Canada Needs C$2.2 Billion and Stronger Policy to Close Its Carbon Removal Gap by 2030

Canada must mobilize C$2.2 billion in new public and private investment to close a critical capacity gap in its carbon dioxide removal (CDR) industry by 2030, according to Carbon Removal Canada's newly released Tracking the Tonnes 2026 report. The country must reach 2 million tonnes of annual CDR capacity by 2030, but its 16 operating projects can currently remove just 98,250 tonnes of CO2 per year, well short of the target.

The report measures a 1.9-million-tonne annual gap that must be filled in just four years. Canada's operating capacity has tripled since 2023, showing real progress, but growth nearly stalled over the past year, adding just 150 tonnes between 2025 and 2026. A pipeline of 38 projects represents nearly 12 million tonnes of planned annual capacity and an estimated C$9 billion in investment, but most remain idle, waiting on funding, buyers, and policy clarity before construction can begin.

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Funding Falls Short at the Critical Stage

The C$2.2 billion estimate amounts to less than 0.5% of the C$500 billion that Canadian financial institutions have committed to critical sectors, but reaching early-stage CDR companies is proving difficult. Of the 15 equity deals recorded in Canada's CDR sector since 2024, 13 closed at or before the Series A stage. Deal flow also declined sharply, dropping from six deals in 2025 to three in 2026, as tighter capital markets hit climate technology across the board.

Projects that advance beyond early-stage financing face what the report calls a demonstration gap. These projects are too large for startup funding but carry too much risk for traditional project finance. Without targeted support at this stage, companies stall precisely where cost reductions become possible. Two projects under construction in Ontario and Saskatchewan are expected to add 27,500 tonnes of annual capacity by the end of 2027, which would grow Canada's current operating capacity by nearly 30%, but the country needs far more than that to stay on track.

Corporate Demand Remains a Weak Spot

A 2025 survey by the Pembina Institute, published as the Growing Curiosity report, found that only 4% of 247 surveyed organizations in Canada were active purchasers of durable CDR credits, while 88% were entirely disengaged. High per-tonne prices are the main barrier. Among those who were active buyers, 67% planned to make purchases before the end of 2026, signaling latent demand that stronger policy could unlock.

Na'im Merchant, Co-Founder and Executive Director of Carbon Removal Canada, framed the challenge plainly in the report's introductory letter: "We risk falling behind."

Government Steps Are Promising but Not Enough

The federal government has started to respond. In March 2026, Canada became one of the first countries to issue a standing offer for the procurement of permanent carbon removal, committing C$10 million to buy credits from domestic projects. That same month, the Advance Carbon Removal Coalition brought together federal agencies, major financial institutions, and clean technology companies around a shared goal of mobilizing C$100 million for Canadian CDR by 2030. In September 2026, Ottawa announced plans to develop a framework under Article 6 of the Paris Agreement, which could allow Canadian projects to sell credits to international buyers.

Still, the report concludes that Canada's overall policy progress in 2026 was modest. The European Union earned the top grade in the report's international scorecard, having adopted a formal carbon removal certification framework and proposed large-scale removal procurement within its emissions trading system. Germany placed second, graded B+, for legalizing commercial-scale storage and embedding CDR into industrial decarbonization contracts. Canada holds a mid-pack grade, ahead of the United States where federal rollbacks have destabilized the market, but trailing Europe's leaders on building the long-term demand signals that attract investment.

What Would Change the Trajectory

A January 2026 report by the Canada Energy Regulator identified 78 CDR companies and 48 active and planned projects across the country, with scaled technology costs ranging from roughly US$10 to US$300 per tonne depending on the removal method. Canada holds meaningful advantages, including geological storage capacity, low-carbon electricity, and an established mining and forestry base, but Carbon Removal Canada says those strengths alone will not deliver the 2030 target.

The organization calls for five priority actions: including CDR in Article 6 international frameworks, adding removals to compliance markets like the Clean Fuel Regulations, funding demonstration projects through Natural Resources Canada's Energy Innovation Program, expanding investment tax credits to cover pathways like surficial mineralization, and scaling federal procurement into a multi-year purchasing program. The report estimates roughly 20 Canadian companies could begin building demonstration-scale projects in 2027 if the right support is in place. The pipeline is real. What Canada needs now is the policy and capital to match.

About Carbon Removal Canada

Carbon Removal Canada is an independent non-profit based in Toronto, Ontario, dedicated to the rapid and responsible scale-up of carbon dioxide removal in Canada. The organization conducts policy research, advocates for CDR-supportive regulations and funding programs, and maintains the Carbon Console, Canada's first public-facing CDR project database. It publishes the annual Tracking the Tonnes progress report series to benchmark national progress on CDR deployment and investment. Carbon Removal Canada is a project of the Clean Prosperity Foundation. Visit carbonremoval.ca for more information.