The Air Mining Rush of Carbon Capture

Last week the world’s richest person, aka Elon Musk, threw down the gauntlet on Twitter, announcing a $100m prize for carbon capture tech. To support Elon on his hunt, and to help the rest of us frame up this notoriously misunderstood market, we went to the start of Carbon Capture, Utilization, and Storage (CCUS) to explore the capture – as an addendum to our prior review of utilization or carbon to value.

At 417ppm CO2 concentration levels, we’ve moved on from targeting carbon neutral to carbon negative. Despite the UNFCCC’s frantic message that we must scale up significant carbon capture in order to reduce existing atmospheric CO2, CCS commercialization is in early innings, plagued by a lack of financial and regulatory incentives, high price tags, and clunky large-scale deployment. There are currently 26 commercial CCS facilities mopping up ~40M captured CO2 tonnes per year, primarily via EOR (enhanced oil recovery). To put this in perspective, there’s a veritable lake of 10 to 15 gigatons or 10,000M to 15,000M CO2 tonnes per year that needs to be removed by 2050 just to keep below two degrees!

Fortunately, buoyed by the expanded federal 45Q tax credit and recent stimulus bill incentives, the clean up crew reinforcements are beginning to arrive. 45Q carbon credits are going for $50 per sequestered ton, more than double a decade ago. “There’s more and more federal funding to support R&D for a huge pipeline of earlier stage innovations with enormous potential. We’re just at the very beginning,” comments Noah Deich of Carbon180, the premier carbon removal NGO.

Recent corporate action has also marked the dawn of the carbon removal age. Notably, Microsoft, Amazon, Stripe, Shopify, and other tech giants have cumulatively committed to invest +$3b in carbon negative companies and projects. Outside of Silicon Valley, Occidental Petroleum and United Airlines joined 1PointFive to make essential DAC infrastructure, including engineering the world’s largest DAC plant in Texas to capture 1M tons of CO2 annually.

A Lay of the Air

Laying out the differences between DAC and Point-Source (source: Carbon 180, Interface Focus)

Carbon capture approaches bifurcate into DAC (direct air capture) where carbon is captured from the ambient air or Point-source capture from a localized, industrial site. Logically, point-source beats DAC in economic efficiency given the lower capture costs from higher CO2 concentrations. Compared to a coal plant’s point source emissions, DAC projects require ~300x greater contact area to capture the same volume of CO2.

Capturing the Value Chain

CCS projects are applying the renewable energy development playbook:

💳 Project developers finance the project

⛏️ Carbon capture startups supply the technologies

👷 EPCs (engineering, procurement and construction companies) build the plant

💰 Customers commit to buy removal supply

🛒 End-users offtake the CO2

CO2 end-users either apply it to utilization (e.g. fuels, diamonds, etc.) or storage (e.g. EOR, mineralization, etc.). Government incentives like tax credits (45Q, LCFS) and a price on carbon expedite market forces. Similarly, courageous corporate buyers have started to put their money where their mouths are to seed demand for first of a kind (FOAK) projects.

The Air Miners and the Pickaxe Sellers

Startups developing the pickaxe technologies for carbon capture (h/t to Madison Freeman)

Within this “Air Mining” value chain, startup activity is most active in developing the pickaxe technology and materials which can significantly improve the economics of CCS projects. Leading technologies capture carbon through liquid solvents or solid sorbents which act as capture agents that bind with CO2 in air/ gas flows. Liquid solvents are most mature (repurposed from their prior O&G applications) with novel startups starting to employ solid sorbent technologies. We talked to Carbon Engineering, Svante, Carbon Clean, and Mosaic Materials about how they’re pushing the boundaries of capture technologies and ratcheting down costs.

Carbon Engineering is partnering with 1PointFive to engineer the world’s largest DAC plant in Texas, which will capture 1 million tons of CO2 annually. CE’s team was the first to project future DAC costs below $100/ton of carbon. CEO Steve Oldham describes:

• “Unlike capturing emissions from industrial flue stacks, the fundamental value of our technology is that it can eliminate any carbon dioxide emission, from any place and any moment in time. We believe this flexibility will be critical as nations around the world seek to achieve net zero emissions while continuing to protect and grow their economies. It provides them with a way to address the most difficult-to-abate sources of emissions, and to do so at a known cost, while also providing a tool to remove the legacy emissions that we can no longer stop.
• Our business model is to license our technology to local plant development partners around the world to build and operate plants. We’ve purposely chosen this model because it gives us the ability to deploy our solutions as quickly and broadly as possible, and to start making a meaningful impact on the huge climate challenge. In August, 2020, we signed a world-first licensing deal with 1PointFive, a development company formed by Oxy Low Carbon Ventures and Rusheen Capital Management, to build Direct Air Capture facilities in the US. That partnership’s first facility is currently being engineered and, when built, will be the largest Direct Air Capture facility in the world, capable of capturing up to one million tons of carbon dioxide every year.”

Svante’s groundbreaking innovation in rapid adsorption using solid filter made from MOF’s cuts capital costs of existing CCS technologies in half. Svante is also partnering with Climeworks to adapt this technology for DAC. We spoke to President & CEO, Claude Letourneau:

• “Our approach is tailored specifically to the challenge of separating CO2 from nitrogen contained in the flue gas generated in industries such as cement, blue hydrogen, and oil and gas. [Our] filters are made with engineered nanomaterials, which create powerful adsorbent with a high capacity for CO2 capture. This makes industrial-scaled carbon capture a reality, with a single plant capturing a million tonnes of carbon a year, equal to eliminating the annual emissions of more than 200,000 cars or doing the work of 10 million trees.”
• Svante has the lowest capital cost solution for carbon capture critical to the world’s net-zero goals required to stabilize the climate. This is no more a technology challenge but rather one of finding the right capital-light business model to create a commercial framework where policies, finance and industry players are aligned and making money.”

