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And just like that... the U.S. takes the lead in a new climate industry

  • With new government spending and a $1.1 billion acquisition providing incentives to investors -- the U.S. is taking the lead in the emerging market for directly capturing greenhouse gases

  • Yesterday, the oil, gas and chemicals company Occidental Petroleum agreed to acquire Carbon Engineering for $1.1 billion

  • The acquisition, coupled with a big announcement of two new billion dollar projects in Texas and Louisiana put the U.S. as a frontrunner in an entirely new industry

  • Ultimately, capturing greenhouse gases could be worth trillions of dollars for businesses that tackle the problem

  • The industry is necessary if the world is going to avoid catastrophic consequences of more excessive global warming

Preventing catastrophic planetary warming is going to require the removal of hundreds of billions of tons of greenhouse gases from the atmosphere -- and recent developments in the United States put the nation in the leadership position of the industry to make that happen.

Driving what could be a multi-trillion dollar market for the cleanup on aisle Earth are a host of new technologies that are only now ready for their close-up.

These innovations fall broadly under the heading of carbon dioxide removal (named after the most abundant greenhouse gas currently blanketing the globe). More specifically, the U.S. is spending billions on direct air capture -- the technologies that, like the name suggests, take carbon dioxide directly out of the air.

It's energy intensive and expensive -- and it could provide a lifeline to the oil and gas industry whose emissions have caused this problem in the first place. But it's also considered to be a vital part of the broader solution to the world's climate crisis.

And, thanks to billions of dollars in government and private sector spending in the U.S. over the month of August alone -- it's having a moment.

Driving the U.S. to the forefront of this emerging industry are recent announcements from both government and big business.

Most recently, investors in these new technologies are getting their first taste of the potential to make real money backing these businesses.

On August 15, the oil and gas company Occidental Petroleum agreed to buy Carbon Engineering (a direct air capture technology developer it already had been working with for years) in a $1.1 billion transaction. That in itself would be a strong signal to the market, according to investors in the climate tech industry.

"It's a big acquisition for any market," said one investor focused on climate solutions. "Particularly since the broader M&A markets for climatetech are so immature... It’s certainly remarkable.. [given] the carbon credit market is relatively immature at best."

These companies also have a massive new booster in the U.S. government.

Under new initiatives that were baked into last year's Inflation Reduction Act, the US will be spending over $3 billion to support new technology development and projects focused on direct air capture technologies.

The marquee projects include one that Carbon Engineering and Occidental Petroleum are developing in Texas and another in Louisiana being built out by Climeworks, a Swiss-based technology developer, and Heirloom Carbon, a San Francisco-adjacent direct air capture company.

The two big projects reflect two very different approaches to what to do with the CO2 once it's captured.

Oxy and Carbon Engineering have spent the last few years marketing their ability to make synthetic jet fuel out of the captured carbon dioxide. Which means that the companies are basically playing catch and release with the CO2. It ensures more oil and gas is kept in the ground, but doesn't actually reduce overall emissions.

Meanwhile, Heirloom takes captured carbon and permanently stores it underground or uses it in building materials that will last (ideally) at least 100 years -- making the solution developed in Louisiana a potentially more permanent one.

No matter the pathway, the leading regulatory bodies and research agencies believe that carbon dioxide removal and direct air capture will be necessary to keeping the world below catastrophic levels of warming.

And U.S. regulators and government officials believe it too.

“Cutting back on our carbon emissions alone won’t reverse the growing impacts of climate change; we also need to remove the CO2 that we’ve already put in the atmosphere—which nearly every climate model makes clear is essential to achieving a net-zero global economy by 2050,” U.S. Secretary of Energy Jennifer M. Granholm said in a statement.

“With this once-in-a-generation investment made possible by President Biden’s Investing in America agenda, DOE is laying the foundation for a direct air capture industry crucial to tackling climate change, transforming local economies, and delivering healthier communities along the way,” Granholm added.

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