Tech giants invest in carbon removal technology
Microsoft and Meta, formerly known as Facebook, are among the leading buyers of carbon removal credits from companies that use direct air capture (DAC) technology to suck carbon dioxide (CO2) out of the atmosphere and store it underground. DAC is a promising but expensive way to reduce greenhouse gas emissions and combat climate change.
Microsoft has announced a new purchase agreement with CarbonCapture, a startup building a huge carbon removal project in Wyoming. The project, named Project Bison, is expected to start operating in the latter half of 2024 and capture and store around 10,000 metric tons of CO2 annually. Microsoft has also invested in other DAC companies, such as Climeworks and Carbon Engineering, as part of its goal to become carbon negative by 2030 and remove all its historical emissions by 2050.
Meta has also committed to buying carbon removal credits from DAC providers, such as Charm Industrial and Carbon Engineering. Meta aims to reach net zero emissions for its entire value chain by 2030 and support the development of carbon removal solutions that can scale up and drive down costs.
DAC faces challenges and opportunities
DAC is a process that uses fans, filters, and chemical reactions to capture CO2 from the ambient air and concentrate it into a pure form that can be stored permanently underground or used for other purposes, such as making fuels or materials. DAC has the potential to remove large amounts of CO2 from the atmosphere, regardless of where it is emitted, and help achieve the goals of the Paris Agreement to limit global warming to well below 2°C.
However, DAC also faces significant challenges, such as high capital and operational costs, low public awareness and acceptance, and uncertain regulatory and policy frameworks. According to the International Energy Agency (IEA), DAC costs between $200 and $600 per ton of CO2 removed today, depending on the technology and location. The IEA estimates that DAC would need to reach a cost of $100 per ton or lower to be widely deployed and contribute to the global net zero target by 2050.
To overcome these barriers, DAC companies need more support from governments, businesses, and consumers. Governments can provide incentives, such as subsidies, tax credits, or carbon pricing, to make DAC more competitive and attractive. Businesses can create demand for carbon removal credits by setting ambitious climate targets and investing in DAC projects. Consumers can also play a role by choosing products and services that are made with low-carbon or negative-carbon inputs.
Carbon removal market is growing rapidly
The market for carbon removal credits is growing rapidly, as more companies and organizations recognize the need to go beyond reducing emissions and actively remove CO2 from the atmosphere. According to Carbon180, a non-profit organization that advocates for carbon removal solutions, the global demand for carbon removal credits increased by 332% in 2020 compared to 2019, reaching 9.4 million metric tons of CO2 equivalent. The supply of carbon removal credits also increased by 59% in 2020, reaching 5.8 million metric tons of CO2 equivalent.
The majority of the carbon removal credits in 2020 came from natural solutions, such as forestry and soil sequestration, which are typically cheaper but less durable than engineered solutions, such as DAC. However, engineered solutions are expected to grow faster in the coming years, as more DAC projects come online and more buyers seek high-quality and long-lasting carbon removal credits.
Microsoft and Meta are among the early adopters of engineered carbon removal solutions, but they are not alone. Other tech giants, such as Shopify, Stripe, and Google, have also expressed interest in buying carbon removal credits from DAC providers. Moreover, other sectors, such as aviation, oil and gas, and agriculture, are also exploring the potential of DAC to reduce their emissions and create new products and markets.
