Can direct air capture make a game-changing difference to carbon emissions?

TL;DR

• Direct air capture technologies remove carbon dioxide from the air, condense it, and then either reuse it or store it underground.

• There are currently only 27 DAC plants operational worldwide capturing approximately 0.01 Mt CO2 each year.

• The industry is in the prototype phase with a mix of more established and emerging companies experimenting with different technologies. Solid sorbents and liquid solvents are the most common methods used, but zeolites, limestone and electro swing absorption are intriguing alternatives.

• The energy requirements and financial cost of DAC are high with costs currently estimated to be up to $1000 per tonne of carbon extracted. Despite this, experts believe as the technology scales and renewable energy costs decrease, DAC will become more affordable over time.

• However, investors have seen the potential in these new technologies with governments providing DAC incentives and private investors ranging from Microsoft and Breakthrough Energy Group to Airbus and United Airlines committing millions of dollars.

The detail

For hard-to-abate industries, where electrification powered by renewable energy might not be a viable option, carbon capture, usage, and storage (CCUS) technologies could have a key role to play. Within this category of solutions lies direct air capture (DAC), which represents a significant opportunity to reduce the amount of carbon already in the atmosphere.

Unlike traditional CCUS, which tends to be implemented at the point where emissions are generated, DAC extracts carbon dioxide direct from the atmosphere, in any location. It will typically then be concentrated and purified before being either permanently stored in deep geological formations or used for a variety of different applications.

DAC is a relatively recent innovation in the fight against climate change. Klaus Lackner, a chemical engineer working at Arizona State University, is credited as being the first to suggest the idea of capturing carbon dioxide from the air in 1999. Today, while there are over 100 different companies working in the direct air capture industry, only 27 DAC plants have been commissioned worldwide. These facilities combined capture around 0.01 Mt CO2 each year with the largest, Mammoth, located in Iceland. Owned by Climeworks, Mammoth came online in 2024 and is estimated to have an annual capture capacity of up to 36,000 tonnes of CO2.

Even so, the true potential of DAC is yet to be realised. To achieve net zero by 2050, the International Energy Agency believes that global DAC capacity will need to reach 65 Mt CO2/year If global warming can be limited to two degrees Celsius, experts estimate that DAC could capture up to 20 Gt CO2 between 2020 and 2100. Currently, 130 facilities are at various stages of development with 15 in active construction. They usually take anywhere from two to six years to construct. The limited number of operational plants is one of the reasons why DAC is considered to be in the large-scale and prototype phase of development and not yet ready for full commercial deployment.

An industry prioritising innovation

The advantage of being in the prototype phase is that there is plenty of scope for innovation. At the moment, most DAC facilities will follow either solid or liquid capture process. There are advantages and disadvantages to both, especially when it comes to the energy required, the capture capacity and the longevity of the technology involved. The energy demands are high – if the US were to achieve capture capacity of 7-9 million tonnes a year by 2030, it would be responsible for 0.3 to 0.4% of the country’s total electricity generation.

With solid capture, a sorbent is used to absorb carbon dioxide from the air. This is one of the more cost-effective DAC methods as the sorbent can often be regenerated and reused. It’s also generally stable with a long lifespan and allows for selective capture to avoid accidental absorption of other gases. However, sorbent processes can require complex engineering to construct and maintain and, most importantly, require a significant amount of energy to work effectively. Climeworks is one company that uses a solid sorbent system which is estimated to have a long-term energy requirement of around 7.2 GJ, equivalent to a fifth of US household’s natural gas consumption.

As its name suggests, liquid capture uses liquid solvents to absorb carbon dioxide from the atmosphere instead of solids. Once captured, the CO2. will dissolve into the liquid and form a chemical bond. It typically requires less energy and can still absorb large quantities of carbon emissions. The liquids can often also be easier to handle as they can be pumped and processed using existing infrastructure. Even so, solvents can be corrosive and may degrade over time, as well as experience evaporation losses. Carbon Engineering, which uses liquid solvents, has estimated energy requirements of around 8.8 GJ/t CO2.

Re-evaluating re-release

The most energy intensive step in any DAC operation, whether liquid or solid, is the re-release of the carbon dioxide after it’s been captured. There are a few different ways this is carried out. Liquid solvents typically use a type of low-grade heat regeneration, which involves heating the loaded capture medium to a temperature just below 200 degrees Celsius. A more efficient and energy intensive option is high-grade heat regeneration, which is used to achieve temperatures of around 800 degrees Celsius.

Emerging technologies are providing potential alternatives to these more established processes. Electro swing absorption is one route based on an electrochemical cell – a solid electrode absorbs the carbon dioxide when negatively charged and then releases it when a positive charge is applied. Verdox is one company that is already using electricity to capture and release CO2, which has the potential to reduce energy consumption by 70%. In the UK, Mission Zero Technologies uses a water-based solvent developed in-house to capture carbon and electrodialysis to release it, ready to be reused.

