Climeworks Is Cutting 22% of Staff as US Climate Backlash Hits Carbon Removal

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Another challenge is that carbon removal doesn’t have a “natural” market, said Robert Hoglund, co-founder of CDR.fyi. Companies making sustainable aviation fuel, for example, will be able to sell the fuel in the market if they can make it as cheap as fossil fuels. Demand for carbon credits depends on companies voluntarily choosing to offset their emissions. 

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So far, the market has been dominated by one buyer: Microsoft Corp. “Carbon removal as an industry is fragile,” said Eli Mitchell-Larson, co-founder of carbon-removal advocacy group Carbon Gap.

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That means carbon removal startups are in a more precarious place than most climate startups. Globally, venture capitalists invested about $110 million in DAC startups during the first quarter of 2025, down by roughly 46% from a year ago, according to Pitchbook.

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“I definitely expect quite a few DAC companies to fold this year and next year,” said Hoglund. “In the long run, maybe there will be five or so with the best technologies.”

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Despite the job cuts to preserve cash, Wurzbacher says Climeworks is continuing to raise money. And he added that Climeworks is on the lookout for acquisitions in case smaller DAC startups fail to secure funding. 

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Last year, global average temperatures were 1.5C above pre-industrial levels. The Paris Agreement calls for “pursuing efforts” to keep temperatures below that threshold, which will require not just halting greenhouse gas emissions but also pulling excess from the atmosphere. The best science shows the world will likely need to remove billions of tons a year by mid-century, a scale the carbon removal industry is nowhere close to. 

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Climeworks’ pilot plant, called Orca, has the annual capacity to trap 4,000 tons of CO2, but it has never captured more than 1,000 tons in any year since its construction was completed in 2021. It’s building another one, called Mammoth, with the capacity of 36,000 tons, but Wurzbacher said the construction is running slower than he would like. 

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“We have chosen to take a step-by-step approach,” said Wurzbacher. Climeworks has made a series of improvements going from Orca to Mammoth. But they “also introduced new challenges,” he said. For context, CO2 emissions from fossil fuels and cement were estimated to reach 37.4 billion tons last year, according to the Global Carbon Project.

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The next stage in growth is the Louisiana factory as part of Climeworks plan to capture as much as 1 million tons of CO2 per year by 2030 and 1 billion tons by 2050. Given the decisions of the Trump administration, Wurzbacher said it’s clear the Louisiana plant will be delayed. If it is canceled, he said the company could shift focus to projects it has lined up in Canada, Germany and Saudi Arabia—though those would likely be smaller at 200,000 tons per year.

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“Policy whiplash hurts not only climate progress, but also business confidence and economic stability,” says Erin Burns, executive director at environmental nonprofit Carbon180.

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But investors don’t necessarily see Climeworks’ job cuts as a red flag of deeper troubles for the DAC industry as a whole. “A downsizing like this is just right-sizing the burn and setting the company up to more successfully grow,” says Alex Roetter, managing director at Moxxie Ventures, a San Francisco-based venture capital firm that invests in direct air capture technology. Moxxie isn’t an investor in Climeworks.

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—With assistance from Jennifer A Dlouhy, Michelle Ma and Sommer Saadi.

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