Direct Carbon Removal - And What To Do With It
*Originally published Dec 4, 2021
Japanese nuclear power plants. Scottish industrial estates. English sewage treatment centers.
What do they all have in common?
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They’ve all been in the news this week, related in some way to the strange advent of Carbon Capture & Storage (CCS) technology.
CCS isn’t new, but there’s been a renewed interest in the technology in recent weeks.
In a nutshell, CCS aims to catch or capture carbon from the atmosphere and lock it away.
If that sounds like a challenge, well, it is. No one has succeeded in deploying CCS technology at scale.
But that hasn’t stopped a number of big-ticket investors, including Elon Musk, from jumping into CCS-related efforts.
Complicating matters is the fact that CCS efforts fall into two categories.
One of them could potentially play a huge role in industrial decarbonization efforts.
CCS tech like the one deployed by Mitsubishi Heavy Industries Group can potentially capture up to 0.3 metric tons of carbon per day directly from power plants and other heavy emissions sites.
If designed correctly, there’s no chance for the CO2 to ever make it into the atmosphere.
So far, so good; but CCS is only part of the story.
There’s a more radical - or perhaps more ambitious - variation on the same technology that’s also gathering a lot of attention.
Direct Air Capture, or DAC, takes over where CCS leaves off. Once CO2 has been released into the atmosphere, DAC tech offers the possibility of pulling it back out.
Sucking carbon from the sky - that’s the mental image, and it’s not entirely wrong. DAC is ambitious, expensive, and more than a bit controversial.
The IEA (International Energy Organisation) issues regular tracking reports on the technology; the latest one shows 19 DAC plants worldwide, capturing only 0.1 MtCO2 per year. That’s a small fraction of the 85 MtCO2 per year by 2030 that the IEA estimates will be needed from DAC alone to meet current climate goals.
The State of CCS and DAC?
CCS is poised to become a huge tool in the decarbonization charge, and quickly. If carbon reaches 100 euros per ton, CCS could be cost-effective in a decade.
Faster if prices rise beyond that point - and lately, they’re on a tear.
Adding fuel to the CCS fire is the recent US "Build Back Better" infrastructure bill, which includes a little-discussed increase in the tax breaks for carbon offsetting measures.
That tax break was increased by nearly 70% - a dramatic increase that could cover a lot of the costs of incorporating CCS technology into high-emissions industries.
What about DAC?
A scalable DAC project would be able to provide measurable, quantifiable benefits on the VCM.
Imagine the price comparison between nature-based offsets (which are typically long-term and difficult to measure) and DAC projects that routinely report how much carbon they’ve removed.
But upside doesn’t equate with results. A quick look at DAC projects sponsored by the UK gov shows just how eclectic some of them can be, with everything from marine-based removal projects to biowaste remediation efforts.
There’s another part to the equation; a growing consensus that DAC (and CCS more broadly) will be absolutely necessary to achieve the UN’s climate goals.
DAC, CCS, and the VCM
Crunch time. How will the growth of DAC and CCS tech influence the VCM?
• Growth, growth, and more growth - all three sectors depend on each other, and as one grows, they’ll all benefit.
• Pricing diversity - There’s a real chance that DAC offsets could command a higher price on the VCM, provided the technology reaches the necessary scale.
• CCS decarbonization - The ability to lock away CO2 as part and parcel of the industrial process could provide a much-needed kickstart to industrial decarbonization efforts.
The global carbon market has grown explosively over the past few years. Technologies like DAC and CCS demonstrate that that growth is only beginning.
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