Getting to Gigatons with Direct Air Capture: Perspectives

Janina Motter

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In this follow-up to Brinc’s first article on carbon dioxide removal (CDR) covering the challenges and opportunities for direct air capture (DAC), additional interviews shed light on the barriers for gigaton-scale global deployment. Stakeholders ranging from the voluntary carbon market to international financial institutions and startups highlight their projects and perspectives. In particular, Brinc hopes to raise awareness of the current landscape for DAC in geographies less typically covered for their CDR activities. It was exciting to see the first DAC project in Brazil announced by Repsol Sinopec Brasil, with planned capacity of 300 tons per year.

 

 

“There is a need to ensure there will be a market for credits while the price of DAC is still high and to confirm the expected cost reductions are actually feasible over time.” Adam Sipthorpe, Senior Sourcing Manager — Carbon Removals, South Pole

 

Insights from Carbon Management Platforms with South Pole

As one of the largest carbon asset managers worldwide, South Pole supports the sale of carbon credits to their clients. DAC is just one of a suite of removal approaches they recommend, including mineralization, enhanced weathering, biochar, and biomass carbon removal and storage (BiCRS). As a result, they have taken a multi-pronged approach to reduce barriers to CDR scale-up, including formalizing accounting and standards, establishing their NextGen CDR facility, and broadly supporting sales and distribution.

In terms of accounting, they are in the process of preparing technical removal standards aligned to International Carbon Removal and Offsetting Alliance (ICROA) as a public good. NextGen is led by South Pole in partnership with Mitsubishi Corporation and includes a global network of buyers: Swiss Re, Boston Consulting Group, LGT, Mitsui O.S.K. Lines, and UBS. The goal is to support a million tons of removal by 2030 at an average price of US$200/ton through fixed price contracts.

Speaking about DAC specifically, Adam Sipthorpe, Senior Sourcing Manager — Carbon Removals, commented: “There is a need to ensure there will be a market for credits while the price of DAC is still high and to confirm the expected cost reductions are actually feasible over time.” While high-priced credits (above US$100 per ton) make up the fastest growing market, he acknowledged that there are still not enough buyers to guarantee that every supplier would sell their proposed capacity.

In terms of DAC’s deployment potential in Asia, Sipthorpe remarked: “China can always surprise the world with how quickly it can move. They already have the most worldwide patents on CCUS, though likely most of these relate to point source carbon capture. Small and quick iterations for modular approaches should bring the cost curve down quickly, and the countries who can produce the most small units would certainly be in Asia.”

 

 

“There’s a fine line between saying this region is creating its own high tech carbon cleanup industry that supports the local economy versus having a situation where rich countries are dumping their waste carbon in these marginalized regions. A lot of that comes down to implementation, who owns the project development and who gets the dividends. It’s critical to work with the right actors.” Tom Spencer, Environmental Management Specialist, Swiss Re

 

The Role of Voluntary Carbon Markets with Swiss Re

Swiss Re, one of the buyers within NextGen, has developed a suite of tactics to support high quality removal since their 2019 announcement to become net zero in their operations by 2030. The goals of NextGen are aligned with their Carbon Steering Levy, an internal carbon price which was first implemented in 2021, to cover all their operational emissions including buildings and travel. The portion of high quality removals purchased will incrementally increase each year in tandem with their carbon price increase. By 2030, Swiss Re hopes that when they purchase 100% removals, the average price point on the market will align with their internal price of US$200 per ton.

Swiss Re’s Carbon Steering Levy drives their internal carbon price. As the price increases, they will incrementally increase the amount of high-quality removals used (instead of traditional offsets). This results in an average price matching that year’s benchmark price. Swiss Re has also written about the unique role they feel they can play as an insurance company.

Additionally, Swiss Re structured the first 10-year carbon removal purchase agreement with Climeworks and further invested in the company’s recent Series F round. Looking to their future commitments to CDR, Tom Spencer, Environmental Management Specialist, acknowledged the strategy is under constant evolution. One aspect was clear, however — their vision is to provide catalytic support and intervene in the market in whatever way would be most helpful.

