What is the price of carbon dioxide removal machine?

The world is failing to cut carbon emissions fast enough to avoid disastrous climate change, a dawning truth that is giving life to a technology that for years has been marginal ' pulling carbon dioxide from the air.

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Leading the charge, the U.S. government has offered $3.5 billion in grants to build the factories that will capture and permanently store the gas ' the largest such effort globally to help halt climate change through Direct Air Capture (DAC) and expanded a tax credit to $180/tonne to bolster the burgeoning technology.

The sums involved dwarf funding available in other regions, such as Britain which has pledged up to 100 million pounds ($124 million) for DAC research and development. That compares with $12 billion in federal spending to drive demand for personal and commercial electric vehicles, Boston Consulting Group estimated.

While bids for the U.S. DAC hub funding were due on March 13, the government and some companies have yet to fully disclose details about the applications, many of which Reuters is reporting for the first time. The US Energy Department expects to announce winning bids this summer.

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Worsening climate change and inadequate efforts to cut emissions have thrust the issue known as carbon removal to the top of the agenda, and U.N. scientists now estimate billions of tonnes of carbon will need to be sucked out of the atmosphere annually to reach a goal of capping global warming at 1.5 degrees Celsius.

While much of that will come from natural solutions such as planting more trees or increasing the ability of soil to sequester carbon, permanent carbon removal like DAC will also be needed.

Big barriers

Yet the list of hurdles is long.

The biggest plant to-date is capturing only 4,000 tonnes a year and costs are high, the talent pool is fledgling and corporate buyers for the credits largely remain on the sidelines. The role of oil companies in the space has also raised eyebrows and developers must muster support for hubs from communities that have often been damaged by big energy projects.

Plus, the CO2 must be stored permanently.

The U.S. government has said it wants to back four hubs, and interviews with more than 20 state, federal, company and investor sources show at least nine applications have been filed in a first round, with two major Occidental Petroleum projects also seen as strong contenders.

Among the most active firms so far has been Swiss start-up Climeworks, which has raised more than $800 million to date and is backed by Singaporean sovereign investor GIC.

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In his first major interview since taking part in applications for three hubs ' in Louisiana, California and North Dakota ' Chief Executive Christoph Gebald said all had the potential to be scaled to the U.S. government's target of a million tonnes, known as a megatonne, a year.

The company planned to boost headcount from the low double-digits to more than 100 over the next 18 months, and by , the three hubs could create 3,500 direct jobs and tens of thousands of indirect jobs, if given the green light, he said.

The real challenge, though, was access to talent, Gebald said. 'Where are you getting those people in the next 30 years?' there's no university programme on DAC.'

Gebald said it would cost 'easily in the billions' of dollars to create a megatonne facility and the firm could look to raise funds depending on the success of its three bids, although it would likely wait until to return to the market.

'The lion's share of the capital is for assets, so it really depends on the build out programme.'

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Another bidding for funding is start-up Carbon Capture, in partnership with Frontier Carbon Solutions and a new company called Twelve, which will use captured carbon to make sustainable aviation fuel in Wyoming, Jonas Lee, chief commercial officer for Carbon Capture, told Reuters.

'This industry is fragile right now, but all the arrows are lined up in the right direction. Now, we have to do our job which is to put iron in the ground and start taking out meaningful amounts of CO2 from the atmosphere,' Lee said.

'Hopefully that will help in a virtuous cycle that galvanizes even more support from corporations buying carbon credits, and maybe from state and local governments.'

Oil involvement

The sites being bid for stretch across the breadth of the country, yet all have several things in common: they are near cheap, renewable energy and plenty of space to store the gas.

Unsurprisingly, perhaps, that has drawn the attention of some of the large, incumbent energy giants keen to position themselves for what could be a multi-trillion-dollar industry as demand for fossil fuels subsides.

