Carbon Removal Has Policy Momentum. Why Do Projects Still Struggle?

Governments and corporate buyers are directing more attention toward carbon dioxide removal (CDR), including technologies that capture and permanently store biogenic carbon dioxide. Yet policy momentum alone does not guarantee that individual projects will be commercially viable.

The fundamental challenge is that carbon removal projects must bring together several complex elements at once:

• A suitable source of carbon dioxide

• Capture technology

• Transport and storage infrastructure

• Credible environmental documentation

• Long-term buyers

• Sufficient revenue to support substantial upfront investment

For pulp and paper producers, this creates both an opportunity and a difficult strategic question. Mills can generate significant volumes of biogenic CO₂ through biomass processing and combustion. Capturing that carbon could open new revenue pathways, but only when the entire commercial chain works.

Key Takeaways

Why Is Carbon Removal Attracting More Policy Support?

Carbon removal is gaining policy support because reducing new emissions may not be enough to meet long-term climate goals. Some residual emissions are expected to remain in sectors that are particularly difficult to decarbonize. This increases the potential need for technologies that remove CO₂ from the atmosphere and store it durably.

Bioenergy with carbon capture and storage (BECCS) is one such pathway. Trees and other biomass absorb atmospheric carbon as they grow. When the resulting biogenic CO₂ is captured during industrial processing and placed into permanent geological storage, the pathway may produce a net carbon removal. This assumes that feedstock sourcing, processing emissions, transport, storage, and accounting requirements are also properly addressed.

Governments are attempting to accelerate this market through subsidies, tax incentives, grants, competitive tenders, and public purchasing programs. Corporate buyers are also supporting projects through voluntary carbon-removal purchases and advance offtake agreements.

These mechanisms can improve project economics. But they do not eliminate the underlying commercial risks.

Why Do Carbon Removal Projects Remain Difficult to Finance?

Carbon removal projects require large investments before meaningful revenue begins. Developers may need to finance multiple elements to move forward:

• Capture equipment

• Compression systems

• Pipeline or shipping connections

• Storage access

• Monitoring and verification systems

• Long-term operational support

At the same time, the market value of a removal can vary significantly according to its durability, methodology, location, certification, delivery date, and buyer. A project cannot assume that a headline carbon price available in one market will apply to its own removals.

This produces a familiar infrastructure problem: developers need dependable future revenue to finance construction. Meanwhile, buyers may hesitate to commit until they have confidence that the project will be completed and deliver verified removals.

Long-term offtake agreements can help resolve this mismatch. However, voluntary purchases alone may not provide the scale or duration required to support every project. Many developments will depend on a combination of policy support, private capital, and contracted demand.

How Do Transport and Storage Affect Project Viability?

Capturing the CO₂ is only one part of the carbon-removal chain. The gas must also be conditioned, transported, injected into a suitable geological formation, and monitored to demonstrate permanent storage.

That makes geography critically important. A mill located near established CO₂ infrastructure or a viable storage site may face a very different cost structure from a comparable facility that must help develop a new transport network.

Shared infrastructure could lower costs by serving multiple industrial facilities, but it introduces coordination risk. Capture projects, pipelines, terminals, and storage sites must become available on compatible timelines. A delay in one part of the chain can affect every other participant.

For mills evaluating BECCS, the commercial question is therefore not just,

“Can we capture biogenic CO₂?”

The question is,

“Can we deliver a verified removal to an end buyer at a competitive total cost?”

Why Does Policy Support Not Always Create Bankable Revenue?

The carbon-removal policy landscape remains fragmented. Programs differ in how they define eligible projects, calculate removals, evaluate biomass sourcing, support capital investment, and distribute funding.

Some mechanisms reduce upfront costs. Others reward each metric ton captured and stored. Competitive auctions can provide price discovery, while tax credits may improve operating revenue. Each approach assigns risk differently between governments, developers, investors, and buyers.

Policy timelines can also differ sharply from project-development timelines. Carbon capture projects may take years to permit, finance, construct, and commission. Changes in political priorities, eligibility rules, or funding availability during that period can materially affect expected returns.

Accordingly, developers must distinguish between general policy momentum and revenue that can actually be incorporated into a bankable project model.

What Role Could Pulp and Paper Mills Play?

Pulp and paper mills occupy a potentially valuable position because many already handle large volumes of biomass and generate concentrated biogenic CO₂ streams. That combination could make parts of the sector well-suited to physical carbon removal.

However, opportunity will vary considerably by facility. Mills need to consider:

• The volume, concentration, and consistency of available biogenic CO₂

• The origin and traceability of the biomass feedstock

• Capture, energy, and operating requirements

• Proximity to transport and permanent storage infrastructure

• Eligibility under relevant incentive and certification systems

• Potential buyers and the duration of available offtake agreements

• Alternative uses for the CO₂, including emerging e-fuel pathways

• The interaction between carbon revenue and the mill's wider energy and product strategy

Traceability is especially important. A buyer is purchasing a verified environmental outcome, not simply a volume of captured gas. Mills must be able to document the carbon's biogenic origin, establish the sustainability of the underlying biomass, and account for emissions across the value chain.

What Will Separate Viable Projects From Overly Ambitious Proposals?

The strongest projects are likely to be those that combine favorable site characteristics with multiple sources of commercial support. That could include public incentives, durable offtake agreements, access to shared infrastructure, credible certification, and the flexibility to evaluate multiple markets for captured biogenic CO₂.

Carbon removal may become an important new market for the pulp and paper industry. But the opportunity should not be assumed. Successful investment decisions will depend on understanding how carbon values, policy incentives, infrastructure costs, competing utilization pathways, and traceability requirements interact.

Turn Emerging Forest-Based Markets into New Opportunities

This post is adapted from the Pulp Mill Bio Solutions: Forest-Derived Feedstocks and Carbon Markets monthly report. Each issue examines how pricing, trade flows, policy developments, and evolving demand are creating new revenue opportunities for forest-derived feedstocks and byproducts. Examples of covered topics include:

• Tall oil

• Lignin

• Biogenic CO₂

• Other materials serving fuel, chemical, and carbon markets

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