Climeworks’ CO2 removal deal with PwC Switzerland suggests both increased interest in its Direct Air Capture (DAC) technology and a tighter focus on emissions by professional services companies.
PwC’s nine-year deal with Climeworks is part of its strategy to achieve net zero emissions by 2030.
Climeworks is installing the largest DAC plant in Iceland, capable of capturing and removing 36,000 tonnes of CO2 per year.
The IEA’s net zero scenario envisages DAC being scaled up to capture 85 million tons of CO2 per year by 2030, and 980 million tons per year by 2050.
Many companies are signing up and investing in DAC removal as a way to offset their carbon emissions. In addition to PwC, Climeworks also has long-term agreements with other large companies Microsoft (NMS:MSFT), UBS (SW:UBSG), and Swiss Re (SW:SREN).
What’s interesting about the PwC deal is the focus on carbon removal as part of its net zero strategy. PwC Switzerland’s net zero by 2030 roadmap includes both validated science-based targets and is to use Climeworks to contribute to the removal of its remaining emissions. Climeworks and PwC Switzerland have agreed a 9-year carbon removal contract, which will help the auditing and consulting firm to remove part of its unavoidable emissions.
Direct air capture (DAC) and its role in net zero strategies
Based on a recent IEA report, there are 19 DAC plants operating worldwide, capturing 10,000 tons of CO2 per year. Additions to global capacity in the near term include Climeworks’ 36,000 tons per year ‘Mammoth’ plant in Iceland.
Carbon Engineering is also building a plant capable of capturing 1 million tons of CO2 per year in development in the US via a partnership between Carbon Engineering and Occidental Petroleum (NYQ:OXY).
Direct air capture is a technology that has been accepted as a proven technology for the removal of CO2, but questions remain as to its feasibility in terms of scale, affordability and long term storage, or conversation into useful products.
While the technology is showing market growth, current costs, installed capacity and reliance on other factors mean the extent of its contribution to net zero by 2050 remains to be proven.
DAC popularity gives Climeworks funding boost, but individuals can also participate
The popularity of DAC has helped Climeworks raise CHF 600 million in a round of equity financing this year, which is six times the size of its record CHF 100 million raise in 2020. Overall, the CHF 700 million suggests a high level of confidence in its technology.
A visit to Climeworks’ website also invites individuals to make a contribution towards carbon removal and even provides them with the ability to pay based on the size of contribution. These range from ‘Supporter’ (£0.90 per month for 1 Kg of CO2) to ‘Discoverer’ (£18/month of 20 kg) and tops out at the ‘Special Expedition’ level (£72 for 80 kg).
Costs reduction needed to make DAC feasible
As a means of directly removing CO2 from the atmosphere, the cost associated with DAC varies according to the specific technology used, and whether the captured carbon is going to be stored or used immediately.
The DAC technology solution being offered used by Climeworks requires CO2 to be compressed under very high pressure in order for it to be injected into geological formations. This raises both the plant’s upfront capital and ongoing operating expenses. Since the CO2 in ambient air is not as dense as in chemical processes, DAC’s energy needs are also higher than other carbon capture technologies.
One benefit of DAC is that plants can be located in places which are close to storage sites, limiting its land use and water footprint. While there is no need to transport the captured CO2, plant location must be close to acceptable energy sources that will help contribute to a net-negative system.
While the technology has yet to be proven on industrial scale, scientific studies have estimated carbon capture costs via DAC to range from $100 per tonne to $1,000 per tonne, depending on assumptions and plant sizes.
An IEA report also cites research released by Carbon Engineering demonstrating costs of $94 to $ 232 per tonne, depending on financial, energy cost, and plant configuration assumptions.
The Inflation Reduction Act could direct over $100 billion in tax credits to carbon-capture technologies. As a result, credit prices for DAC have risen from $50 per ton to $180 per ton, which could be applied to the financial assumptions identified above and drive costs down.
The promise shown by DAC is evident from the success that Climeworks and others have had attracting investment and also customers. Yet, delays in getting capacity up to scale mean reliance on DAC as a major mitigation option may not be feasible.