The below message was originally sent out to Noya investors as a way to provide the company’s perspective on how a second Trump presidency might influence the infant carbon removal industry.
My fellow Noyans,
Regardless of who we Americans might have voted for in this week’s presidential election, the reality of a second Trump term will have yuge impacts for climate tech startups like Noya. In this note, I want to share some initial thoughts on our position as well as implications for the broader carbon removal industry.
While the political landscape has shifted, Noya’s mission and the global need for innovative climate solutions remain unchanged. Overall, we’ve heard two key messages from policy experts and research analysts since the election. First, they anticipate the clean energy transition will slow down, but won’t entirely change course under a second Trump administration (climate innovation is a cargo ship, not an e-foiling jet ski). Second, if any changes are made in the carbon removal space, it will be with a scalpel, not an axe.
The reasons for the second point above are clear: the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL) have together helped generate hundreds of billions of dollars in private investment into projects that could create roughly 200,000 jobs — with the vast majority of these investments going to congressional districts led by Republicans. As such, we expect many Republicans will push back on more sweeping changes to the IRA.
The most likely targets for rollbacks are EV subsidies, tax credits for clean energy generation, climate disclosure requirements, and environmental justice initiatives. Where federal carbon removal funding programs are in place (primarily the Department of Energy), we do expect implementation to slow down. However, it is also possible that permitting approvals may accelerate due to the removal of certain requirements related to Justice40 and Community Benefits Agreements, which could unlock faster DAC project deployment.
Critically, we expect federal funding for direct air capture, notably through the 45Q tax credit, to remain strong. 45Q benefits both DAC companies and oil & gas companies that perform point source carbon capture, giving it ongoing bipartisan support. Most notably, Oxy’s CEO Vicky Hollub has been a very vocal supporter of the IRA for these tax credits, and other oil majors have voiced similar types of support. While many climate tech industries will likely receive less funding than they would’ve if Harris won the White House, DAC remains poised to continue receiving federal support.
While there may be impacts to US federal policy on DAC, it's crucial to remember that one national election doesn’t preclude meaningful political action at the state and international levels, nor does it alter our customers’ growing demand for carbon removal. California appears poised to pass a version of SB308 in the years to come, which would mandate increasing levels of carbon removal procurement to reach the state’s 2045 net zero target. The European Union recently passed the Carbon Removal Certification Framework, a significant step toward integrating carbon removal into EU climate policies. The Canadian Government committed to spending at least $10M on carbon removal between now and 2030 to reach its goal of net-zero emissions in government operations by 2050. And earlier this year, Japan became the first country to accept durable carbon removals in a national emissions trading system.
Looking beyond policy-driven demand-side market mechanisms, we anticipate continued and growing voluntary demand for carbon removal from corporates. Many companies have voluntarily made commitments to purchase high-quality carbon removal, with estimates of 30M tons per year of carbon removal demand by 2030.
On top of this, the Science Based Targets initiative (SBTi) is expected to provide guidance in 2025 for how companies should set interim carbon removal targets as part of net-zero commitments. SBTi targets currently cover ~5Gt of emissions. Companies are required to use high-quality carbon removal for any residual emissions in their net zero year, up to 10% of their baseline value (that is, 500Mt in total). We’ve heard rumors that SBTi guidance may land at ~7% of this residual emissions figure starting in 2030, which would bring up to ~35M tons of additional carbon removal demand by 2030.
Taken together, these show strong (and voluntary!) tailwinds for carbon removal market growth over time.
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In sum, we anticipate slowed progress on clean energy generation, but also fewer federal regulatory requirements and faster permitting processes, along with ongoing bipartisan support for the $180/t 45Q tax credit for direct air capture + storage projects. We expect companies, states, and other countries with aggressive climate targets to continue supporting carbon removal scale-up — and Noya’s flexible, differentiated approach will allow us to go where the best opportunities exist.
Trump’s victory almost certainly means the United States will make less progress towards our climate targets. By some estimates, the US will emit 4B additional tons of CO2 by 2030. This makes the work we’re doing at Noya that much more important.
We will continue to monitor how things play out in the run-up to inauguration day and will keep you updated on any impacts to the business.
Onward,
Josh and the Noyans