Spencer commented that Frontier is already well-positioned to support novel technologies, but “perhaps geographies that are currently marginal in the CDR space or applications with strong socio-economic implications” may be of interest. In fact, Swiss Re has already complemented their DAC purchases with high-quality biochar projects based on the co-benefits provided to farmers and the soil (see recent announcement about their work with Carbonfuture).

Spencer highlighted the tensions around supporting projects in marginal markets. “There’s a fine line between saying this region is creating its own high tech carbon cleanup industry that supports the local economy versus having a situation where rich countries are dumping their waste carbon in these marginalized regions. A lot of that comes down to implementation, who owns the project development and who gets the dividends. It’s critical to work with the right actors.”

In terms of overall barriers, Spencer mentioned that while it is difficult to predict exactly how far the voluntary markets can support the deployment of DAC and other removal technologies, he didn’t see potential to reach gigaton scale if solely relying on this approach. He also commented: “Compliance markets can go a decent way with a ‘polluter pays’ principle, but ideally that should only go so far as those industries wind down. For countries to realize their net zero goals and for the world to reach net negativity, a different model will be needed. It’s a serious political discussion how the world should fund it and who ultimately shoulders the costs.”

 

 

“It’s not enough to have one plant flown in by helicopter, broader government support is needed to assess how DAC will integrate into their industries and overall strategy.” Alfredo Bano Leal, Senior Energy Specialist, Asian Development Bank

 

Financing Mechanisms to Drive Change with Asian Development Bank

Outside of voluntary markets, financial instruments and multilateral organizations are uniquely positioned to drive change. Asian Development Bank (ADB) follows a country partnership strategy, making five-year plans with their member countries and using sector studies to develop proposals that align with inputs from the Ministry of Finance and Ministry of Energy. Depending on financial requirements and how much borrowing the country can support, ADB then helps create a pipeline of relevant projects. They also pool resources with bilateral development agencies and other global funds to develop larger projects. Additionally, ADB supports the private sector in developing member countries through a wide range of financing instruments.

Progress in DAC deployment is closely tied to the advancement of clean energy efforts, as emissions reduction approaches should be prioritized and DAC projects must rely on excess clean energy to minimize their own emissions intensity. Towards this goal, ADB developed an energy transition mechanism to help countries accelerate the closure of coal plants. This provides a financial incentive for governments and utilities to close these assets earlier than their typical operational life, and substitute the lost capacity with renewables and energy storage. With efforts starting in 2021, the energy transition mechanism was first announced at COP26 and has already been tested in Indonesia (the first project was recently announced). Part of this work involved establishing structures that did not exist to operationalize the funds and laying the foundation for future funding from other sources. Related discussions are currently ongoing in the Philippines and Vietnam.

Alfredo Bano Leal, Senior Energy Specialist, commented that combined efforts across the private sector to commercialize technology with policy and regulation are necessary for DAC. “It’s not enough to have one plant flown in by helicopter, broader government support is needed to assess how DAC will integrate into their industries and overall strategy.”

“Every DAC project is different and must be tailored to fit specific community needs. Stakeholder engagement is crucial to the development, implementation, and operation of DAC facilities, so that historically marginalized groups, frontline communities, and industrializing nations can decide what climate justice means for themselves within the context of DAC.” Lydia Le Page, Director of Research, and Viviana Rames, Director of Marketing, Capture6

 

A Climate Justice Focus with DAC Startup Capture6

In terms of actual technology development to drive down costs with an eye on climate justice, Viviana Rames, Director of Marketing at Capture6, and Lydia Le Page, Director of Research at Capture6, shared their perspectives. Capture6, an active member of the DAC Coalition, has an integrated approach which combines electrodialysis with DAC to generate carbonates for permanent storage. Capture6’s input (any saltwater to produce their capture solvent) and byproduct output streams (hydrochloric acid, but tunable to hydrogen and chlorine gas) potentially provide bespoke decarbonization solutions tailored to the requirements of their partners and clients.