Occidental Petroleum has said it is well positioned for federal grants for what could be the biggest Direct Air Capture plants in the world. It declined to say whether it had applied for support for two DAC projects it is developing in Texas.

Oil companies are also far ahead in getting permitted, sequestration wells, guaranteed to keep the CO2 in the ground.

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'We have the pore space to begin with, from the reservoirs that are depleted or depleting, that we've operated that now can be repurposed into sequestration by the engineers who know how that reservoir reacts,' said Chris Gould, chief sustainability officer, at California Resources Corp, an oil company that aims for net zero emissions and is working with Climeworks on a California project.

But the oil companies are still looked at with scepticism by some in the carbon removal community.

'It's really essential for the success of direct air capture that this be about removing legacy emissions and not be about continued fossil fuel use,' said Erin Burns, executive director of Carbon 180, a DAC consultancy. 'We're hoping to see hubs that don't have ties to fossil fuel production.'

Energy intensive

Most DAC processes use a liquid or solid that is engineered to naturally soak up carbon dioxide, then heated or treated to extract the carbon to be put underground.

But the energy to run the process, the factories, pipelines and storage is expensive. The jury is still out on whether it can be deployed at a scale big enough to affect the climate, at a cost the world can bear.

Across a range of technical processes, it can cost more than $1,000 to capture and lock away a ton of planet-warming carbon dioxide, yet the U.S. government has targeted a $100 a ton price tag.

Heirloom Carbon, a California company which with Climeworks is part of an application for a Louisiana hub, sees that as a realistic goal, while Carbon Capture told Reuters it expects to hit $250 a ton by and $150 a ton within a decade.

To get to a cost and scale that can affect the planet will mean designing an easily duplicated plant that does the same thing over and over again, like a franchised fast-food restaurant, said Dan Friedmann, chief executive of DAC firm Carbon Engineering, which is supplying technology to Occidental.

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'It's a McDonald's kind of thing,' he said.

Does the world need millions of machines sucking carbon dioxide directly out of the air to beat the climate crisis? There is a fast-growing number of companies that believe the answer is yes and that are deploying their first devices into the real world.

From turning CO2 into rock in Iceland, to capturing the breath of office workers, to 'putting oil back underground', their aim is to scale up rapidly and some have already sold their CO2 removal services to buyers including Bill Gates, Swiss Re, Shopify and Audi. Prices, however, are sky high ' $600 (£440) per tonne and more. Given that humans emit about 36bn tonnes a year, that is problematic. .

Direct air capture (Dac), as the technology is known, is challenging in more ways than just financially. Despite its potent climate heating properties, CO2 makes up just 0.04% of air and so trapping a tonne of the gas means processing a volume of air equivalent to 800 Olympic swimming pools.

'It is not super intuitive,' says Jan Wurzbacher at Climeworks, which just opened the world's biggest Dac plant in Iceland and recently hosted a conference for the Dac industry. 'But that doesn't mean it is hard. There is no physical reason it can't be done for $100/tonne in the next 10-20 years.'

The Dac industry is still young and there is a proliferation of technologies and business models, though most use modular machines that should be easier to manufacture and stack.

Climeworks' units use fans to pass air over a solid material that absorbs CO2. When the material is saturated, it is heated to 100C (212F) and releases a stream of pure CO2. Its Orca plant in Iceland uses renewable geothermal energy.

The CO2 is then taken by a partner company, Carbfix, and put underground with water, where it solidifies into rock in two years. About 4,000 tonnes a year will be captured and the company is also working on projects in Oman and Norway.

Canadian firm Carbon Engineering takes a similar approach to CO2 capture but is looking to bury the CO2 in depleted oil and gas reservoirs in the US and the North Sea off Scotland, effectively reversing the flow in existing pipes. 'Rather than the transportation of gas in, it's the transportation of CO2 out,' says Amy Ruddock, the company's European head.

