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The landscape of direct air capture (DAC) technologies is rapidly evolving, driven by new project launches, significant funding rounds, and a growing market for subsidies and financial mechanisms to support these climate-critical innovations.

Startup Innovations 

Recently, the U.S. startup Avnos secured a notable $36 million in Series A funding to advance its hybrid direct air capture system, which intriguingly captures both carbon dioxide and water from the atmosphere. This funding round, led by a subsidiary of NextEra Energy Resources, underscores the increasing interest from both traditional energy sectors and new investors in DAC technologies. Avnos’s technology, originally developed at the Pacific Northwest National Laboratory, has also gained support from strategic partners and early investors like Shell Ventures and ConocoPhillips, highlighting the cross-sectoral collaboration driving this space forward​​.

Another startup company based on technology spun out from Los Alamos National Laboratories is also making significant strides in DAC. Spiritus Technologies recently unveiled its innovative “Carbon Orchard” concept.

By deploying a groundbreaking approach that utilizes geologic sequestration for carbon storage, Spiritus aims to dramatically lower the cost of direct air capture to under $100 per ton. This cost reduction could revolutionize the accessibility of high-quality carbon dioxide removal, making it a feasible option for a broader range of stakeholders. Orchard One, their flagship project in Wyoming, is set to sequester 2 megatons of carbon annually, equivalent to removing the emissions of approximately 340,000 pickup trucks each year. This project underscores the scalability of DAC technology and its power as an engine for job creation​​.

What is “Direct Air Capture”?

DAC is part of a broader suite of carbon capture, utilization, and storage (CCUS) technologies designed to help combat climate change by reducing atmospheric concentrations of CO2. These technologies are varied but can be broadly classified into two main approaches:

  • Chemical Absorption: This method involves the use of liquid solvents that chemically bind with CO2 in the air. As air passes through a DAC facility, the solvent captures CO2 through a chemical reaction. The CO2-laden solvent is then processed to strip out the CO2, which can be compressed and stored underground or used in various applications. The regenerated solvent can be reused in the system to capture more CO2.
  • Solid Adsorption: This method uses solid sorbents to physically adsorb CO2 from the air. These materials have surfaces that CO2 molecules stick to in a process similar to how a sponge absorbs water. After the sorbent is saturated with CO2, it can be heated or pressure-reduced to release the captured CO2, which is then collected for storage or use. The regenerated sorbent is recycled back into the system for capturing more CO2.

Government Interventions

Governments around the world are pouring money into financing to support these projects as they begin to scale.

In the US, the Department of Energy (DOE) is supporting DAC through its ambitious $3.5 billion program aimed at commercializing the technology. This program, part of the bipartisan infrastructure law of 2021, focuses on creating regional “hubs” for DAC, aiming to catalyze the deployment and integration of DAC technologies at a scale necessary for meaningful climate impact​​.

Meanwhile, the EU is making concerted efforts to advance DAC and CCUS technologies through various initiatives and funding mechanisms. One of the key strategies includes the potential integration of industrial carbon removals into the EU’s emissions trading system (EU ETS) or a connected mechanism, which underscores the need for “additional support” due to the high costs associated with DAC technologies at an early deployment stage​​.

Furthermore, the EU’s draft Industrial Carbon Management (ICM) strategy outlines an ambitious plan to inject approximately 50 Mt of CO2 annually by 2030 across the European Economic Area, which includes CCS pioneers like Norway. This is part of a broader goal to significantly increase CO2 injection capacity to at least 250 Mt by 2040. The strategy emphasizes the development of an EU-wide “investment atlas” of potential CO2 storage sites to facilitate investment and includes CCS deployment at a large scale within the EU, supported by a steadily rising carbon price in the ETS​​.

To support these technologies, the EU has established several funding mechanisms. The Innovation Fund is one such mechanism, mobilizing over EUR 25 billion for breakthrough technologies in CCS and CCUS, among others. Additionally, the Connecting Europe Facility (CEF) supports cross-border CO2 transport networks, while other funds like the Recovery and Resilience Facility (RRF) and the Just Transition Fund (JTF) also provide crucial support. Horizon Europe further backs research and pilot projects related to carbon capture technologies​​.

In the UK, new startups like Mission Zero Technologies, a London-based developer of modular DAC technology which raised €25.4 million in Series A funding, continue to raise invesmtent dollars. This funding will help accelerate the development of their DAC product, aiming for a solution that can recover 1,000 tonnes of atmospheric CO2 a year. Mission Zero’s technology is noted for its cost-effectiveness, even at smaller scales, and its compatibility with renewable energy sources​​.

Moreover, the UK is involved in developing large DAC projects, such as the North-East Scotland DAC project, highlighting the country’s commitment to scaling up carbon removal technologies. These efforts are part of a broader global trend toward increasing DAC capacity, with significant developments in the field projected for the coming years​​.

The EU and the UK’s focus on DAC and CCUS technologies through strategic funding, policy initiatives, and cross-border collaborations represents a crucial step towards achieving global climate targets and fostering a sustainable transition to a net-zero economy.

Corporate Buyers Creating Forward Demand

Companies like Climeworks are at the forefront of the DAC industry, recently announcing significant partnerships with the LEGO Group and KIRKBI. Climeworks’ expansion into the U.S. market, with a new headquarters in Austin, Texas, and partnerships with high-profile clients like Microsoft, JPMorgan Chase, and Shopify, further signifies the sector’s growing momentum​​.

Technology companies like Microsoft, Shopify, Klarna, are driving deployments forward with forward market commitments on their own and through the consortium called, Frontier Climate. Through their support — and with funds from the US Government — Heirloom Carbon Technologies has launched America’s first commercial DAC plant in California, capable of absorbing 1,000 metric tons of CO2 per year.

While this amount is a small fraction of overall emissions, the operational deployment of such technology marks a crucial step forward from research to practical application. The facility uses an innovative process involving limestone to capture CO2, which is then utilized in concrete production, showcasing the potential for DAC technologies to integrate with and enhance sustainability within other industries​​.

These developments signal a significant shift towards the operationalization and scaling of DAC technologies. The increasing involvement of major energy companies, alongside substantial federal and private investments, highlights a broader recognition of DAC’s potential role in addressing climate change.

Jobs Boon

All of this investment activity should yield economic benefits as the energy transition accelerates.

In the United States alone, the emerging direct air capture industry could add 2 million jobs to the economy by 2050, according to a report from the Rhodium Group.

The industry is one that tackles the twin problems of carbon emissions and economic growth with a potential solution that, at scale, is a vital part of the decarbonization strategies laid out by the International Energy Agency and the international bodies negotiating the global response to climate change.

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