Carbon Capture Startups Face Staff Cuts Amid U.S. Funding Uncertainty

Wall Street Journal

16-05-2025

Carbon startups are facing staff cuts amid worries over the Trump administration axing funding in the U.S.
Swiss direct air capture startup Climeworks said this week that it was trimming staff due to macroeconomic uncertainty, shifting policy priorities in some jurisdictions and over uncertainty related to whether it will receive funding for its plant in the U.S.
'To ensure Climeworks remains resilient through today's global challenges and able to lead toward a gigaton-scale future, we are planning to reduce the size of our team,' Climeworks co-founders Christoph Gebald and Jan Wurzbacher said in a letter. 'As the best funded scale-up in the industry, we are grateful for the trust of our investors, but we need to be mindful that our funding must be managed with diligence.'
Likewise, Heirloom, another direct air capture start up based in the U.S., said it was also being forced to cut staff due to uncertainty over its U.S. operations.
'As we scale our operations, Heirloom continues to adapt to meet the demands of a rapidly evolving industry,' the company said in a statement. 'That includes making strategic changes to our team—letting go of some employees while hiring for new roles essential to executing our priorities.'
In both cases, the worry surrounds funding from the Energy Department, and whether $1.8 billion of financial support from the agency had been cut for projects in Texas and Louisiana—something which had originally been committed by the Biden administration.
Climate and environmental funding has taken a sharp cut under President Trump, with a new bill from Republicans this week cutting subsidies for electric vehicles among other climate policies.
The draft framework put out Monday by the Ways and Means Committee took aim at a raft of subsidies put in place by the Biden administration, to help fuel tax cuts proposed by the new administration. Trump has referred to the Inflation Reduction Act, the bipartisan bill which committed billions in environmental subsidies, as 'the green new scam.'
The DOE didn't respond to requests for comment. Heirloom added its project in Northwestern Louisiana hasn't yet been paused and it was working with the DOE on its future.
Carbon credits have been touted as one of the ways that companies can meet their carbon goals, by offsetting their emissions. In particular, technical solutions like direct air capture which suck carbon emissions from the air, have been lauded as a way to permanently remove greenhouse gases from the atmosphere.
Both companies have had strong backing from the corporate sector, with companies like Microsoft, Google parent Alphabet, and payments firm Stripe, under an umbrella group known as Frontier, among those that had committed to buy carbon credits from the firms.
That said, those projects often have much higher costs, with the credits also fetching up to $1,000 per metric ton of carbon removed. Nature based projects, which have less permanence, often sell for less than $100 a ton, while other technologies such as biochar or enhanced rock weathering also sell at much lower prices compared with direct air capture, often around the $100 to $300 range.
'With over 140 DAC companies founded, most spots on the starting line are now taken and the race to determine which technologies can scale most cost-efficiently is on,' said Robert Höglund, head of carbon dioxide removal at the impact firm Milkywire and co-founder of CDR.fyi, a carbon removal database. 'In this explorative phase, as well as during initial scale-up, subsidies will be crucial to make DAC cost-competitive with other CDR methods.'
Write to Yusuf Khan at [e-mail]