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Direct air capture has become the most sought-after technology in the fight against climate change. Swiss direct air capture pioneer Climeworks gives an insight into the market.
At the foot of a volcano in a remote corner of Iceland, a purported green revolution spluttered into life last September. A large metal structure, which looks like a series of shipping containers propped up on stilts, is the largest facility of its kind in the world designed to achieve something that is not as simple as it sounds: suck carbon dioxide out of the air.
Orca, as the plant is known, sits next to a geothermal power plant at Hellisheiðarvirkjun, 25 km southwest of Reykjavik. It contains large fans that draw ambient air through a filter containing materials that bind with CO₂ molecules. Water is then added and the solution is pumped underground via the Carbfix method where it reacts with basalt rock and - in a mineralisation process that takes a few years - turns to stone.
The plant, which runs on geothermal energy and was developed and built by Swiss company Climeworks, is designed to remove up to 4000 tonnes of CO₂ a year this way. This represents a breakthrough in a young but burgeoning sector. Yet for Climeworks it is very much just the beginning.
"We have seen how the world can be galvanised to find solutions to reduce emissions with renewable energy or electrified transport, " says Andreas Aepli, the company's CFO. "What we have shown is that we can do the same for carbon removals. The solution is here, it can be deployed today, and all it needs is more customers and more capital."
Technology to remove carbon from the air at scale, a process known as direct air capture (DAC), has been a dream for years - and an alternative to bolstering natural carbon sinks such as forests. Aepli, who until 2021 worked on a project to turn insects into food, says the game changed when the Intergovernmental Panel on Climate Change (IPCC) concluded in 2018 that even best-case scenarios for decarbonising economies and industries would not be enough for the world to hit the internationally agreed 1.5 degree global heating target. In addition to cutting emissions, the IPCC said billions of tonnes of CO₂ will also need to be removed.
The second major turning point, Aepli says, has come in the past three years with a shift in the business model for carbon removal. Climeworks’ development depends on selling its carbon removal service to individuals, corporations and institutions looking for ways to neutralise the emissions that they are unable to cut. "When they cannot reduce more, we will help them get to net zero through our removal service," he says.
At stage, technological carbon removal (like direct air capture and storage) is a more costly alternative to nature-based carbon removal (such as planting trees) for companies already used to shopping for credits as part of their environmental, social, and governance (ESG) obligations. But many companies are now prepared to pay more to get in on the ground floor of a new sector - and to improve the traceability and efficacy of their investments.
“People who are experts in this market realise that the currently available nature-based credits that are currently quite inexpensive will become more expensive over time," Aepli says. "Space for planting trees is limited and there will never be enough supply to fulfil all the net zero commitments that are now being made. Technological carbon removal has the advantage that the more you buy, and the bigger that industry grows, the cheaper they get."
Climeworks' clients include Microsoft and Swiss Re. In December 2022, LGT signed a long-term deal with the company to remove 9000 tonnes of CO₂ as part of its own commitment to the Paris Agreement. "Supporting innovative companies that have promising technologies is an integral part of LGT's fight against climate change," H.S.H. Prince Max von und zu Liechtenstein, LGT's Chairman, said after the announcement.
"There have been many efforts by the banking industry to make ESG more transparent, and to advise clients where they should invest," Aepli said in 2022. "I think LGT are the first bank to really walk the talk on this."
Governments are also beginning to back the technology. The US infrastructure bill laste year included USD 3.5 billion to deploy this technology until 2026, and there are initiatives within the EU to support growth. In 2022, Elon Musk and the UK government launched competitions to promote the development of technology in the sector worth USD 100 million and GBP 100 million respectively.
And that growth is needed. While Orca is the largest plant of its kind, the 4000 tonnes it can remove each year is nothing compared to the 10 billion tonnes the IPCC says we need to be taking out of the air annually by 2050. "The scale of the problem is gigantic, but it is solvable," Aepli says.
Turning CO₂ to rock underground is the solution Climeworks is so far pursuing, in partnership with Carbfix, a company set up by academics and the Icelandic government. Other firms, including Carbon Engineering from Canada, are working instead to bury the CO₂ in depleted oil and gas reservoirs in the US and the North Sea off Scotland. The company also wants to provide CO₂ as a feedstock for low-emission jet fuels.
Some climate scientists and campaigners, including Greenpeace, have warned that hyping CO₂ removal as a great new solution to the climate crisis risks providing another fig leaf for continuing carbon emissions, while also criticising its current high cost and energy demands. But other scientists view direct air capture as our best hope of meeting net zero targets alongside other measures. "Not long ago, people said carbon removals was a crazy idea, that it could never work," Aepli says. "But now everything has changed."
