Optimizing Direct Air Capture Similar to Recovering Spilled Wine

Imagine sipping a glass of wine in the bathtub after a long day at Gastech 2024 in Houston.

The glass tips—5 fluid ounces of wine splash into 80 gallons of water—and now the task at hand is to recapture the wine at its original concentration.

Most would agree this would be quite a difficult undertaking.

Direct air capture (DAC) poses a similar challenge, said Martin Perez, assistant director of carbon management for the U.S. Department of Energy’s Office of Clean Energy Demonstrations (OCED), during a DAC session on Sept. 18 .

“It doesn’t matter how great your technology is. It will always be difficult,” Perez said. “Direct air capture will always be your tool of last resort. There’s always going to be a lower hanging fruit.”

But Perez said the need for DAC technology is still huge, as the emissions produced historically still need to be captured at some point.

Becoming a leader in such a market requires putting some capital at risk, and that’s the kind of investors that DAC companies should be searching out, he said.

Unlike other technologies that capture carbon from concentrated industrial processes or diluted sources near emission point sources, DAC technologies extract CO₂ directly from the atmosphere at any location for sequestration or utilization. It is one of the most difficult and expensive carbon capture techniques. With only about a couple of dozen DAC facilities operating globally, DAC is still considered a nascent process.

Financing, technical challenges and the growing momentum behind DAC projects were among the topics discussed among executives from Climeworks, 8 Rivers Capital, Airhive and the DOE.

To incentivize DAC developments, the U.S. is investing $3.5 billion to develop four regional DAC hubs with the potential to capture at least 1 million metric tons of CO₂ annually. Additional funds are being made available through competitions and the Bipartisan Infrastructure Law.

‘Not a blank check’

OCED focuses on managing risks from developing and scaling new clean energy technologies such as DAC. The office recently awarded $50 million to the South Texas DAC hub, led by Occidental Petroleum subsidiary 1PointFive. The amount is part of the federal government’s cost share of up to $500 million.

“The government’s support is not a blank check. There’s basically a contract that we negotiate with the recipient by which we commit to provide certain support over a certain timeline,” Perez said. In turn, the recipient’s project plan must be approved by the DOE and performance metrics must be hit before funds are gradually released, he said.

How much the recipient contributes varies: it could be 50% of the funds for large projects or 30% for technologies with a lower technological readiness level, he said. And, of course, the technology must actually capture carbon.

“We’re going to have our engineers look at it. … So you can’t have a perpetual motion machine. The physics needs to work. The chemistry needs to work, and also the economics,” Perez said. “I want to make sure that you have enough money to complete the project.

“I don’t want to be in a situation where we provide support, and we end up funding something that becomes a crater in the ground and a monument to how government doesn’t do things the right way.”

But funding from government alone won’t be enough to accelerate DAC.

Perez sees successful projects being backed with strategic investments from equity investors who believe in the technology and are willing to put their own capital at risk, he said.

Doing DAC

Climeworks, the Swiss-based company that started up a DAC facility designed to capture up to 36,000 tons of CO₂ in Iceland, finds itself in sort of a gap when it comes to financing.

Early stage investors view Climeworks as too mature in the DAC space while traditional institutional investors see the company as too nascent, said Savannah Bush, strategic partnerships lead of North America for Climeworks.

“One of the challenges for Climeworks is we have to show, especially for our new facilities, before we have shovels in the ground, that a certain proportion of our capacity is already spoken for, just like an LNG facility,” Bush said. “We’ve had to get really creative when we're doing these long-term offtake agreements. Our average deal length [is] 15 years.”

Finding companies with economically hard-to-abate emissions is not a challenge.

“But if they’re a commoditized industry, they can’t afford the direct air capture,” she said. “Fun fact: in 2023, the average price of a carbon credit was $6 per ton, and we are more expensive than that. It’s just slightly more expensive. … So, we always say that we’re trying to sell an F1 [Formula 1] car to people that don’t have driver’s licenses.”

Partnerships, however, come into play. For example, when the company looks for storage partners, it looks for companies that can serve as service providers and offtakers, she said. That moves projects closer to a final investment decision.

Gaining interest, lowering costs

Panelists seemed to agree that companies are interested in DAC. Some are buying DAC credits; some are choosing to be OEMs; and some companies are investing in DAC projects as they look for capture partners, according to Rory Brown, cofounder and CEO of Airhive.

“You can also sell your units of your technology to developers, and then, of course, you’ve got the utilization side,” Brown said. “There are lots of utilization opportunities. ... In general, it doesn’t do what DAC was originally designed to do. But I think it’s a very important decarbonization option in the near term, particularly [to] the DAC sector as a whole scale.”

Some segments in the utilization market are willing to pay, he said, noting food and beverage.

DAC is also not a hard sell to Big Tech looking for credits. However, the sector needs to move beyond that “because that is a very small segment of the total potential demand side to things like industrials who are interested in it,” he said.

Airhive is designing ways to decarbonize beverage production by providing air captured CO₂ in partnership with Coca-Cola Europacific Partners.

“DAC is expensive,” Brown said, but costs can come down if the technology is kept reasonably simple and strong development capabilities are built.

Most DAC companies forecast costs will fall as they scale, added Mike Adams, senior vice president of capital management for 8 Rivers Capital.

“As you scale and as you repeat, you’re going to get learning on the technology,” he said. Another way to bring down costs is to bring in partners.

“We look for partners who understand the technology, understand this space,” Adams added.

Earlier this week, 8 Rivers announced it landed an investment from Japan’s JX Nippon Oil Exploration, a longtime CO₂ sequester, to support Calcite DAC technology.

“If we’re bringing our technologies to market, we know it’s important to show how the solutions are implementable in economic ways to get them more adopted in market,” he said. “A partnership approach is one way to do that.”

Works in progress

All three companies are moving forward with DAC projects.

8 Rivers’ pilot project will test how well the technology absorbs CO₂ from the atmosphere, determine the energy efficiency of operations and how to automate operations to scale. The pilot facility being built this year will be a precursor to a small commercial-scale facility inside a DOE-sponsored DAC hub in Alabama.

Airhive also has a pilot-scale demonstration DAC system underway: Project TENET in the U.K. The company is also pursuing its first scaled commercial facility, Project Carpenter. The facility is expected to begin operations in 2025.

In Louisiana, Climeworks is working with Battelle and Heirloom Carbon Technologies to develop the DOE-funded Project Cypress DAC hub. Climeworks uses a solid sorbent capture and thermal regeneration technology.

“There’s a lot of misconceptions in this space about where we are from price perspective, where we are in technological readiness. ... As much as you can, try to evangelize in your different spaces that DAC is here and DAC is ready,” Bush said.

About 130 large-scale DAC facilities are in various stages of development, according to the International Energy Agency. If all of the projects advance, DAC deployment would nearly hit the level required in 2030 under the Net Zero Emissions by 2050 Scenario, the IEA said. That would be around 65 million metric tons of CO₂ per year captured.

To date, only 27 DAC plants have been commissioned globally, IEA data show.