IEA: Carbon Management Technologies Gain Funding And Policy Support – Carbon Herald

Report on Carbon Capture and Carbon Removal Technologies in the Context of Sustainable Development Goals (SDGs)

Introduction

Carbon capture and carbon removal technologies are increasingly recognized as critical components in global energy innovation. Governments and investors are prioritizing these technologies to reduce emissions from industrial processes and the atmosphere, aligning with the United Nations Sustainable Development Goals (SDGs), particularly SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), and SDG 13 (Climate Action). This report summarizes key findings from the International Energy Agency’s State of Energy Innovation 2026 report.

Carbon Capture Gains Policy Momentum

Government Strategies and Policy Support

Carbon capture, utilization, and storage (CCUS) technologies are increasingly integrated into government strategies aimed at decarbonizing heavy industry and existing energy infrastructure. This development supports SDG 9 by fostering innovation and infrastructure modernization, and SDG 13 by mitigating climate change impacts.

Policy frameworks are expanding globally to address sectors where electrification or fuel switching is challenging. For example, Denmark launched a carbon capture and storage fund in 2025 with a budget of approximately $4.2 billion. This fund provides 15-year contracts covering CO2 capture, transport, and permanent storage, applicable to emissions from fossil fuels, biomass, or atmospheric sources.

Challenges and Progress

• A recent government tender in Denmark attracted only two bids from an initial pool of ten, highlighting policy design challenges in complex environments.
• Despite this, the initiative is considered partial progress toward achieving SDG 13 targets.

Carbon capture technologies are advancing through the innovation pipeline, moving from early research stages to large-scale demonstration projects. Several “first-of-a-kind” commercial initiatives are underway to validate the technical and commercial viability of large carbon management projects.

However, the report notes a 20% decline in reliance on certain large-scale CCUS applications currently under construction, indicating ongoing challenges.

Financing and Deployment

The primary obstacle for developers is securing financing to transition from pilot projects to full commercial deployment, a challenge common to many large energy technologies. This “missing middle” financing gap exists because projects are:

1. Too costly for venture capital alone
2. Considered too risky for traditional lenders

To address this, governments are increasingly providing support through:

• Joint ventures with industrial partners
• Long-term offtake agreements
• Direct funding mechanisms

These measures help bridge the financing gap and accelerate project construction, contributing to SDG 9 and SDG 13.

Carbon Removal Emerges as a Fast-Growing Sector

Rising Interest and Investment

Alongside industrial carbon capture, carbon dioxide removal (CDR) technologies are gaining rapid interest. These technologies focus on removing CO2 directly from the atmosphere through methods such as direct air capture and engineered storage, supporting SDG 13 by enhancing climate mitigation efforts.

The IEA report identifies carbon removal as part of a new wave of emerging energy technologies attracting significant venture capital investment. Since 2021, seven sectors—including carbon dioxide removal, nuclear technologies, and next-generation geothermal—have compensated for previous declines in funding for electric vehicles.

Investment Trends and Startup Activity

• In the late 2010s, emerging sectors accounted for less than 5% of energy venture capital investment.
• By 2025, these sectors represented approximately one-third of total energy venture capital, reflecting investor confidence in technologies essential for deep decarbonization.
• Nearly 400 companies have been founded in these emerging technology areas over the past decade, with over 60% established after 2020.
• Despite rapid growth, 2025 saw a decline in startups receiving initial funding, indicating potential market adjustments.

Contribution to Sustainable Development Goals

The expansion of carbon removal technologies directly supports:

• SDG 7: By promoting clean energy innovations.
• SDG 9: Through fostering industrial innovation and infrastructure development.
• SDG 13: By enabling significant reductions in atmospheric CO2 concentrations.

Conclusion

Carbon capture and carbon removal technologies are gaining critical momentum supported by government policies and increasing venture capital investment. These technologies are vital to achieving the Sustainable Development Goals related to clean energy, innovation, and climate action. Continued focus on overcoming financing challenges and scaling commercial deployment will be essential to maximize their impact on global decarbonization efforts.

For further information, see the related article: SMI Urges Dedicated Fund To Close CCS Financing Gap.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article discusses innovations in carbon capture and carbon removal technologies, which are part of clean energy solutions.
2. SDG 9: Industry, Innovation and Infrastructure
   • Focus on energy innovation, development of new technologies, and infrastructure for carbon capture and storage.
3. SDG 13: Climate Action
   • Directly related to reducing greenhouse gas emissions and mitigating climate change through carbon capture and removal.

2. Specific Targets Under Those SDGs Identified

1. SDG 7
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • Target 7.a: Enhance international cooperation to facilitate access to clean energy research and technology.
2. SDG 9
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
   • Target 9.b: Support domestic technology development, research and innovation in clean energy technologies.
3. SDG 13
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
   • Target 13.3: Improve education, awareness-raising and human and institutional capacity on climate change mitigation.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicators related to carbon capture and storage (CCUS) deployment:
   • Number and scale of carbon capture projects implemented (e.g., Denmark’s CCS fund and contracts).
   • Amount of CO2 captured, transported, and permanently stored (from fossil fuels, biomass, or atmospheric sources).
2. Indicators related to innovation and financing:
   • Venture capital investment amounts in emerging clean energy technologies including carbon removal.
   • Number of startups founded and receiving funding in carbon capture and removal sectors.
   • Progression of technologies from pilot to commercial scale (e.g., “first-of-a-kind” projects).
3. Policy support indicators:
   • Government budgets and contracts supporting carbon capture and removal projects.
   • Policy design effectiveness measured by tender participation and project initiation.

4. Table of SDGs, Targets, and Indicators

Source: carbonherald.com