How Carbon Removal Loses
Why the "pre-compliance" story for carbon removal may not survive the geopolitical moment we’re living through
This is a summary of a solo episode of the Reversing Climate Change podcast. You can listen to the episode on Apple Podcasts, Spotify, YouTube, or wherever you enjoy your shows. You can also listen to the full episode right below this paragraph.
Quick Takeaways
The foundational assumption of carbon removal has been the “pre-compliance story”: the voluntary market is a bridge to compliance-driven demand that will arrive soon.
That story depends on Japan, Canada, the EU, and the UK advancing climate policy while the US steps back.
Every one of those countries is now facing significant political headwinds against climate action.
Right-wing populism is surging globally, and it competes directly with climate policy in every case.
Japan’s new leadership is focused on energy security and defense, both of which crowd out decarbonization.
Canada’s Mark Carney has a carbon markets background, but faces cost-of-living crises, Arctic and conventional security threats, and Albertan secessionism.
The EU is projecting low growth, facing rising energy prices, and watching right-wing parties gain ground across the continent.
The UK’s Reform party is growing rapidly at the expense of the Tories, mirroring patterns seen everywhere.
Climate action requires collective sacrifice, and that story becomes nearly impossible to sell if major economies opt out.
If the US doesn’t participate, European leaders face an impossible pitch: raise taxes and energy prices for a goal that can’t be met without global coordination.
Carbon removal companies should plan for both continuity (regression to the mean) and discontinuity (a fundamentally reshuffled world order).
This isn’t doom—it’s a call to build strategies that survive either future.
The Pre-Compliance Story
There is a story that carbon removal has been telling itself for years. You’ve heard it. You may have said it. You may believe it.
It goes like this: the voluntary carbon market and the big corporate offtake agreements we’re seeing are necessary but not sufficient. They’re buying time. What we’re really waiting for is compliance — regulation that automates demand, that obligates it, that makes carbon removal not a nice-to-have but a legal requirement. We’re in a pre-compliance moment, and the biting point is coming.
This story has been enormously useful. It gives startups a reason to keep building despite thin order books. It gives investors a thesis for patient capital. It gives employees in the space a reason to stay through the lean years.
But it depends on a specific geopolitical configuration that may no longer exist.
The Countries We’re Counting On
After the US pulled out of the Paris Agreement, the UNFCCC, and torpedoed the IMO shipping deal, the pre-compliance story didn’t die. It just moved. The new version says: fine, the US is out, but China is leading the clean energy revolution, and Japan, Canada, and the EU will carry climate policy forward. No need to panic.
Each of those pillars is wobbling.
Japan elected Sanae Takaichi of the Liberal Democratic Party, who is focused on energy security and defense — priorities that compete with decarbonization. They don’t have to, but from the right, they are rarely framed as complementary.
Canada nearly elected Pierre Poilievre by double digits before Trump’s “51st state” rhetoric shifted the race. Mark Carney won, and he has deep carbon market credentials. But he’s now navigating cost-of-living crises, a need to rapidly militarize, Albertan separatism, and Arctic security questions that will define Canadian politics for decades. Climate policy will survive in Canada, but it faces pressures that make it far less reliable as a global anchor than we’d hoped.
The EU is projected at around 1% growth, energy prices are surging, and right-wing populism is advancing in nearly every member state. The National Rally is projected to do well in France. The AfD is growing in Germany. Reform is surging in the UK. Even center-right leaders like Friedrich Merz face pressure from their right flanks that makes ambitious climate policy harder to advance.
The Collective Action Problem
Climate action has always been a collective action problem, but the current moment makes the logic especially brutal.
Meaningful climate policy requires sacrifice—higher taxes, higher energy prices, or at minimum the opportunity cost of investing in decarbonization rather than more immediate concerns. Voters will accept that sacrifice under specific conditions: when they feel safe, when their cost of living is manageable, and when they believe that other major economies are making the same sacrifice.
Remove any of those conditions and the politics collapse.
Right now, all three are under strain simultaneously. Voters across the developed world feel less safe (security competition, Arctic tensions, the Iran conflict). Cost of living is rising (energy prices, inflation, low growth). And the world’s largest economy has conspicuously opted out of the collective sacrifice.
