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A New Era Of Net Zero Strategic Investments Has Begun | |
| Staff Writer |
Climeworks has recently raised an unprecedented US$650 million in strategic investment as investors manifest an increased interest in direct air carbon capture. In fact these numbers are significantly higher than Verdox which managed to raise US$80 million in 2022.
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Growing focus on net zero strategies, along with soaring prices for regulated and voluntary carbon credits, means that carbon management strategies are entering a new era. Verdantix has predicted a wave of new innovative technology and services providers coming to market with propositions to limit the global temperature rise to 1.5°C by 2050.
In particular, dramatic growth in the level of investment in direct air carbon capture (DACC) technology solutions, a technology that captures carbon dioxide directly from ambient air with an engineered, mechanical system.
Voluntary carbon credits exceeded $1 billion for the first time in 2021.
An analyst at Verdantix, Connor Taylor, said: “DACC is at a relatively early stage of maturity but presents an exciting decarbonization opportunity for climate-focused firms. We’re already seeing increased investment in the sector, with Climeworks raising $650 million – an unprecedented sum for the market, Carbon Engineering recently raising in excess of $100 million, and Verdox raising $80 million earlier this year.
The demand for ‘neutralization’ offsets is high. Unlike nature-based credits, they remove carbon on an almost permanent basis. There are minimal concerns present around the additionality of the credit. Currently, availability is small; only Climeworks has commercialized DACC credits on a large scale.
Climate-conscious brands are not the concern. For big emitters, they are simply too expensive and the quantities are currently too small. For firms with relatively small direct footprints, investing in neutralisation credits is a viable strategy to deflect greenwashing accusations, and offset otherwise unreducible emissions, such as those from air travel.
“Perhaps the biggest recent move in this space is the US$3.5bn funding promised by President Biden’s infrastructure bill, for the building of four direct-air carbon capture facilities in the United States. In addition, a recent IPCC report placed considerable emphasis on carbon capture as a key technology for meeting decarbonisation goals, and that may also have a significant impact on the sector’s development.”
Carbon Engineering, which has received funding from Chevron and Occidental Energy, plans to use captured carbon for oil recovery in the Permian Basin, claiming that this oil will essentially be carbon neutral.
“Time will tell if ExxonMobil – which has promised to reach net-zero operations in the Permian basin by 2030, partially through ‘employing emissions offset technology’ – will similarly leverage DACC technology to produce ‘carbon neutral’ oil.” Taylor added.
Verdantix says DACC is a good fit for companies seeking to:
Carbon offset credits can expose buyers to certain reputational threats as they come with question marks around their baselines, additionality, longevity, and impact on local communities.
A high-quality carbon removal is a zero-reputational-risk option; it is a perfect fit for brand-conscious firms as well as an enabler for high-profile climate initiatives, such as Stripe Climate.