Beyond Plan B: The Technologies & Tailwinds Powering Direct Air Capture
Direct Air Capture is one of the most well funded start-up sectors today. But what is it? Why do we do it? And what does the future hold?
I was inspired to write this article after a few weeks ago after being asked to give a talk on the DAC sector to a group of carbon-capture experts. In preparation, I put together a summary of the current status of DAC, its challenges, its opportunities, all in the context of the evolution of the industry over the past decade. It transformed into an article simply reflecting the personal opinion of someone who’s worked in the field for over a decade and wants to see it flourish.
Why DAC?
Direct Air Capture (DAC) involves the capture and conversion, re-use or storage of CO2 from our atmosphere. There are two reasons the world is pursuing DAC;
The first is to develop the capacity to draw down CO2 from the atmosphere in a manner that is fast, reliable and scalable. Not as a silver bullet to climate change but as a Plan B, in case we overshoot the limit we’ve placed on measured concentration of atmospheric CO2 — which is looking more and more likely [1] — and need to make up for that.
The second is the creation of a truly circular economy. We only have one planet, a finite amount of resources and a growing population. For any future on Earth to be long-lived (whether we’re multi-planetary or not) we will need to learn to re-use and up-cycle.
The concept of up-cycling is defined nicely in William McDonough’s book Cradle to Cradle. Think, for example, of hardware being borrowed rather than used, then discarded. So when my dishwasher breaks down — rather than ending up on a rubbish heap, it’s retrieved by the original manufacturer and broken down into its component parts. These parts are in turn ‘up-cycled’ into an even better dishwasher or similar appliance. Effectively, hardware is leased for a period of time before being retrieved and converted. It’s similar to what Apple does for its iPhones today or how we up-cycle plastic. But applied to everything. DAC plays into this by enabling the re-use and up-cycling of CO2 into a large-scale and valuable commodity.
Companies are already exploring the concept of using atmospheric CO2 for the following purposes;
- The creation of carbon-neutral, synthetic fuel
- The production of plastic
- The production of cement
- The production of biofuel
- Manufacturing of synthetic meat (carbon as the building block for protein)
- Boosting of crop yields (indoor agriculture)
- Supply of drinking water (desalination plants)
The first three categories alone represent billions and billions of tons of CO2 either sequestered (cement & plastic) or displaced (synthetic fuel). Along with the sale of carbon credits, these alone will make for trillion dollar markets over the next thirty years. More on that later.
Where are we now and what are the main opportunities?
Simply put, there are two key challenges to making DAC economically viable. These are doubtlessly reflected in the efforts of all those developing the technology today;
- Energy. Bringing down the energy intensity of the CO2-capture and release process.
- % of CO2 captured with respect to weight and volume of the capture medium. And maximizing it.
Maximizing the percentage of CO2 captured with respect to weight of the capture medium brings down energy intensity along with infrastructure costs. This is because the surrounding enclosure (and volume in which to create a vacuum in the case of a Thermal Vacuum Swing (TVS) processes) and the cost of ancillary equipment required, are both reduced. However, in all large-scale, operational DAC units today, CAPEX represents significantly less lifetime cost as compared to energy consumption assuming >15 years of operation. In fact, DAC today is only cost-effective at scale by coupling it with low-grade, waste heat sources. Essentially free heat. However, for the technology to be more easily and widely deployable as well as to reach gigaton scale, combined with the need to maximize the utility of waste-heat available from industry and geothermal, it will be preferable to have them run economically off any energy source. For that reason, we will focus on opportunities to minimize energy consumption.
A few interesting approaches tackling the energy problem today;
- Electro-swing
In the electro-swing method, CO2 capture sites are embedded in a solid state battery. Reversing the polarity of the battery directs electrical energy precisely to those bonding sites, circumventing the need to heat up the entire medium. Typically, eg. in solid amine TVS, a capture medium accounts for at least 80% of the heat energy used in regeneration (ie. releasing CO2 once captured) while only 20% goes towards breaking the bonds between the CO2 molecules and their capture sites. Therefore, the electro-swing technique has the potential to reduce the energy footprint of traditional DAC processes by 80%. One company pursuing this technique is Verdox. Another is Repair, although the working mechanism differs somewhat.
2. Humidity-swing
The above technique was originally developed by Prof. Klaus Lackner, who currently runs the Centre for Negative Carbon Emissions at Arizona State University. Here, regeneration is powered by the change in relative humidity around the capture medium (to be precise, a chemical reaction occurs around the functional sites used to bond carbon in which carbon dioxide molecules are displaced by water molecules). The technique implies zero energy required for regeneration and hence the overall capture and release process. For context, ‘capturing’ CO2 is usually a passive, exothermic reaction in DAC, one which requires no energy input. The only caveat in the case of humidity-swing technique is that clean water needs to be freely available from the surrounding area.
