government of Canada has committed to purchase $10 million in carbon removal through by launching an RFI on procurement options. The government will then launch a competitive procurement process to select the providers, with the aim of tackling the hardest-to-decarbonize aircrafts and ships through these technologies.
· Three provinces – Alberta, British Columbia, and Saskatchewan – now have subsurface CO₂ regulations in place, with Ontario in the process of developing their regulations
· The federal government has completed its draft for its direct air capture federal offset protocol
· The federal government will also launch its public consultation on the potential economic benefits of carbon removal
Key challenges for these companies include underdeveloped measurement, reporting, and verification (MRV) protocols, particularly for novel methods like electrochemical ocean CDR. Additionally, pre-revenue startups face limited access to non-dilutive funding—a gap partially addressed by CICE’s newly announced $3M CDR innovation fund.
Policy Horizons: Chokepoints and Innovations
The Low Carbon Fuel Procurement Program (LCFPP) expansion debate dominated policy discussions, with strong consensus emerging around broadening eligibility beyond the current focus on DAC to include all permanent removal methods (e.g., enhanced rock weathering, and ocean-based solutions).
The LCFPP creates a solid base for future procurement in the carbon removal market. Participants concurred that these agreements should also increase the amount of carbon purchased, in order to support this burgeoning industry.
Importantly, the LCFPP has not only put a government seal on carbon removal procurement, but it provides a model on which other government agencies and ministries can move forward in this realm. Having the model of this agreement already in place will lower hesitation and buyer difficulties when negotiating future carbon removal contracts for government procurers.
Carbon removal markets have advanced due to voluntary markets, but these markets will not be capable on their own to scale the sector to the level it needs to attain to achieve net-zero country-wide.
This is where government – at the federal, provincial, and municipal levels – have a critical role to play. These governments can act in the vanguard as early buyers, but they also have the capacity to create compliance markets and integrate carbon removal protocols. Such markets, like the Greenhouse Gas Pollution Pricing Act, already regulates carbon emissions from large industrial carbon emitters with carbon pricing standards, and applies in areas that do not meet the GGPPA benchmarks in pricing and pollution.
For the carbon removal industry to flourish, the industry must move beyond Ottawa’s recent DAC protocol (link) to identify next steps, and make this new protocol a viable business-supporting opportunity that can compete in a market with much cheaper carbon credits.
A significant uptick in research and innovation on how the carbon removal industry can better integrate into existing supply chains is necessary. This research and innovation must also be nimble and ready to evolve, due to the lack of clarity and regulatory certainty when new carbon removal projects are launched.
Enduring Relationships: Partnerships as Growth Accelerators
Cross-sector coalitions continue to emerge, with the CDR Alliance leading the way—a consortium of 38 firms that funds CDR innovation to reduce costs, test solutions, and improve climate outcomes. The alliance strengthens carbon removal markets by enhancing MRV standards and helps companies increase revenue through tax credits and federal procurement.
Industry players must also embrace collective learning and support, by sharing knowledge learned and understanding that hoarding such knowledge will only damage the future prospects of the carbon removal sector. Together, all companies and organizations operating in the sector can overcome the challenges in this sector where so many regulations are yet to be clarified. Only then can carbon removal companies scale to the necessary level.
Indigenous partnerships have become an operational necessity, not just an ethical consideration. The Akwé Kon Framework provides specific protocols for co-developing CDR projects with First Nations communities that protect biodiversity, respect sacred sites, and generate mutual economic benefits. Carbon Removal Day participants emphasized that true partnerships must involve early and meaningful Indigenous engagement from project conception, with the goal of achieving at least 30% Indigenous ownership in CDR projects by 2030
Further steps will need to be taken by the carbon removal industry to build relationships that extend beyond individual projects. This will create a strong foundation for trust, accountability, and continuous progress and development of carbon removal.
Once these have been implemented, it will be easier to create public-private collaborations, encouraging corporations and the private sector to join up with the government of Canada to purchase high-quality carbon removal credits. This will both help to build a durable, long-term market for carbon removal companies, and signal long-term demand.
