Carbon capture startups face staff cuts amid U.S. funding uncertainty

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🗞️ Driving the news: Leading direct air capture (DAC) startups Climeworks and Heirloom are reducing staff amid growing uncertainty over U.S. federal funding for carbon removal projects
• The cuts come as the Trump administration signals major rollbacks in climate spending, raising concerns about the future of $1.8 billion in Department of Energy (DOE) commitments to DAC initiatives in Texas and Louisiana

🔭 The context: Both Climeworks and Heirloom had been beneficiaries of substantial public and private investment under the Biden administration's Inflation Reduction Act, which prioritized advanced carbon removal technologies
• The Trump administration’s proposed budget cuts target these climate subsidies to fund broader tax reforms, casting doubt on the continuation of support for costly technical CDR solutions like DAC.

🌍 Why it matters for the planet: DAC is a pivotal tool in the carbon removal portfolio, offering the promise of permanent greenhouse gas removal
• However, its viability hinges on sustained government subsidies due to high operational costs — up to $1,000 per ton of CO₂ removed
• Policy reversals could slow progress just as the technology is entering a critical scale-up phase, impacting broader climate mitigation goals

⏭️ What's next: The fate of DOE funding for projects in Louisiana and Texas remains unclear, and companies are actively engaging with federal agencies for clarity
• If subsidies are reduced or revoked, DAC firms may shift focus to jurisdictions with stronger policy support, slowing the U.S. lead in carbon removal innovation
• Further budget negotiations and potential legal challenges to the cuts are expected in the coming months

💬 One quote: "Subsidies will be crucial to make DAC cost-competitive with other CDR methods,” — Robert Höglund, head of carbon dioxide removal at Milkywire and co-founder of CDR.fyi

📈 One stat: Direct air capture carbon credits can fetch up to $1,000 per metric ton—up to ten times the cost of nature-based carbon credits

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