As we count down to the 4th International Conference on Carbon Dioxide Removal in Milano, we are hosting a series of discussions on the research that will be shaping our sessions this June! 
This research develops a finance-focused 
framework for evaluating the bankability 
of Carbon Dioxide Removal 
projects, showing how commercial 
and regulatory 
uncertainties significantly hinder large-scale deployment of BECCS 
and DACCS 
. By linking project risks 
to credit quality 
and financing costs 
, the authors demonstrate that revenue stabilisation mechanisms such as carbon contracts for difference 
could substantially improve investment viability 
, lower the cost of carbon removal 
, and help scale CDR deployment 
through more effective public–private 
risk sharing.
Full Abstract: De-risking carbon removal through commercial structures and risk allocation in BECCS and DACCS
Authors: JulianSmart Niall Mac Dowell
Carbon dioxide removal (CDR) is increasingly embedded in net-zero strategies; however, commercial deployment remains far below stated targets. This gap persists because CDR projects face compounding frictions, including insufficient CO2 transport and storage (T&S) infrastructure, supply chain and technology uncertainty, MRV liability allocation, and uncertainty over who finances removals and on what contractual basis. While much of the literature emphasises techno-economics and levelised cost targets, the bankability of CDR is often treated implicitly, despite financing costs and credit risk being decisive for scale. We develop a credit-aligned project finance framework that quantifies how uncertainty propagates from project risk to cashflow volatility, credit quality, and the levelized cost of carbon removal (LCCR). Project cashflows are simulated using Monte Carlo uncertainty on key drivers, including input costs, capital overruns, MRV costs, and CO2 T&S costs. Outcomes are mapped against lender and investor criteria using debt service coverage ratios (DSCR) and equity return thresholds to derive bankability metrics and indicative credit profiles. We report results for BECCS and DACCS as they are the primary pathways expected to be adopted in ETS integration. Under current market and regulatory conditions, our simulations indicate that merchant BECCS is predominantly sub-investment-grade (indicative rating distribution centred on B-), with limited debt capacity and near-zero equity feasibility at conventional hurdle rates. Bankable outcomes are highly sensitive to financing conditions. At 30% debt, the share of simulations meeting the lender constraint (DSCR ≥ 1.2) increases from 8-12% to 51-71% as tenor extends from 5 to 15 years across ± 200 bps pricing. At 50% debt, it falls to 2-31%, and at 70% debt, it is effectively zero across tested tenor-price combinations. We then evaluate how commercial structures reallocate risk to restore bankability and how this translates into the implied cost borne by markets and/or public funds. We model revenue support (e.g., CCfD-style price floors) and other contracting counterfactuals as cash-flow-equivalent stabilisation mechanisms that vary strike/price levels, tenor, and contracted volume. Low stabilisation levels leave bankability close to the merchant baseline regardless of coverage, whereas higher stabilisation (e.g., a ~$300/tCO2 revenue floor) can move BECCS from speculative-grade to investment-grade as contracted coverage rises. This credit transition materially reduces financing premia embedded in LCCR. Merchant BECCS LCCR is $373-382/tCO2, while revenue stabilisation can reduce LCCR to ~$318/tCO2. At the policy and upscaling level, we translate bankable contract requirements into expected and tail (stress) fiscal exposure over contract tenor, providing a transparent basis for CCfD (and other contract) design that mobilises institutional capital while managing public balance-sheet and budget risk.
If BECCS and DACCS are mostly unbankable today, what would a truly finance-ready carbon removal market look like? 