That leaves European and Canadian leaders in an impossible position. Telling your population that their net worth went down, inflation went up, and energy prices are higher—but they need to keep sacrificing for climate goals that can’t be met without global coordination—is not a winning electoral strategy. It requires a kind of patient, selfless political maturity that no electorate has demonstrated at scale.
The Maslow Problem
There’s a Maslow’s hierarchy at work here that’s hard to argue with. If you’re struggling to buy groceries, or worried about whether your country is safe from its neighbors, or watching your purchasing power erode—you are not going to prioritize threats that are abstract, probabilistic, and decades away.
Climate change is the most important long-term threat facing humanity. But it is precisely the kind of threat that recedes when more immediate ones advance. And right now, immediate threats are advancing everywhere.
The smart play is to frame climate policy in ways that address those immediate concerns simultaneously—energy independence, job creation, cost savings. And in fact, much of the clean energy transition does exactly that. But there is always going to be some residual cost, some amount of sacrifice and disruption that can’t be reframed away. And it’s that margin where the politics are being lost.
Continuity or Discontinuity
When advising companies, there’s a question that increasingly needs to be asked up front: do you want advice based on continuity or discontinuity?
The continuity scenario says this is a temporary disruption. The US will eventually return to something like the liberal democratic order. The populist wave will crest and recede. Climate multilateralism will resume. The pre-compliance story will arrive, just delayed.
The discontinuity scenario says the world order is being fundamentally reshuffled. The rules that governed international cooperation for the past 80 years are changing. Climate compliance may not arrive in any recognizable form for a very long time.
If you’re building a carbon removal company, you can probably design a good strategy for either scenario in isolation. The challenge is that you need a strategy that works across both—or at least one that doesn’t leave you bankrupt if the world you planned for doesn’t materialize.
That’s the real takeaway here. Not doom. Not despair. But clarity. Know what the world is doing. Have a plan for the world you want and a plan for the one you might get. And don’t mistake optimism for strategy.
Full Transcript
Ross Kenyon: Hey, out there. Thank you so much for listening. This is Ross Kenyon. I’m the host of the Reversing Climate Change podcast, which is the show you’re listening to right at this very moment. Before the show starts, if I could ask you please for a very small favor, what I hope is a very small favor, if you could please open up your podcast app, whether it’s Apple Podcast or Spotify, or whatever you use, give the show a full rating on Spotify and Apple Podcasts.
That’s five stars. If your podcast app has reviews, if you could leave a quick review on Apple Podcasts, whatever else you use that does reviews. It’s really helpful. It helps more people find the show. And if you like this show, presumably you’d like it if more people listen to it. If I could ask you to please do that, it would be so appreciated. You can also become a paid subscriber on Substack or on Spotify for $5 a month. You can get ad free listening except for the ads that are you, myself, and bonus content for subscribers only. I haven’t fully set it up on Substack or on the other platforms, but I really should stay tuned on that.
I’m gonna try and get that set up. I already recorded a version of this show and I try to listen to my gut actually as much as I can, and that day I just felt like I wasn’t quite getting it and I wanted to make sure that I could give you the show that I think this topic deserves.
And I think it’s a hard topic to do well because there’s a tendency to overdo it and include way too much information. And I also don’t wanna include too little information in seeming cavalier. Today I’m gonna be making a bearish case for carbon removal. What might lead to carbon removal coming apart at the seams in the world to come? And just so I can say it as clearly as possible, I do not like playing this role. If you know me, I love to help people. I love relating to people. I love trying to make sure that everything gets to where it needs to be.
I’m not trying to steal all the glory for myself. If I were to spend a lot of time gatekeeping, I’m really trying to move this forward because I think climate change is a team sport as the cliche goes. And one thing about not being tied to a specific company in a full-time capacity is I’m able to really focus on an ecosystem building kind of capacity.
If you’re at a company and you know that there’s a party line that you must tow, because there often is, maybe I can give voice to some of those feelings and intuitions and intellectual observances that maybe you’ve had but haven’t felt super safe voicing whether to others or even to yourself, because many of the things that I’m going to talk about today are threatening to the self and your life plans and your ability to pay your mortgage and to have a career that is not as turbulent as maybe your spouse might like it to be.