'Importantly, there is a huge overlap between the skill sets required to do Dac and traditional oil and gas, so it really supports the green transition,' she says. The company aims to bury 1m tonnes a year in the US in , at about $300/tonne. The company also wants to use its technology to provide CO2 as a feedstock for producing low-CO2 jet fuel. 'That's the largest market we're seeing at the moment,' Ruddock says.

Peter Reinhardt, CEO of Charm Industrial, has an even more striking pitch: 'We put oil back underground.' The company takes agricultural and forestry waste that would otherwise rot ' emitting CO2 ' and heats it to create 'bio-oil' that is then pumped back into empty oil reservoirs.

The first injection took place in Oklahoma in January and the equivalent of 1,400 tonnes of CO2 has been buried this year, at a cost of $600/tonne. 'Obviously there is a long way to go ' it's a drop in the bucket compared to the scale of the problem,' Reinhardt says. But if 500,000 machines are deployed, he says, a billion tonnes could be buried at $50/tonne.

CarbonCapture Inc, a US firm, is using 'molecular sieves' called zeolites to capture the CO2. Handily, zeolites are already produced in huge volumes for use in laundry detergents, oil refineries and sewage plants. In the Netherlands, Carbyon hopes using thin-film technology will make its machines faster at separating the CO2 from the air.

Energy use is a big concern if Dac is to be deployed at massive scale and Mission Zero Technologies uses electrochemical processes to release the captured CO2, which it says means 3-5 times less power is needed than for heat-based processes.

Another firm, Heirloom, does away with fans and allows heat-treated rocks to passively absorb CO2 over a couple of weeks, before more heating liberates the gas. 'We are trying to turn this Dac problem from a chemical engineering problem into an industrial automation problem,' says Shashank Samala. 'Imagine white powder on cookie trays in cafeteria tray racks ' it's pretty simple.'

There are also other business models. Soletair Power's approach is to turn buildings into CO2-capturing machines. The CO2 in exhaled breath makes offices stuffy and can reduce worker productivity, says CEO Petri Laakso. 'Basically people are more stupid indoors and that means thousands of dollars of loss for companies in offices,' he says. 'We have a different business logic: we sell fresh indoor air as a service.' The company's current office unit can capture a kilogram of CO2 every 8 hours.

A lack of commercial CO2 supply recently hit the UK, and AirCapture, based in California, is developing onsite machines that suck CO2 from the air to produce streams for businesses such as drinks companies. Most CO2 today is produced from fossil fuels and has to be trucked to sites.

But can these systems really play a significant part in beating the climate crisis?

The biggest and most urgent task in beating the climate emergency is to slash the burning of fossil fuels to as close to zero as possible. The problem is that some sectors are very hard to decarbonise, such as farming, aviation and certain industrial processes, and these emissions have to be mopped up to stop global heating.

It is also likely, given that CO2 emissions are actually still rising, that the world will overshoot the carbon budget for the internationally agreed 1.5C target. This also means CO2 is going to have to be pulled from the air. The Intergovernmental Panel on Climate Change concluded in that billions of tonnes of CO2 a year may need to be captured and buried after .

'Unless affordable and environmentally and socially acceptable CO2 removal becomes feasible and available at scale well before , 1.5C-consistent pathways will be difficult to realise, especially in overshoot scenarios,' the IPCC said. 'Roughly, we need to take care of 10 billion tonnes of CO2 each year in mid-century,' says Wurzbacher.

Dac, however, is not the only option. Growing crops, burning them to produce power, and burying the emissions also removes CO2, but scientists worry about the huge land and water requirements. Growing trees ' the original CO2 removal machines ' is also an option, but also requires a lot of land, takes time and the forests then have to be protected for decades or the CO2 goes up in smoke.

Prof Thomas Crowther, an ecologist at ETH Zurich and prominent backer of reforestation, says: 'We cannot simply plant a blanket of trees across the planet and hope to save the world ' nature isn't going to do this alone. We are undoubtedly going to need thousands of solutions.' He says technology for drawing down CO2 has immense potential.