3. Direct conversion
Here, CO2 is converted directly into other elements using natural or synthetic catalysts. The advantage of doing so is that a step is skipped; rather than first creating clean, concentrated CO2 from the air and then supplying that gas into a second reaction, CO2 is converted directly into the desired element.
The disadvantage of the technique is that each catalyst design is particular to the resulting element required — whether that element is fuel, biomass, a mineral (eg. limestone) or a high-value chemical. However, such processes are key to creating a circular economy discussed earlier. A few companies exploring the technique are;
- Twelve / Synthetic catalysts for a variety of by-products
- Mission Zero / Mineral production
- Prometheus / Fuel production
It should be noted that all these processes are nascent in their development. None have been demonstrated at any meaningful scale. All are in the midst of overcoming cost challenges as well as sector barriers to entry (eg. regulation, replacement of old infrastructure, creation of new supply chains).
Accelerating adoption via a decentralised approach
In the meantime, a few companies, including Skytree (one which I founded), are pursuing ‘modular’ deployments of DAC units, albeit mainly using traditional methods of capturing carbon ie. combining solid sorbents with a Thermal (Vacuum) Swing (TVS) process. TVS processes combined with solid or liquid amine sorbents have been used in some way in industry for decades, are well understood, and are replicable at scale, hence why they’re leading the charge today.
At small usage volumes, the market price of CO2 increases dramatically (exponentially even), making these ‘decentralized’ modular systems cost-effective for customers to adopt. The modular nature of the systems and their replicability also allows for mass-manufacturing and the economies of scale which follows. Furthermore, through mass deployment, the combined capture capacity of the systems could very quickly add up to more than the giant DAC hubs being developed today. Skytree has coined this approach Decentralised Direct Air Capture (DDAC).
The company has found product-market fit for a number of DDAC applications to date: mainly those small-scale processes in which concentrated or pure CO2 is required. Despite not being quite ready to be used at a climate-changing level (think > million ton+/year, centralized facilities), companies such as Skytree will be able to generate revenue today and use those proceeds to organically improve their tech, all the while leveraging in-field learnings.
So what’s next for DAC?
The Inflation Reduction Act (IRA) has been fantastic for DAC. Overnight, the US went from being a laggard in the field to the leader in DAC research, development and deployment. Over $3.5Bn has been dedicated for the construction of giant ‘DAC hubs’ over the next seven years [2]. Five to six potential sites have already been specified. The selection of contractors is currently underway.
The IRA did another very important thing — it specified a price floor for carbon credits generated by DAC processes of $216/ton [3]. This is in fact a massive driver for the sector, and will generate far more value than the initial subsidy of DAC hubs. It means that if DAC can get to below $216/ton (including CO2 transportation & storage), it’s made. Currently, the price charged for one ton of captured and stored CO2 using a DAC process is about $1500/ton if we go by the Climeworks website.
Value-stacking
Furthermore, the true price floor of DAC could be higher if processes allow value-stacking. Value-stacking is the generation of multiple revenue streams from a single product. For example, a DAC company could sell its CO2 for a certain amount, say, $200/ton (the going price paid by industry today for large quantities of CO2 in gas or liquid form). If that industrial CO2 sequesters or displaces carbon-positive streams, carbon credits can be sold by the DAC company or customer through an accreditation party (eg. Puro.earth), adding to the value generated by the feedstock carbon. Value-stacking in such a way creates a higher price floor. In this case; $200 per ton sales revenue + $216/ton credit revenue = $416/ton.
Such a price point suddenly seems much more viable for the technology than the perceived target of $20 per ton ten years ago, which was the general price of carbon credits at the time. However, even a $416/ton price floor is still a ways off for most companies, and of the +80 DAC players that exist today, many will not survive. Also many of the technologies funded via the IRA’s DAC hubs will not be economically viable in the long run. But some will — and that’s all that counts.
The true scale of the carbon credit market and carbon as a driving commodity in the circular economy is quite unfathomable. The credit market alone will represent hundreds of billions ([4], [5]), perhaps even trillions of dollars, while a developing circular economy using carbon as a building block for fuel, food and the built environment, will only enlarge its impact.
It’s ironic how a technology that just ten years ago was niche and poorly understood, could easily supplant oil & gas in size and scale. The future is bright for DAC, and we should all be very happy about that….
References
[1] SYNTHESIS REPORT OF THE IPCC SIXTH ASSESSMENT REPORT (AR6), p.10, Box SPM.1, Table 1, 2022
[2] Office of Clean Energy Demonstrators, US Department of Energy, 2023
[3] The Inflation Reduction Act: The Key Provisions that Impact Climate Change, Antenna, antennagroup.com, 2022
[4] BloombergNEF, 2022
[5] MorganStanley, 2023
[6] 6 Things to Know About Direct Air Capture, World Resources Institute, 2022