Investment Readiness: Bridging the Valley of Death
Despite growing venture interest—with Canadian CDR startups raising $320M in 2024—significant Series A/B funding gaps persist due to technology readiness level (TRL) mismatches. Canada must close the economic incentives gap with the U.S., which is investing billions in direct air capture hubs through its Department of Energy, to remain competitive in the global CDR landscape.
This is why the industry needs to explore new investment vehicles, with the sole purpose of financing early-stage carbon removal projects. Because of the current risk profile associated with many of the nascent and soon-to-come technologies, securing this funding will be imperative to the continued growth of the carbon removal industry.
Participants specifically identified project-backed bonds, carbon removal-focused venture debt, and concessional capital as promising financial instruments for bridging early commercialization gaps. For technologies at TRL 6-7, blended finance models combining patient private capital with government guarantees were identified as particularly effective for de-risking the path to commercial scale
One of the most straightforward and effective ways of de-risking the investment environment for the industry will be creating and significantly expanding the demand for these services. For this substantial expansion of demand, we will need to look both within the carbon removal industry, as well as outside of it, searching for opportunities and businesses who would benefit from our services.
Governments also have the power and capacity to help the carbon removal industry in de-risking funding. Only governments can provide tax credits, loans, and procurement programs. Government bodies can also help new projects get off the ground by providing project-level non-dilutive grant support.
Advancing Commercial Deployment: From Pilots to Gigatonnes
Scaling commercial deployment is feasible, but is currently facing several obstacles in Canada. To overcome these funding and infrastructure challenges, among others, there will need to be more public-private partnerships with risk-sharing mechanisms. These will be integral in supporting both the supply and demand side of the carbon removal market.
These may take the form of, on the supply side, blended finance for projects, and on the demand side, advancing market commitments for credit purchases.
Investors and companies in carbon removal will need to pay particular attention in supporting pilot- and demonstration-scale projects. The industry will need to attract more private capital, possibly creating new insurance products to de-risk the investment.
While Canada has made significant strides in developing a supportive policy and regulatory environment to allow carbon removal to take root economically, it has yet to close the economic incentives gap, particularly with the U.S. but also with other countries.
Canada’s competitive advantages stem from its abundant renewable energy resources, extensive geological storage capacity, and deep engineering expertise. However, to become a leader in this sector, the country needs an integrated industrial strategy that harmonizes provincial and federal regulations, streamlines permitting for demonstration projects, and requires coordinated action across both public and private spheres.
Conclusion: From Incremental Progress to Exponential Trajectories
Carbon Removal Day 2025 crystallized Canadaʼs dual reality: world-class innovation assets paired with fragmented demand signals. The eventʼs policy announcements—particularly the Treasury Boardʼs RFI and CICEʼs funding program—lay groundwork for overcoming the commercialization valley of death. However, achieving the 500 MtCO₂/year removal capacity 13 required by 2050 demands urgent action on three fronts:
Regulatory parity: Aligning provincial storage regulations and federal offset protocols with ISO standards to attract global capital.
Demand multiplication: Expanding compliance market integration through Clean Fuel Regulations and binding CDR procurement mandates for heavy emitters.
Indigenous equity: Institutionalizing the Akwekon Framework across federal funding programs to ensure 30% Indigenous ownership in CDR projects by 2030.
The sector’s immediate priorities include securing additional federal procurement commitments in the next 12 months, finalizing MRV protocols for all major removal methods, and establishing provincial regulatory frameworks that recognize carbon removal as an essential climate solution. Industry stakeholders must simultaneously develop project pipelines that demonstrate commercial viability at increasing scales while engaging communities as true partners in the emerging carbon removal economy
As global CDR competition intensifies, Canadaʼs ability to leverage its geologic, technological, and human capital will determine whether it becomes a climate leader or lagger in the carbon negative economy. The collaborations seeded at Carbon Removal Day suggest the former trajectory is attainable—if policymakers match the sectorʼs ambition with commensurate urgency.
