US backs direct air capture with $1.2bn in financing

The US Biden administration recently made $1.2bn in financing available to two commercial-scale direct air capture (DAC) projects in Texas and Louisiana, in recognition of the technology as a credible tool to address global CO2 emissions. The move could kickstart the development of other such facilities across the US.

The US department of energy (DoE) on August 11 announced that it would provide $1.2bn in funding for Project Cypress in Calcasieu Parish, Louisiana, and the 1Point5 facility (DAC-1) in Texas from the Regional Direct Air Capture Hubs Programme. As part of President Biden’s Bipartisan Infrastructure Law, the programme is meant to encourage investment in other large-scale carbon removal schemes. Project Cypress and DAC-1 are expected to lead to the creation of nearly 5,000 jobs in the region and remove up to 2mn tonnes of CO2 annually, the equivalent from the annual exhaust of 445,000 gasoline automobiles.

Project Cypress is led by US innovative industry Battelle, which is joined by Climeworks Corp, Heirloom Carbon Technologies and Gulf Coast Sequestration (GCS), which will sequester the CO2 in deep storage geology in the Texas, Louisiana, and Gulf of Mexico region. GCS plans to eventually have a capacity to sequester 10mn t of CO2 annually.

The DAC-1 hub in Texas is being financed and developed by 1PointFive, a company created by Oxy Low Carbon Ventures (OLVC). When it starts operations next year, it will be the world’s largest DAC plant with an initial capacity to capture 500,000 t of CO2 and later 1mn t of CO2. The facility is meant to demonstrate that DAC is a viable option for reaching a state of net zero.

Technology from Occidental’s recently-acquired Carbon Engineering will drive the project, which will be scalable. Worley has been awarded the contract for front-end engineering and design (FEED). The technology features air contactors that pull in atmospheric air that in turn reacts with a potassium hydroxide solution to bind and separate the CO2. This process leads to a series of chemical reactions that yields a pure, compressed stream of CO2 that will be transferred to underground sites where it can be permanently stored.

Besides the funding now provided by the US Government, United Airlines has made a multi-million-dollar investment in the project.

In its statement announcing the funding for the two projects, the DOE said it is dedicated to ensuring that the selected Regional DAC Hubs projects deliver community benefits and avoid harm in those communities while also advancing the development of carbon capture, transport, and storage systems. The DOE also said it intends to publish a series of funding opportunities for projects and prizes focused on supporting the development and commercialization of a suite of CO2 removal technologies. 

“Cutting back on our carbon emissions alone won’t reverse the growing impacts of climate change; we also need to remove the CO2 that we’ve already put in the atmosphere – which nearly every climate model makes clear is essential to achieving a net-zero global economy by 2050,” Jennifer Granholm, secretary of energy said. “With this once-in-a-generation investment made possible by president Biden’s Investing in America agenda, DoE is laying the foundation for a direct air capture industry crucial to tackling climate change,” she said. 

DAC’s value

The International Energy Agency (IEA) has endorsed DAC as playing “an important and growing role in net zero pathways,” and encourages “an accelerated scale-up” in order to reach a carbon removal target of 980mn tonnes/year by 2050. DAC provides “a way to balance emissions that are difficult to avoid, including from long-distance transport and heavy industry, as well as offering a solution for legacy emissions,” the IEA said in a report released last year. 

DAC is not an alternative, but “part of a comprehensive strategy” for reaching net zero, according to the IEA. It has several advantages in its approach to tackling emissions in that it makes a relatively small land and water footprint, and there is a high degree of assurance in both the permanence of the storage and quantification of the CO2 removed.

The CO2 captured in the process can be used as feedstock for a range of products including beverages, chemicals, cement and synthetic aviation fuels. 

In July, the French-US company Dioxycle announced that it had raised $17mn for further research in transforming CO2 emissions into high-value, sustainable chemicals, particularly ethylene, at a cost that is equal or lower than ethylene derived from hydrocarbons.

“With a market size of some $180bn, ethylene is the world’s most consumed organic chemical, used in the production of textiles, plastics, furniture, and construction materials but has a hefty carbon footprint. By removing fossil fuels from the production of ethylene, Dioxycle has the potential to slash CO2 emissions by 800mn tonnes every year, representing over 2% of the global total,” the company said in a statement announcing its new funding, which should enable the firm to move to first on-site demonstrators and an industrial prototype before preliminary commercialization within the next five years.

Dioxycle was launched in January 2021 and was supported in its pursuit of funding by climate tech investors Lowercarbon Capital and Breakthrough Energy Ventures Europe (BEV-E), with participation from Gigascale Capital. 

Since the start of the decade, governments around the world have allocated nearly $4bn specifically to DAC development, according to the IEA. In the US alone, Washington has made $3.5bn funding available for the development of four DAC hubs (including the two in Texas and Louisiana) and $115mn in a DAC Prize programme. Furthermore, DAC companies have raised some $125mn in capital since 2020.

During August, international oil and gas operator Occidental Petroleum announced that it would pay $1.1bn for Carbon Engineering Limited, a climate solutions company that is focused on the global deployment of large-scale DAC technology. In a statement announcing the acquisition, Occidental said it intends to use the technology to build about 100 DAC plants, about 30 of which will be located in the Permian Basin in Texas, where the South Texas DAC Hub (DAC-1) is under construction.

“The acquisition enables Occidental to catalyse broader development partnerships for DAC deployment in the most capital efficient and valuable way,” Occidental said. The two firms have been working together since 2019.

Currently, the largest operating DAC facility is the Orca project operated by Switzerland-based Climeworks. Orca is located in Iceland due to the nature of the basalt rock in the island’s geology. The facility started operations in September 2021, and it is presently removing 4,000 t of CO2 annually and storing the captured carbon in the rocks below.

However, Climeworks in June announced the groundbreaking for a new DAC facility in Iceland named Mammoth that marks a considerable scale-up from Orca. The company said it looks to have a multi-megatonne capacity in the 2030s and a gigatonne capacity by 2050. 

A company statement said the recent increase in equity to $650mn enables it to concentrate on large modular DAC and storage facilities. Climeworks said it will invest further in technological development and grow the company globally. 

The Mammoth facility is Climeworks’ 18th project and its second commercial DAC and storage plant. It has the nominal CO2 capture capacity of 36,000 t annually when fully operational. Construction is expected to last 18-24 months. The plant will capitalise on a growing and dynamic market demand. It has already signed several 10-year offtake agreements in recent months.