One of the foundational assumptions of carbon removal to the point that it’s become a bit of a cliche is what I call the pre-compliance story. Whether you call it this or you call it something else, or maybe you haven’t even named it, you’ve certainly heard it, which is that the voluntary carbon market purchases and the big corporate offtake you see are necessary but not sufficient, that we are basically waiting for compliance to automate demand, to obligate demand, and we’re all waiting for the biting point to arrive.
We are waiting for compliance to make sure that climate policy is taken seriously enough that we are able to hit the climate targets we need to not send the world into a desperate overshoot scenario.
And the most recent version of this that you may have heard, maybe you’ve said it yourself and maybe you believe it, and I really do hope that you are correct and that we are still on the trajectory to be in a pre-compliance moment.
Okay. The United States has pulled out of the UNFCCC, United Nations Framework Convention on Climate Change, has torpedoed, for lack of a better word, the International Maritime Organization’s deal to regulate international shipping. It’s pulled out of the Paris Agreement.
But that’s not as big of a deal as it maybe looks because China is still leading the clean energy revolution and moreover, the policy environment in Japan, Canada, the EU, specific member states within European Union are going to carry the day with climate policy.
And so, no need to panic. There’s still going to be enough support here to make sure that carbon removal can scale in the years ahead. I do not think this story is true. I want it to be desperately, I do not like playing this role, but I’ve been studying this, watching the politics and the geopolitics and the international relations and the trends in various electorates, especially since the start of 2025.
And I keep waiting for the high watermark to be visible to me, and I can’t say that I’ve seen it yet. And that was even before the conflict with Iran. And I had recorded essentially an entire podcast on this topic that I decided to scrap. And then this had come along. But I actually think Iran doesn’t pose that big of a challenge to the core ideas I’m going to discuss.
What concerns me about the pre-compliance story is that I think in a post-Trump two world, the three countries or network of countries that I mentioned earlier, all have had substantial electoral changes since that pre-compliance story was written.
Japan elected Sanae Takaichi of the Liberal Democratic Party. Her party picked up a whole bunch of seats in the National Diet of Japan, their legislative body. Admittedly, I know the least about her politics and how Japan operates, but she seems to be quite focused on energy security for Japan. And is focused on defense — those things compete with decarbonization. They don’t have to, but they often do. And coming from the right, they are likely not seen as complementary. I think, or maybe not as much as we might like.
Canada is a place where Poilievre of the Conservative Party was projected to win over Carney by double digit figures and only began to lose because of Trump’s 51st State talk. The 51st State talk really caused problems for Maple MAGA. This 51st State talk really makes me think because it’s one of those things where it’s an own goal. In one sense, it probably would’ve been much better for Trump to have a MAGA or MAGA-esque candidate as the Prime Minister.
And surely he had advisors saying, knock off all the 51st state talk and all this Greenland stuff because it’s freaking out the Canadian electorate. You’re gonna put someone in power in Canada that you really don’t want.
If that advice was given, it doesn’t seem to have been heeded. Which actually concerns me because it makes it seem like that 51st state talk was genuine. There wasn’t some blustery near-term political advantage to it. In fact, it seemed to have caused political problems more than political solutions.
It is not like Canada as the 51st State was a core issue for MAGA that Trump hitting on was rallying the base in some way. It just felt like, where is this coming from? Which struck me as more than likely to be a sincere desire, which is scary. Most of the Canadians I know, they took that 51st State talk very seriously.
It seems that Mark Carney has as well, even though Mark Carney famously has a long background in carbon markets, he’s also in a position now of trying to cut trade deals. Canada has very high cost of living and has to focus on militarizing in a way that is genuinely new for it. And all of those things compete with things like climate action.
He also has to contend with Albertan secessionists who potentially want to join the US or maybe want to just be independent of Canada and the US, but certainly will have more affinity with Trump than with the Trudeau-Carney sort of orbit.
I think Canada will continue to be a climate leader, but I’m also very aware of the fact that Canada is going to face many more challenges in the future. One of the big geopolitical questions I have for the future is, does it help a country to be in the Arctic? Or does it make it more vulnerable? One of the stories around why climate change may not be so bad in the future deals with the Arctic and says that this will make shipping routes much faster around the world. It will open up access to many more types of natural resources, and this will be a really good thing.
