Why cost reduction alone cannot deliver bankable carbon dioxide removal.

Carbon dioxide removal (CDR) is indispensable for net-zero, yet CDR projects remain unbankable for institutional lenders. Using a stochastic project-finance model in which financing terms follow from simulated cash flows rather than being assumed, we examine when BECCS and DAC become bankable. Under unhedged conditions bankability is effectively zero, with lender coverage failing across most of the financing space and equity hurdles met in less than 0.1%. Contrary to the emphasis on cost reduction, credit-worthy offtake is the primary determinant. Learning alone lowers the levelized cost of removal by up to 38%, yet leaves projects unbankable, whereas offtake raises BECCS bankability to 43%, or 57% with learning. DAC requires offtake above US$2,500 per tCO2 and remains marginally bankable, reflecting sole dependence on carbon revenues. An electricity-anchored BECCS pathway can reach investment grade without fully contracted carbon revenues. These results show where revenue support must be targeted to mobilize institutional capital.