A recent report from the International Energy Agency shows that carbon capture, sequestration, and utilization projects are coming fast and furious -- and this time the market could be real.
These technologies are essential to mitigating global climate change, because the world needs to do more than just stop putting greenhouse gases into the atmosphere, industry also needs to remove the gases that are already there.
A new contract between the financial tech developer, Square, and direct air capture company, Climeworks, to remove 2,000 tons of carbon dioxide from the air is just an illustration of how far direct air capture has come -- and the early demand from well-meaning adopters. Climeworks also counts Microsoft, Shopify, and Stripe among its customers.
Earlier this year, Charm Industrial, another carbon capture and sequestration company, announced the permanent sequestration of 5,000 tons of carbon dioxide from the atmosphere. It was another significant milestone for the carbon removal market.
According to the IEA report, these initiatives are just the tip of a (quickly melting) iceberg of projects focused on carbon capture, sequestration, and utilization. So far in 2021 over 100 new carbon capture and utilization facilities have been announced and the pipeline for carbon dioxide capture is on a pace to quadruple.
The U.S. and Europe are leading the charge on these projects (as they should because they're the largest historical emitters of carbon dioxide in the world). The U.S. intends to spend at least $12 billion on CCUS as part of the massive infrastructure package that President Joe Biden signed into law earlier this year.
Meanwhile, Norway is going to spend $2 billion on the Northern Lights offshore storage hub for carbon announced earlier this year. Elsewhere in Europe, the Netherlands committed up to EUR 2 billion for its own CCUS hub in Rotterdam; and the UK has a GBP 1 billion infrastructure fund that will be developing four carbon capture hubs by 2030. All of that is on top of the four projects funded by the European Union as a whole from its EUR 10 billion climate-focused Innovation Fund.
The world has made other attempts to push through carbon capture technology in the past.
After the global financial crisis in 2008 and 2009, nearly $9 billion was dedicated to projects around the world -- but none of those projects were able to meet their targets and only 30% of the cash was allocated to projects.
Problems ranged from a failure to receive necessary permits to the structure of grants issued to the projects failing to account for costs associated with storage of the captured gases and maintenance of the more expensive facilities contributed to their demise or downsizing.
If government funding and technical limitations were the death knell for the last generation of carbon capture solutions, a new appetite for these technologies -- and advancements in fundamental components of the technology -- could signal their rebirth.
“Square’s long-term commitment to remove unavoidable CO2 emissions with Climeworks shows that the financial services industry is a frontrunner in the scale-up of the carbon dioxide removal market, and we are excited to start this journey with Square.” Christoph Gebald, co-CEO and co-founder of Climeworks, said in a statement.
Commitments from companies like Square, Microsoft, Stripe, and Shopify help drive down and create early demand for direct air capture technologies and other solutions, like the Charm Industrial sequestration project. Eventually, the development of a global market that sets a price on greenhouse gas emissions should drive other businesses to develop offset solutions that include carbon capture.
“We’re thrilled to partner with Climeworks as an important long-term ally in our path to net zero. Early and long-term adoption of this technology is investing in a future of affordable and large-scale removal which is an essential component to helping mitigate the future negative externalities of climate change.” Neil Jorgensen, Global ESG Lead of Square, Inc. said in a statement.