Yeah, but I think it’s very likely that we will see intense security competition and potentially even war in the Arctic during our lifetimes. I guess it depends on how old you are right now at the time of listening for your lifetime, but I think that’s a very real possibility.
And while Canada will certainly benefit in many ways, it also exposes it to a great deal of risk. Its internal politics also are not uniform and are not uniformly oriented towards climate policy as we saw from how the last election went. And I do not feel confident that Canada has a permanently durable climate politics in it. The electoral competition may show that Canada has more pressing and urgent problems than climate.
They need to make sure that they have security. They need to make sure that the Arctic is protected. There are things that they need to be looking out for, and obviously many of those things do overlap with climate. But people are not choosing climate policy in a vacuum. Politicians whose jobs are always up for being called back and replaced are trying to figure out how to balance climate politics versus more kitchen table issues like cost of living and “are we safe from our neighbors” kinds of questions.
And those other questions in a sort of basic Maslow’s hierarchy of needs way are going to ring much more powerfully. If you’re having a hard time buying enough groceries for your family or feeling like you can’t get ahead in this economy, it’s really hard to think about how bad the world is going to be in several decades if we can’t make sure we’re hitting our climate targets and sacrificing right now. There are ways of making that pain less — ways of doing more with less that actually make our lives better.
But in many cases, addressing climate change will require higher taxes or just the opportunity cost of investing in climate technology rather than more quotidian issues that voters care about. I don’t feel like we can look to Canada as always going to be a place of climate policy refuge that we had maybe hoped it would be. And I hope that is the case for the future. I think Canada has durable institutions, but it also faces political pressures that essentially the entire world is experiencing right now.
And that brings me to Europe and the European Union in particular. I think it’s safe to say that within carbon removal, the EU has the most hope placed upon it. Everyone is looking towards Europe with the hope that various things like the carbon border adjustment mechanism, CBAM, or the EU ETS, the emissions trading system, or direct procurement by various states like Germany are going to have for carbon removal. There’s talk of the buyer’s club and there’s various other acronyms of European policy that depending upon your preferred type of carbon removal offer various types of supports.
I have a hard time imagining a near future where Europe will be able to advance significant climate policy. Even in the last couple weeks we’ve seen the EU ETS be criticized by mayors in Germany and others. But one thing I’m looking towards closely, and granted I’m an American and I’m not living in these places and swimming in the same political culture as Europeans are. But I still try to track pretty closely what’s happening in Europe for various reasons.
And quite a lot of what I am seeing is the growth of right-wing populism in the same way that we’re seeing essentially everywhere. The National Rally in France is projected to have a very good year. Friedrich Merz in Germany — he’s a Christian Democrat and right of center.
But I think a lot of older school center-right politicians face some pretty significant electoral challenges, especially with the growth of AfD, the Alternative for Germany. Right-wing populists just have a more aggressive story that — if you’re an American, think about how different MAGA feels from Ronald Reagan, or even Bush Senior and Bush Junior, or even some of how Bill Clinton spoke because Bill Clinton, of course, as a quote unquote “new Democrat,” the idea was very much that we’re gonna balance the budget and we’re not going to spend and focus on giving welfare, but we actually need to be fiscally conservative in a way that you wouldn’t associate with someone like LBJ or FDR.
It has a stately, tweedy, older school vibe to it. I think that’s even more pronounced if you look to the UK and you think about how the Tories are doing relative to Reform. I’ve mentioned this elsewhere, that when I was a kid, United Kingdom Independence Party, UKIP, when I was younger I remember hearing about Nigel Farage. And then now to see 20 years later, you’re seeing how Reform, the party that Nigel Farage is a part of now, the growth of them has been absolutely staggering.
