What's happened?
The European Commission has published a proposal to revise the EU Emissions Trading System to support more ambitious clean energy deployment in the face of rising energy security risks. For context, the EU’s cap-and-trade carbon market that was launched in 2005 to mitigate climate change across power, industry, aviation and shopping sectors by setting limits on emissions.
One proposed change is to recognise permanent domestic carbon removals within the scheme. Permanent removals mean storing carbon dioxide safely for centuries or millennia, and cover technologies such as direct air capture with carbon storage (DACCS), bioenergy with carbon capture (Bio-CCS) and biochar. Direct air capture is a type of carbon dioxide removal that uses chemical reactions to pull carbon dioxide out of the ambient air. Air passes over a solid or liquid material that traps the CO2 and lets the rest through, and the captured gas is then released for storage or use.
Carbon dioxide removal (CDR) is not yet part of the ETS compliance mechanism. The Commission funds early-stage removal technologies indirectly through the Innovation Fund financed by ETS auction revenues. The newest proposal creates a pathway to promote permanent removals. It is under consideration and will not, on its own, bring more projects online, but it is a step in the right direction for an industry that needs more policy backing.
Who is building the DAC market?
The market is still small but has been growing. As of early 2025, there were around 150 DAC companies worldwide, up from a handful less than a decade ago, and roughly three dozen plants were operational, according to the World Resources Institute. Climeworks, a Swiss pioneer using solid sorbent technology, is one of the most established, and according to the International Energy Agency (IEA) is the only company with operational projects in Europe. Its Mammoth plant in Iceland has the potential to capture up to 36,000 tonnes of CO2 a year, stored underground through mineralisation.
The US are the leading country for major DAC project developments. The Stratos plant in west Texas is designed to capture 500,000 tonnes a year once fully operational, and two further US projects backed by the Department of Energy's Regional DAC Hubs programme are designed for 1 million tonnes each.
Some DAC projects use only electrochemical processes instead of using both electricity and heat, which could reduce energy needs. Phlair is one company exploring this technology with significant offtake agreements, counting Google and JPMorgan as customers, while Germany's Ucaneo and the UK’s Mission Zero Technology are also developing electrochemical technology in this space.
The cost challenge
DAC is an expensive removals method, which is in part owing to it being a young technology. It’s also because separating CO2 from air, where it sits at very low concentration, takes up a lot of energy. A few sources cite DAC as the most expensive carbon credit cost per tonne of CO2. Senken, a science-backed standard for carbon removal, found prices as low as €12 for credits from the Brazilian rainforest and as high as €1000 for a tonne from direct air capture. DAC companies are looking to bring down the costs to between $250 (€216) and $400 (€347) per tonne by the end of the decade. However, this might not be low enough. Analysts suggest that at below €200 per tonne, DAC would start to compete with cheaper but less permanent options such as afforestation credits. Additionally, the projects being developed are struggling to move out of the pilot phase and see efficiency gains.
The Climeworks Mammoth plant in Iceland, which is one of the few operational projects in Europe, has demonstrated cost and capacity issues. This project only sequestered a net of 105 tonnes CO2 over 2025, out of its expected 36,000 tonnes. The ramp-up issues of the technology have led the company to reduce its expectations of bringing the costs down to $100 per tonne of carbon by 2030, to reach between $250-$350. Climeworks also cites issues of macroeconomic instability and changing policy priorities that weigh on its confidence in the sector.
Mint Selection sees policy certainty and boosted incentives as critical to scaling. The gap between current market prices and the technology's operating costs remains too wide. Demand also remains limited to the tech sector with Microsoft alone having bought more than 80% of all carbon removal credits to date. Tighter restrictions on emissions from governments is needed to push industrial users into investing in DAC.
Looking ahead
DAC has an important role to play in the climate crisis. A leading body, the Intergovernmental Panel on Climate Change (IPCC) recognises this necessity in its mitigation pathways. DAC provides the benefit of permanent storage of carbon that offers more security that natural-based solutions such as afforestation. However, as we have highlighted, high costs are a key barrier to the viability and scalability of the technology. We highlight that the reforms such as the EU’s ETS are important for encouraging growth and while we expect the market to continue pushing technology innovation, more regulatory and financial support is needed to move DAC into a competitive market.
As carbon removal scales, demand for the people who can build it will follow. At Mint Selection, we support the energy transition across renewables, storage, hydrogen, carbon capture (CCUS) and emerging removal technologies, connecting energy companies with the specialist talent these projects depend on. If your organisation is building in carbon capture and removal and needs the team to deliver it, contact us at hello@mintselection.com.