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3 big direct carbon capture deals to know

The past few months of 2022 have seen a flurry of deals between promising direct air capture startups or ventures and big corporate sponsors.

Factory on green grass

Digital Rendering of Climework's direct air capture plant, Mammoth, slated to be built in the coming years. Image courtesy of Climeworks


Direct carbon capture is a climate solution with bipartisan support, new funding from the Inflation Reduction Act and backing from big polluters. It also aligns with America’s love of new technologies and new companies that can change the world. Of course it has its downsides: Giving those big polluters a way to keep polluting and the high cost, at least right now. But most climate experts will tell you that we have passed the point where we can just reduce new carbon emissions to avoid catastrophe. We need to remove carbon dioxide already in the atmosphere, and these technologies are our only way to do that.

But the carbon capture economy and technology are still in the early stages. They need help, and big corporations and governments know that. Here are three direct carbon capture agreements released just in the past month you should know about:    

1. Climeworks teams up with UBS for the long term

Climeworks has become the darling direct air carbon capture startup of the corporate world with purchases from Stripe, Square, Spotify, Microsoft and LGT. In late August, Zurich-based Climeworks added UBS, the global financial services company, to its growing portfolio of buyers. The 10-year agreement, in which Climeworks will capture and store CO2 on behalf of Microsoft, is one of the longest partnerships in the ecosystem right now. 

Climeworks technology works by using an engineered CO2-absorbent material that chemically bonds to CO2 in the air and fans to circulate the air. Over 2 hours the material is saturated with CO2 and is heated to 100 degrees Celsius to break the bonds and suck the pure CO2 out for storage 500 meters underground in Iceland. Climeworks opened a facility in Iceland in September and has plans for a new larger one there, called Mammoth. Iceland provides access to reliable renewable geothermal energy as the carbon emissions from the energy required for direct air capture has been a concern for experts, activists and companies.

"The most important mission is to scale," said Climeworks CFO Andreas Aepli. "For partners, I think it's important to have planning towards reaching their net-zero targets. And this agreement basically fulfills that on both sides." 

Direct air capture is notoriously expensive and while UBS and Climeworks are not releasing the price the carbon credits will be sold for, The World Resources Institute estimates direct air capture to cost between $250 and $600 per metric ton of CO2 removed.

"We think that the thought leaders and pioneers like UBS, a big global brand and one of largest partners, will inspire a lot more companies to take action towards removing CO2," Aepli said. "It’s important for us to show the demand in the market, which will enable us to scale and also eventually be able to provide the service at lower cost."

2.Microsoft goes from investor in to customer of Heirloom 

Earlier this year, Microsoft's Climate Innovation Fund was part of Heirloom’s $53 million Series A funding along with Breakthrough Energy Ventures and Prelude. In August, Microsoft deepened its partnership with the San Francisco-based carbon capture startup for carbon removals through 2025. Microsoft will fund the removals and receive carbon credits in return, helping the tech giant reach its goal of becoming carbon negative by 2030 and responding to its increase in Scope 3 emissions last year. As with Climeworks and UBS, neither company would release the price of the carbon credits. 

Nature is a very elegant solution.

Like Climeworks, Heirloom also uses a CO2-absorbent material to suck carbon from the atmosphere, but unlike Climeworks-engineered material, Heirloom is using limestone and a kiln to speed up a naturally occurring process that sequesters the carbon into the stone.

"We've got a series of proprietary technologies that speed up that absorption time from what takes years in nature to three days," said Alexa Dennett, head of marketing and communications for Heirloom. "Nature is a very elegant solution."

While Climeworks uses forced air to increase the absorption process, Heirloom is using a passive process that can be done anywhere making its energy usage much lower, according to Dennett. There is also already a large supply and robust existing supply chain for limestone. And Heirloom actually reuses the limestone over multiple capture cycles as the CO2 is pulled out of the limestone and stored as a gas. It is worth mentioning that Microsoft has also bought carbon removal credits from Climeworks.

Heirloom’s end goal is to have a real path to removing 1 billion tons of CO2 by 2035. 

“We're super grateful to Microsoft, for the long-term commitment to Heirloom,” Dennett said. “It takes companies that are sustainability leaders like Microsoft to help catalyze our technology and provide us with the necessary resources [to get to] the billion tons we hope to achieve.”

3. A cross-border collaboration for transport and storage in Europe

An underemphasized part of the direct air capture and storage economy is the transportation needed to get the carbon emissions from where they are captured to where they will be stored for millions of years. 

A joint venture between Shell, Norwegian energy company Equinor, French company Total and the Norwegian government is called Northern Lights. Northern Lights’ mission is to deliver carbon storage and transport as a service.

In late August, the venture announced a partnership with Yara Sluiskil, an ammonia and fertilizer plant in the Netherlands. Starting in 2024, the companies will collect 800,000 metric tons of carbon dioxide emitted from industrial processes at the plant, compress and liquefy it before transporting it to the Northern Lights store 1.6 miles under the sea off the coast of Norway. This is the first international shipping and storage of carbon dioxide.  

Northern Lights’ total storage goal will start with 1.5 million metric tons of CO2 per year, with the hope of scaling up to 5 million metric tons over time. 

Correction 10/24: Climeworks is not selling credits to Microsoft but is capturing the carbon on its behalf.

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