Financial barriers CCU start-ups currently face financing challenges due to long development timelines, high capital requirements and immature business models. Innovative CCU technologies face a distinct set of financing challenges that hinder their path to commercial viability. These challenges stem from long development timelines, high capital intensity, fragmented policy support and an immature market structure. As a deep tech sector,60 CCU technologies typically progress through extended R&D cycles and require significant funding to demonstrate and scale up. At each stage of this innovation curve, the risk-return profile shifts, presenting unique barriers to capital access and misalignments with investor expectations. The result is a series of “valleys of death” — funding gaps that arise during transitions from research to pilot, pilot to demonstration and demonstration to full-scale deployment. Overcoming these requires patient, risk-tolerant capital and more strategic alignment between technology development and financial ecosystems. Investment trends in CCU 3.1 Investment in CCU companies has increased sharply since 2020 (see Figure 9). Fuels, chemicals and intermediates have seen the greatest increase in investment across all pathways. Investment in technologies for producing CO2-treated building materials has also increased since 2021, but still lags behind other emerging pathways. US-headquartered companies continue to dominate CCU investment flows, with a surge in 2022 (likely driven by expansion of the 45Q tax credit and capital grant funding under the IIJA) that significantly improved the economic viability of carbon capture projects.Since 2023, regional investment flows have diversified, with European and Canadian CCU developers capturing increased market share. In Europe, this shift has coincided with the implementation of RED III, which has created new incentives and greater policy clarity for carbon utilization in fuel applications. The trend underscores the growing importance of regional policy frameworks in shaping investor confidence and capital allocation. While the US retains a leadership position, regulatory certainty in Europe and Canada is enhancing their competitiveness (see Figure 10). Investment in CCU companies has increased sharply since 2020. Fuels, chemicals and intermediates have seen the greatest increase in investment across all pathways.3 Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways 21

Defossilizing Industry Scaling-up CCU 2025