And I think the Tories are really struggling to figure out what their story is. Because there’s always a funny kind of strange bedfellows vibe with right-wing politics where there often are working class traditional values kinds of voters and people, but then certain types of conservative thought is extremely intellectual. Think of someone like William F. Buckley as sort of an archetypal tweedy conservative type. The average working class person, I don’t think they’re looking to William F. Buckley and thinking like, this is the guy I wanna listen to. But they do wanna listen to someone like Trump who sort of has this populistic, non-philosophical, not talking about Aristotle or looking back in time to English institutions and how important Magna Carta is. It’s more about kitchen table issues and the culture war and things like that, that I think the more stately types of conservatives are very poorly suited to win in a debate with. And you’re seeing this happen where statelier, older school conservatives don’t have as good of a story to compete with more radical right-wing candidates. So you are seeing around the world right now, much more radical right-wing governments ascend.
It would divert from the show to go into why this is happening and why now, and there are still a number of theories for how this is working. A fair amount of the causality belongs to how the internet operates and is monetized in the political economy of the internet. I’ll leave that to someone else who has studied this more closely. All we need to know, though, is that right-wing populism is a very, very dangerous trend for climate action.
And when people point to places like the EU as a bastion of climate policy that will survive even though the US has pulled out of essentially all of the major climate policy frameworks internationally, even if there are still some very good things happening inside of the US that have lingered on even within Trump two.
I think the thing to watch out for here is that Europe is projecting low growth rates. In the show that I recorded previously, I had heard that Europe was poised for an average of 1% growth rates over 2026, which is pretty low, and that was before Iran and the cost of oil shot above a hundred dollars a barrel.
That can only put more pressure on the European system. It changes the relationship of various European states to Russia and those that are friendlier with Russia want to maintain their access to Russian gas. And even the US has relaxed restrictions on Russian energy. To make sure that the war remains less controversial, because obviously one of the main moves that Iran is doing and will continue to do is trying to make this experience as embarrassing for the US and as costly as possible by raising energy prices worldwide.
It’s one of those kitchen table issues that really focuses the mind of politicians where they know that their voters are going to care a lot about their energy prices and whether they have a job and whether they get a raise, because whatever money that they were gonna get has now gone into paying higher energy prices, which are already very high in Europe. It’s gone.
Those kinds of issues can be very challenging for governments. And if you want an example, you don’t even have to look that far. And you can think about the Gilets Jaunes of France who were protesting over a tax on gasoline. And you don’t really want to encourage politics like that if you are aiming for stability and for climate action. And when there is just less breathing room with low economic growth, with higher energy prices and with right-wing populists gaining in so many countries, I don’t think there’s going to be as much room for radical climate politics.
Germany has carbon removal procurement in its sights — do you think that’s likely to survive if the AfD continues to grow in electoral support? My guess is probably not.
People are looking towards the UK ETS — is that likely to survive the growing ascendancy of Reform? My guess is probably not.
And one additional reason why this concerns me so much is that climate action basically only works if we all or most of us band together and say, we’re all going to restrict ourselves in the same kind of capacity. We are going to invest the money in decarbonization, invest in carbon removal, because that is how the world order is structured. And if we don’t do this, we will be an outsider to what are seen as the most legitimate countries on earth, the most powerful, the most trustworthy, who are all making those sacrifices and looking askance at us when we fail to meet our obligations and are trying to do the thing that is for our collective wellbeing.
But the US is world leader and it’s an open question to what degree the US wants to remain the world leader that has been since the end of World War II versus change its status to something more like a regional hemispheric hegemon. Open question.
But if that were to play out, it’s difficult for me to imagine European leaders arguing to their populations that even though the US is not pursuing climate action, the EU should still raise their own taxes, raise their own energy prices to enact meaningful climate action, because climate action essentially only works if all or most of these economies are engaged in the transition.
If major powers just sit it out, those other countries are making sacrifices that actually don’t get us to the goal. Maybe it buys us a little time, but I think that’s a really hard story to sell to voters. Going to your population and saying, your net worth went down this year. Inflation went up, your earnings went down. Energy prices are up, but we need to sacrifice, even though it’s not going to stop climate change, we need to do it because it’s just the right thing to do. I think that is an electorally losing strategy. I’m really sorry to say. I wish we were able to have a sort of symbolic, beautiful, sacrificing kind of moment where that could be successful.
I would think it would take a lot of patience and maturity and character to do that, but I don’t think that can happen. Especially not at the scale necessary to do that in the hopes that maybe the US gets it together and either at midterms or at the next administration.