The company was involved in the latest DAC Coalition campaign to collectively produce best practices for direct air capture that work towards climate justice. Rames commented: “Every DAC project is different and must be tailored to fit specific community needs. Stakeholder engagement is crucial to the development, implementation, and operation of DAC facilities, so that historically marginalized groups, frontline communities, and industrializing nations can decide what climate justice means for themselves within the context of DAC.” The five principles follow:

  1. DAC projects should offer co-benefits to the communities surrounding facilities
  2. The costs of DAC facilities should not be borne by populations that have historically contributed the least to global greenhouse gas emissions
  3. Historically marginalized groups, diverse perspectives, and frontline communities should be at the decision-making table through all stages of project development, implementation, and operation
  4. Monitoring, reporting, and verification should be transparent, ensure additionality and durability, and offer a comprehensive life cycle analysis
  5. DAC facilities should utilize clean energy sources to avoid new pollution and promote renewable energy production

 

Already a fully remote company with team members based across the US and New Zealand, Le Page and Rames expressed that Capture6 has a global approach in mind and is currently exploring a range of options for siting. They commented: “We are considering the role of disadvantaged communities and potential co-benefits as we evaluate locations.”

 

Outlook

Considering all these perspectives in context, the voluntary markets align with recent developments under the Inflation Reduction Act (IRA) 2022 to set roughly US$200 per ton as a cost target for DAC, ideally by 2030. Financing instruments are already being deployed to drive clean energy (and energy storage) adoption, increase bankability of projects, and promote cross-border deployment. The necessity to understand local context as DAC expands across borders remains a critical consideration.

When evaluating the future outlook of the market for DAC, one of the biggest open questions is around the most sustainable path for growth beyond the voluntary markets. International government support is the default answer, but what exactly are the optimal policies, and how do they change across regions? While corporates such as Repsol can quickly scale globally by leveraging existing operations in multiple geographies at validated storage sites, the favorability of local policy as a driver remains an open question. Similar to Capture6, Brinc looks forward to continuing to work with the DAC Coalition to understand global policy and support larger movements for collaboration, awareness, and education in line with leading principles.

Another key unknown for the optimal deployment of DAC comes from progress across alternate carbon removal domains. How soon might other solutions approach US$200 per ton at scale (or less) and meet increasingly refined measurement, reporting and verification (MRV) standards around permanence and additionality? Brinc will explore other carbon removal opportunities with inherent co-benefits in an upcoming article.

In the meantime, stay tuned for upcoming announcements about our own global collaboration efforts. Startups developing innovative solutions and partners who want to get involved, please visit our site or email us to find out more.

Janina Motter

Janina is the Sustainability Program Manager at Brinc. She holds a Bachelor's degree in Chemistry and a Master's degree in Materials Science & Engineering from Stanford as well as a joint MS/MBA degree from Harvard. Janina has extensive experience working in research and development, operations, and business development at deep tech startups in Silicon Valley and Boston. She also has venture capital experience at SOSV and Clean Energy Ventures. Janina was involved with ecosystem-building initiatives during business school, such as the sustainability track ("Eco") of the biotech incubator Nucleate and the Harvard Circular Economy Symposium.

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Janina Motter

Janina is the Sustainability Program Manager at Brinc. She holds a Bachelor’s degree in Chemistry and a Master’s degree in Materials Science & Engineering from Stanford as well as a joint MS/MBA degree from Harvard. Janina has extensive experience working in research and development, operations, and business development at deep tech startups in Silicon Valley and Boston. She also has venture capital experience at SOSV and Clean Energy Ventures. Janina was involved with ecosystem-building initiatives during business school, such as the sustainability track (“Eco”) of the biotech incubator Nucleate and the Harvard Circular Economy Symposium.

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  • Janina Motter

    Janina is the Sustainability Program Manager at Brinc. She holds a Bachelor's degree in Chemistry and a Master's degree in Materials Science & Engineering from Stanford as well as a joint MS/MBA degree from Harvard. Janina has extensive experience working in research and development, operations, and business development at deep tech startups in Silicon Valley and Boston. She also has venture capital experience at SOSV and Clean Energy Ventures. Janina was involved with ecosystem-building initiatives during business school, such as the sustainability track ("Eco") of the biotech incubator Nucleate and the Harvard Circular Economy Symposium.

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