Christoph Gebald at Climeworks is bullish about his company's technology: 'We are very confident we can achieve million-tonne [per year] capacity in the second half of this decade, and billion-tonne capacity by .'

Businesses are increasingly buying offsets to claim carbon neutrality, often via schemes that claim to protect forests, plant trees or install renewable energy. But many offset schemes are criticised as smoke and mirrors. Gebald argues that, by contrast, Dac with underground burial offers immediate, permanent and easily measurable CO2 disposal.

Will the financials add up? For all these companies, scaling up to crush the cost of their technologies is critical. Hans De Neve, founder of Carbyon, says solar panels were originally extremely expensive but have plummeted in price, falling by 80% in the last decade alone: 'I see no fundamental reason why this can't happen for the Dac industry.'

Gebald says Dac will need a subsidy phase. 'Solar PV in the s was receiving subsidies well north of $500 per tonne of CO2, and with the support of billions of dollars annually over 10 years, this really helped the industry to scale and drive down costs.' Ruddock highlights the cost of unchecked global heating: 'The benchmark I would throw out there is what is the cost of going above 1.5C or 2C?'

The other critical factor for large-scale Dac is the creation of a market for CO2 disposal. Jet fuel and clean office air might raise some funds in the near term, but not enough to get to removing billions of tonnes of CO2 a year.

'If there's no price on CO2, it's going to be extremely difficult to establish these technologies,' says Prof Reto Knutti, a climate scientist at ETH Zurich. 'So I think that governments have to say, yes, there is a price for CO2, and then the private sector can come up with fancy innovative solutions.' Negotiations over rules for an international CO2 market will be one of the main issues at the Cop26 summit in November, and the backers of Dac will be hoping for success.

Early adopters of Dac, like Microsoft, are already pushing funding into the sector, and both Elon Musk and the UK government have launched technology competitions worth $100m and £100m respectively. There are also some early offset customers, such as insurance giant Swiss Re, which has signed a 10-year deal with Climeworks, and Shopify, both attracted by the certainty of removal.

Jens Burchardt of Boston Consulting Group, another customer, says: 'We think it's something that the world undoubtedly needs to get to net zero and we are one of not-so-many companies in the world who can afford to give this a push at a time when its economics are not yet where they need to be.'

Climate campaigners, such as Greenpeace, have argued that Dac could be a dangerous distraction. 'We simply can't wait until tech like Dac is finally affordable or widely available if we want to avoid catastrophic climate change,' says Charlie Kronick, senior climate adviser at Greenpeace UK. 'If overhyping Dac encourages delay and dithering on the necessary action to cut emissions then it will make the situation worse, not better.'

Prof Michael Mann, a climate scientist at Penn State University and author of The New Climate War, says: 'Of all of the geoengineering schemes, Dac seems the safest and most efficacious. It could, along with natural reforestation, be an important component of broader efforts to draw down carbon from the atmosphere, a strategy that arguably belongs in any comprehensive climate abatement program. But since we're only talking about capturing 10%, at most, of current carbon emissions, this obviously cannot be a primary strategy for cutting emissions.'

'Dac would be an amazing weapon in the fight against climate change,' says Robert Rohde, a climate scientist at Berkeley Earth. 'However, it remains very small-scale and high cost. Current global capacity for Dac is about 12,000 tonnes of CO2 per year. Each year, human activities release 40bn tonnes. So, right now, Dac is like trying to bail out the Titanic using an eyedropper.'

'The industry needs to find a way to rapidly grow many thousands of times larger, and cut costs by about 80%, if they are going to have a real hope of making a tangible impact in the fight against global warming,' says Rohde. 'It will be great if they can make it work, but I am not optimistic, and most of the world's attention should be focused on reducing emissions because we don't have time to wait.'

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