By Susanna Twidale, Valerie Volcovici, Simon Jessop and Peter Henderson
(RockedBuzz via Reuters) – The world is failing to reduce carbon emissions fast enough to avert disastrous climate change, a nascent truth that is giving birth to a technology that has been marginal for years: extracting carbon dioxide from the air.
Leading the charge, the US government has offered $3.5 billion in grants to build the factories that will capture and permanently store the gas – the largest effort of its kind globally to help stop climate change. through Direct Air Capture (DAC) and extended a $180/ton tax credit to support the burgeoning technology.
The sums involved dwarf funding available in other regions, such as Britain, which has pledged up to £100 million ($124 million) for DAC research and development. That compares with $12 billion in federal spending to drive demand for personal and commercial electric vehicles, according to Boston Consulting Group estimates.
While bids for funding for the DAC hub in the US were slated for March 13, the government and some companies have yet to reveal full details about the applications, many of which RockedBuzz via Reuters is reporting for the first time. The Department of Energy plans to announce the winning bids this summer.
Worsening climate change and inadequate efforts to reduce emissions have pushed the issue known as carbon removal to the top of the agenda, and UN scientists now estimate that billions of tons of carbon will need to be sucked out of the atmosphere every year. to reach a target of limiting global warming to 1.5 degrees Celsius.
While much of this will come from natural solutions like planting more trees or increasing the soil’s ability to sequester carbon, permanent carbon removal like DAC will also be needed.
Yet the list of obstacles is long.
The largest rig to date is only catching 4,000 tons a year and costs are high, the talent pool is fledgling, and corporate buyers for credits remain largely on the sidelines. The role of oil companies in the space has also raised eyebrows, and developers need to rally support for hub communities that have often been harmed by major energy projects.
Furthermore, CO2 must be stored permanently.
The US government has said it would support four hubs, and interviews with more than 20 state, federal, corporate and investor sources show at least nine applications have been filed in a first round, with two major Occidental Petroleum projects seen as strong. contenders .
It offers three tiers of funding, ranging from $3 million for early stage feasibility studies to $12.5 million for engineering design studies to $500 million for projects ready to complete the procurement, construction and operation phases.
Among the most active companies so far has been Swiss start-up Climeworks, which has raised more than $800 million to date and is backed by Singaporean sovereign investor GIC.
In his first major interview since taking part in applications for three hubs — in Louisiana, California and North Dakota — Chief Executive Officer Christoph Gebald said they all have the potential to be scaled back to the US government’s goal of a million tons, known as a megaton, a year.
The company plans to increase headcount from the low to double-digits to more than 100 over the next 18 months, and by 2030, the three hubs could create 3,500 direct jobs and tens of thousands of indirect jobs, if given the green light, he said. .
The real challenge, however, was access to talent, Gebald said. “Where are you going to take those people in the next 30 years?…there are no college programs on the DAC.”
Gebald said it would cost “easily billions” of dollars to create a megaton facility and the firm could seek to raise funds depending on the success of its three deals, though it will likely wait until 2024 to get back to market.
“The lion’s share of the capital is for assets, so it really depends on the construction schedule.”
Also bidding for the financing is start-up CarbonCapture Inc., in partnership with Frontier Carbon Solutions and a new company called Twelve, which will use the captured carbon to produce sustainable aviation fuel in Wyoming, Jonas Lee told RockedBuzz via Reuters. chief commercial officer of CarbonCapture.
“This industry is fragile right now, but all the arrows are lined up in the right direction. Now, we need to do our job which is to put iron in the ground and start removing significant amounts of CO2 from the atmosphere,” Lee said .
“Hopefully this helps in a virtuous circle that further galvanizes support from companies buying carbon credits, and perhaps from state and local governments.”
The sites involved in the offer extend throughout the country, but they all have many things in common: they are close to cheap renewable energy and plenty of space to store gas.
Perhaps unsurprisingly, this has caught the attention of some of the big incumbent energy giants eager to position themselves for what could be a multibillion-dollar industry as demand for fossil fuels wanes.
Occidental Petroleum said it is well positioned for federal grants for what could be the largest Direct Air Capture facilities in the world. He declined to say whether he had requested support for two DAC projects he is developing in Texas.
Oil companies are also well ahead of getting impoundment wells licensed, guaranteed to keep the CO2 in the ground.
“We have pore space to begin with, from tanks that are depleted or running low, that we’ve managed that can now be re-sequestered by engineers who know how that tank reacts,” said Chris Gould, Chief Sustainability Officer, at California Resources Corp, an oil company aiming for net zero emissions and is working with Climeworks on a project in California.
But oil companies are still viewed with skepticism by some in the carbon removal community.
“It’s really critical to the success of direct air capture whether it’s removing legacy emissions and not continuing to use fossil fuels,” said Erin Burns, executive director of Carbon 180, a DAC consulting firm. “We hope to see hubs that have no ties to fossil fuel production.”
Most DAC processes use a liquid or solid designed to naturally absorb carbon dioxide, then heated or treated to extract the carbon to put underground.
But the energy to run the process, factories, pipelines and storage is expensive. The jury is out yet on whether it can be implemented on a scale large enough to affect the climate, at a cost the world can bear.
Through a series of technical processes, it can cost more than $1,000 to capture and lock a ton of planet-warming carbon dioxide, yet the US government has aimed for a price of $100 a ton.
Heirloom Carbon, a California company that with Climeworks is part of an application for a Louisiana hub, sees it as a realistic target, while CarbonCapture told RockedBuzz via Reuters it expects to reach $250 a ton by 2030 and $150 a ton by a decade.
Achieving a cost and scale that can affect the planet will mean designing an easily duplicable plant that does the same thing over and over again, like a fast-food restaurant franchise, said Dan Friedmann, chief executive officer of the DAC Carbon Engineering firm. supplies technology to Occidental.
“It’s kind of a McDonald’s thing,” she said.
($1 = 0.8056 pounds)
(Reporting by Susanna Twidale and Simon Jessop in London, Valerie Volcovici in Washington, and Peter Henderson in San Francisco Additional reporting by Sabrina Valle in Houston; Editing by Lisa Shumaker)