Passive DAC is an alternative that focuses on accelerating the natural process which transform calcium hydroxide and atmospheric carbon dioxide into limestone, a technique already being used by Heirloom and one of the lowest cost pathways for removing carbon from the air. Zeolites, an inexpensive catalyst that is already being produced on an industrial scale, is another emerging option. Thanks to their porous structure, zeolites can be adapted to absorb carbon dioxide, with the first plant already being built in Norway and aiming for a capacity of 2,000 tonnes of CO2 a year.

A luxury few can afford?

Despite these lower cost innovations, DAC remains the most expensive application of carbon capture. As the carbon dioxide in the air is more diluted, extracting it almost always comes with higher energy requirements and costs.

The cost of DAC is usually estimated between $250 and $600 per tonne of CO2  removed, while some experts put the price of DAC and carbon storage at around $1,000 per tonne of CO2. To put that figure in perspective, a permit to emit carbon dioxide in Europe costs less than $100 per tonne. The good news is that, as DAC facilities and their supply chains scale, and renewable energy costs reduce over time, the price per tonne could fall to between $150 to $200 over the next five to 10 years.

It is due to these costs that the DAC industry has often relied on voluntary carbon offsets and government incentives to scale up. Both the US and Canada have offered incentives to foster growth; the US Inflation Reduction Act and Canada’s Carbon Capture, Utilisation, and Storage Investment Tax Credit have both been described as major initiatives encouraging innovation in the sector. The Inflation Reduction Act, for example, is offering a credit of up to $130 per tonne of CO2captured via DAC while the CCUS Investment Tax Credit means DAC projects could be eligible to a 60% tax credit for equipment used in the process.

Partnerships with additional benefits are also important, and one common trend among investors is to have a certain number of guaranteed carbon credits included in the deal. This approach is attractive for industries with hard to abate emissions but may be misleading as these credits do not necessarily correspond to carbon being removed or emissions curbed. Furthermore, investment from airlines often comes with the caveat that at least a percentage of the carbon removed should be used in the production of sustainable aviation fuel (SAF).

A thriving investment community

Despite obvious cost barriers, the investment landscape for DAC appears to be quite strong. In 2020 alone, governments and industry committed almost $4 billion towards DAC technologies.

The companies with the most developed technologies – Climeworks, Carbon Engineering and Global Thermostat – have attracted the most investment. In 2022, Climeworks raised $650 million, Carbon Engineering received investment from Airbus and Air Canada, and Global Thermostat sold to Zero Carbon Systems for a deal valued at tens of millions of dollars.

That’s not to say that emerging companies aren’t also attracting investor interest. Pasadena-based CarbonCapture secured $35 million in Series A funding to develop its zeolite-based DAC technology, Verdox received $80 million from Breakthrough Energy Ventures, Mission Zero Technologies raised more than £20 million in 2024, and Heirloom attracted investment from United Airlines, including the right to purchase up to 500,000 tonnes of carbon dioxide removal to be used to produce SAF.

Other notable investors in the space include 1PointFive, a subsidiary of US oil company Occidental, which has agreed a deal with Microsoft worth several hundred million dollars and plans to create a DAC plant with a capacity of 500,000 tonnes per year. In April 2022, the LowerCarbon Capital Fund announced plans to invest $350 million in CCUS start-ups, including DAC. Breakthrough Energy’s Catalyst programme, meanwhile, is raising funds from philanthropists, governments and companies to invest in DAC, and the X-Prize is offering up to $100 million for four promising carbon removal programmes, including DAC.

Governments worldwide are also committing funds to support DAC development. In January 2025, the US Department of Energy announced $1.8 billion in funding for the design, construction and operation of DAC facilities as part of the DOE’s Regional Air Capture Hubs Recurring Programme. It aims to support the development of four regional DAC hubs, each with a capture capacity of one million metric tonnes/year. The UK committed £20 billion for CCUS including DAC in March 2023, Japan aims to capture up to 12 Mt CO2/year by 2030, and the European Commission aims to store 50 Mt CO2/year by the same date.

Projects already underway hold promise. A planned development in Texas would be the first DAC facility to rely on low-cost clean power generated on site. The plant is set to come online in 2028 and should remove up to 500,000 metric tonnes of carbon from the atmosphere each year. The project is a collaboration between Return Carbon, a Dutch project development and investment company, and Skytree, a Netherlands-based DAC company. Wind power will be supplied by a subsidiary of EDF, while the carbon will be stored underground by Texan firm Verified Carbon. This is an example of what could be achieved if investors, renewable energy providers and CCUS firms join forces to accelerate DAC.

It's fair to say that DAC is a work-in-progress. Its potential is clear – there are already established players in the market with impressive funding, big name partnerships and production methods that are likely to become more cost-effective and energy efficient over time. Emerging alternatives prove that there this is an industry that has plenty of room to evolve. Zeolites, limestone and more are less energy intensive and have received both public and private investment to help spur their growth. While it’s impossible to say whether DAC will scale to a point where it can play a game-changing role in tackling carbon emissions, the investment and innovation landscape is promising.

— Lew 👋

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The Transition’s work is provided for informational purposes only and should not be construed as advice in any capacity. Always do your own research.