I’m really concerned that that’s probably the way that it’s going to go. None of those dynamics feel conducive to climate multilateralism, climate action for the world. It seems like those are really powerful headwinds — the zeitgeist is blowing into our face, and it’s hard to imagine how we’re going to come back out of that.
Those are the biggest reasons why I’m personally bearish right now on the future of carbon removal. I don’t think the pre-compliance story is going to hold unless the zeitgeist switches again, and it’s possible that it does. But these trends are so global and it doesn’t seem like the momentum has petered out quite yet.
And this doesn’t even get into all of the stuff about Greenland and playing so aggressively with one’s allies in NATO. And how dramatically that can reshape the world order. The behavior of the US around Greenland — it reminds me of someone who maybe wants their significant other to break up with them, but isn’t willing to break up with them themselves. And so behaves badly in the hope that their significant other will dump them. That’s kind of how that whole thing felt to me. I’m like, oh, wow, you just really don’t care about doing this to NATO, huh? I feel like that’s a really surprising thing to do, and I feel like something like NATO no longer existing in a trans-Atlantic capacity, at least for the US, I think would be a major, major change to the world system. NATO’s durability and even the European Union’s durability is something that I think is a big open question and none of it bodes well for climate policy. I think anything that’s disruptive, anything that raises prices in this way is likely to make climate action more difficult.
Because when people are concerned about security or the cost of living, more abstract, probabilistic, future-oriented threats recede. How could they not?
You can try to make your climate policy focus on ways of addressing all of those things at the same time. And in fact, it’s probably the smart thing to do. But there’s just probably always going to be some amount of sacrifice and cost necessary that we will have to shoulder to deal with the world that we have created and are passing on to our children.
Given the way electoral politics is changing around the world and the rise of right-wing populism, I don’t think that we can depend upon Japan, Canada, and the European Union, and to a lesser extent the United Kingdom, to carry us through climate policy.
I hope that I’m wrong. I’m actually really sick of thinking these thoughts and saying them. I keep saying them in meetings. People ask me, what do I think about this? I’m like, this is where I am at and maybe I’m just gonna send them this episode from now on because I’ve been staring into this for a long time.
And it’s just not looking good from basically any angle. In fact, one of the famous lines that I think this is one of the best jokes of all time — I don’t even actually know if it’s true or not, it might just be apocryphal — but it’s George Orwell’s famous response to Joseph Stalin.
Stalin is alleged to have said, “If you wanna make an omelet, you’ve gotta break a few eggs.” And George Orwell retorted, “Where’s the omelet?” And that’s essentially how it feels to me right now. The world has been changing massively in the last year plus, and I’m looking for the omelet, and I cannot seem to find one for climate, let alone on any other front really.
When I’m advising companies in carbon removal and climate tech broadly, I’m often put in a position to ask them if they would like advice based around continuity or discontinuity. Do we regress to the mean? Is this a temporary phase that we all pull back from and say, oh, that was a thing that we did for a while, but the US is still broadly on the track that it was previous and that we just made a small detour and then we all came back to the liberal democratic order, and that’s what we’re gonna commit to for the foreseeable future. Or are we entering a period of reshuffling when the world order is being reconfigured?
And if you want the answer based around continuity, I can give you a pretty good sense of how to build a successful carbon removal company, but you need to keep inside of your probability distribution what you do when the world is fundamentally changed and does not regress to the mean.
Whatever you’re doing in climate, make sure you have some plans for how your company can be successful if the world does not go back to the way that we thought it was. Because it may not.
Hopefully that isn’t too dour a message. Again for the third or fourth time, I don’t like being in this position. I like being helpful and optimistic, but I think it’s really important, especially if you work on anything strategic, that you have a clear vision of what the world is doing and what the various inputs are.
In hindsight, some of them will matter less than one thought they would, and I hope that this is the case for this podcast. But I think we all need to prepare for a future in which the pre-compliance story does not arrive on time — or maybe does not arrive at all.
Thanks for listening.
Cool! Bring George with you and the red pill.:)
Well put. Things are so confuddled to me like asking, "Well, where's George Orwell?"