Carbon Clean has developed an integrated point-source capture solution by improving upon conventional amine-based liquid solvents and utilizing next-gen modular systems which reduces equipment size by 10, promotes scalability, and lowering the cost of CO2 capture to $30/ tonne in average. CEO Aniruddha Sharma notes:

• “Carbon Clean is a global leader in low-cost CO2 capture technology. Our patented technology significantly reduces the costs and environmental impacts of CO2 separation when compared to existing techniques. Our key partners include Chevron, Marubeni Corporation and Veolia among many others and we’ve recently joined with Marubeni Corporation to launch ‘Carbon Capture as a Service’ – a first-of-its-kind service delivering a design, build, finance, and operate model - to support and develop CCUS projects.”
• In 2016, we partnered with Tuticorin Alkali Chemical and Fertilizers Ltd. to create the world’s first fully commercial CCUS plant. Located near Chennai, India, this hallmark venture has been achieving over 90% carbon capture rates since it began operation. TAC uses the captured CO2 to manufacture green soda ash — which is then purchased by Unilever as part of their commitment to using renewable or recycled carbon in 100% of their cleaning and laundry product formulations by 2030.
• Of the hard to abate industries, four key sectors stand out as ideal candidates for carbon capture: cement, steel, refineries, and energy from waste (EfW) facilities. Our key strategic partnerships include DAREL, Marubeni, Ikigai and Sistemas de Calor among many others and will help bring an accessible carbon capture solution to industry that lies below the line of $30 per metric tonne cost of CO2 captured.”

Mosaic Materials’ breakthrough sorbent material known as metal-organic frameworks (MOFs) improves a range of applications, from DAC systems to submarines and powerplants, for higher capacity and lower costs. CEO Thomas McDonald explains:

• “Mosaic is commercializing a breakthrough sorbent material for carbon capture systems. At the heart of any carbon capture system is the material that captures the CO2 and so better sorbents are one of the key strategies for reducing carbon capture costs across the board. The chemistry that defines the capture and release of CO2 in our materials is different than other carbon capture sorbents, and that’s what gives the higher performance carbon capture customers are looking for: higher capacity, lower energy, lower costs.
• Sorbents are like CO2 sponges. When any gas that contains CO2 moves through the empty space of the sponge, the CO2 sticks to the surface and you produce a gas stream without CO2. When the sorbent is heated, a high purity stream of CO2 comes off the sponge and the sorbent can be used to capture more CO2. Our materials exhibit much higher capacities for CO2 than other sorbents, especially for the most challenging separations like direct air capture (DAC). Our high capacity sorbents can make DAC systems smaller and more energy efficient and thus can enable drastic reductions in DAC costs.
• Mosaic’s technology has the potential to improve the efficiency of a broad spectrum of carbon capture technologies, but a key part of that is getting the technology effectively scaled to reduce costs. Today, Mosaic is working with customers and partners for whom the performance increase our materials offer is the difference between success and failure. There are a lot of companies, big and small, that are interested in getting a DAC or zero-carbon fuel concept off the ground, but the CO2 capture material is what’s missing for them, and so Mosaic is working on addressing this pain point.”

Key Takeaways and Trends

• Carbon removal is a public good, managed by private “waste removal” companies. CCS looks less like the electricity industry than it does the waste management one. CCS deployment has so far mimicked the renewables tax credit playbook, but collecting and buying CO2 doesn’t have a market like electrons do. The 45Q tax credit certainly helps, but CCS will need a regulatory regime such as a carbon price which starts high to enable nascent technologies to get off the ground.
• In the place of government action, corporates must drive initial demand for high quality permanent carbon removal solutions (vs cheaper, temporary methods like reforestation.) Carbon removal costs will only come down with scale, much like renewables did in the 2010s buoyed by government investments and tax credits. In the early market stage, FOAK projects must be financed by high margin technology companies.
• Carbon capture is a last resort solution. With CCS’ high price tag, it only makes sense for industries with no clear pathway to decarbonization (e.g. cement, steel, hydrogen, chemicals) to prioritize emissions reduction. CCS should not be used as an excuse to continue operating fossil fuel plants which can be replaced by renewables.
• It’s a cost game. The market expects exponential demand for sequestered carbon at the $50/ ton threshold, growing to $100+ in the near future. The question is how quickly can DAC costs drive down from $400-600/ton (assuming that tax incentives hold fast at $35-$50/ton)?
• Carbon to value commands the highest sticker price, but the market is small. Some carbon is sold to soda companies, converted into synthetic fuels, injected into cement, and used as an ingredient in chemicals and plastics production. Today, the merchant market for carbon to value products is extremely limited at ~20M tonnes per year – compared to the 35-40B tonnes still emitted annually. These niche applications can still absorb the high initial price tag of CDR, and play a key role in driving down the learning cost curve.

For more resources on carbon capture, check out the excellent CDR Primer, Prime Movers Lab’s 5-part Medium posts, and Stripe’s Ryan Orbuch insights. Next week, we’ll address nature-based solutions to carbon capture through a deep dive into the soil carbon market.

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