Cover image by ClimateWorks

Direct air capture (DAC) is a carbon removal technology that can capture carbon dioxide from the ambient air and remove it permanently when combined with geologic sequestration. Direct air capture will very likely be needed to help the United States reach net-zero emissions by mid-century by balancing out residual emissions after deep reductions have been made. In the longer term, it can be used to help reduce atmospheric CO2 concentrations to safer levels.

In addition to its climate benefits, direct air capture can provide economic advantages to the countries and local areas hosting these facilities — for example, through increased investment in emerging technologies, increased tax revenue, job creation, and sometimes economic diversification of disadvantaged communities or regions.

U.S. Investment in Direct Air Capture to Date

Direct air capture is an emerging technology: Globally there are 18 DAC plants of varying sizes, capturing around 8,000 tonnes of CO2 (tCO2) per year. A million-tonne per year plant is currently under development in west Texas and is expected to be operational in late 2024. Meanwhile, a 36,000 tCO2/yr scale plant is under construction in Iceland — a nearly 10-fold increase from the largest plant in operation today, which is also in Iceland and captures 4,000 tCO2/yr.

While there is a large gap between direct air capture capacity on the ground today and the amounts most climate model scenarios point to, there has been significant growth in interest and investment in DAC over the past few years, indicating this shift is beginning to happen.

The Bipartisan Infrastructure Law and Inflation Reduction Act in the U.S. make unprecedented investments in direct air capture, combining funding with enhanced tax credits to spur development and adoption of DAC technology. The private sector is also stepping up: In 2022, a series of commitments and investments were announced for direct air capture or carbon removal technologies more broadly. For example, the Frontier Fund committed $925 million in advance market commitments for tonnes of carbon removed; Bill Gates’ Breakthrough Catalyst Fund is putting $1.5 billion into four key technologies including DAC; and Lowercarbon Capital raised $350 million to invest in carbon removal start-ups.

Challenges to faster DAC development and deployment include the need for more public and private financing; further build-out of enabling infrastructure (such as geologic sequestration facilities); a stronger market for carbon removal; and more robust governance, regulatory and permitting frameworks.

Direct Air Capture Initiatives Under New Climate Legislation

Direct air capture is entering a pivotal moment in its development following the enhancement of the 45Q tax credit for sequestered carbon under the Inflation Reduction Act. The 45Q credit for DAC more than tripled from $35-$50/tCO2 to $130-$180/tCO2; additional provisions reduce the capture threshold to receive the credit, extend the time projects can start by ten years and allow for direct payment of the credit.

Direct air capture also received extensive funding as part of the Bipartisan Infrastructure Law, most prominently $3.5 billion to build four DAC Hubs that can each remove at least 1 million tonnes of CO2 per year. This is the largest influx of funding for direct air capture, or any carbon removal technology, to date and will serve as a critical point of proof for the technology as well as for public acceptance of DAC projects. More than $4 billion was also provided through the Bipartisan Infrastructure Law to support building out geologic sequestration capacity and CO2 transport infrastructure. The law requires DAC developers to have strong community engagement efforts, develop community benefit plans and track the contributions projects will make to the Justice40 Initiative.

Additionally, the Department of Energy launched Carbon Negative Shot, with the goal of reducing the cost of carbon removal to $100/tCO2 for approaches that can reach the 1 billion tonne scale.

Next Steps for Advancing Direct Air Capture

Building public understanding and acceptance of DAC technology is an important first step. Ensuring that the process to develop and operate direct air capture hubs is transparent, inclusive and equitable will be critical to setting this technology on track for long-term scale-up.

Public awareness and education

To gain the public support required to scale direct air capture, there is a need for broad public education about its benefits and potential challenges, as well as specific efforts to enable community members to understand and evaluate facility proposals. Understanding and awareness of DAC is low because it’s a new technology and a new type of business — selling tons of CO2 instead of a product or service will be a foreign concept for many investors and communities. 

To complicate matters, direct air capture is often conflated with carbon capture and storage (CCS), and its acceptance depends on targeted education to key stakeholders to help differentiate the two. Point-source carbon capture and storage is a form of emissions reduction which captures CO2 emissions at the source (such as a power plant); it can have different local health impacts depending on the facility on which it is retrofitted. CCS is typically associated with fossil fuel-powered operations and may reduce some of the air pollution coming from their smokestacks but may not capture hazardous air pollutants. Direct air capture, by comparison, removes carbon from the ambient air, will not produce significant amounts of soot or smog, and releases only trace amounts of chemicals.   

Local zoning and planning

State, county and city environmental justice initiatives can assemble advisory panels to provide input on planning and zoning decisions. This will help ensure that health and economic impacts on marginalized communities are considered in planning decisions and that infrastructure serving a public good, such as direct air capture, is distributed equitably.

Local planning and policies can help counteract historical patterns of land use that concentrate locally unwanted projects near and in communities that are low-income, Indigenous, or composed predominantly of people of color. Planning can also help address zoning driven by “NIMBYism (not-in-my-backyard-ism)” — or an acceptance of the need for infrastructure but opposition to building the infrastructure near the opponent’s home or community. Zoning influenced by NIMBYism can concentrate industrially zoned land and the resulting facilities in communities that have less political power to inform siting decisions and negotiate benefits.

Construction permitting processes

Cities, states and counties can develop ordinances requiring new direct air capture facilities, infrastructure and CO2 sequestration sites to complete environmental impact and environmental justice review processes to be eligible to receive building permits. Newark, New Jersey set a precedent by passing an ordinance that requires developers seeking permits to disclose possible environmental impacts. Related ordinances could similarly require community engagement and consultation prior to permits being granted.

Regulating use of DAC toward emission reduction goals

There is general scientific consensus that carbon removal technologies, including direct air capture, will be a critical tool to meet climate goals alongside deep emissions reductions. However, some climate advocates have raised concerns that DAC could be a distraction from needed emissions reductions.

State and local governments can establish policies and practices to address those concerns in a variety of ways. For example, the California Climate Crisis Act (AB1279) establishes a goal to cut statewide emissions by 85% by 2045. The bill allows carbon dioxide removal to complement emissions reductions to achieve the state’s ultimate net negative goal; however, it makes clear that emissions must be brought near zero through reductions with carbon removal providing additional progress toward the goal — not substituting for direct reductions at the source of the pollution. Companies that have adopted Science Based Targets must abide by guidelines that require them to reduce emissions in their value chain as low as possible (around 90%) and invest in permanent carbon removal to address the remaining residual emissions.

Next steps for the private sector

Direct air capture project developers can prioritize procurement of lower-emission versions of materials like cement and steel, where possible, and can prioritize environmental impacts when selecting chemicals used to capture atmospheric CO2 and their suppliers. DAC developers can also prioritize environmental impact, along with cost and efficiency, for in-house RD&D.

Because it has the potential to permanently remove carbon, direct air capture could provide verifiable carbon removals for emissions that are hard to abate in the near term. If DAC projects provide carbon credits, credit certification programs could help to verify that the projects producing credits are developed in an environmentally and socially responsible way.

Overcoming Implementation Challenges

Direct air capture is an emerging technology, so policies are needed across the spectrum from basic research to develop new variations, to deployment support for the systems that exist today. This range of support exists to some extent — including annual appropriations for research and development at the Department of Energy (DOE) and the 45Q tax credit for deployment — but more is needed.

In addition, the decision-making process around siting direct air capture plants will need to be inclusive and equitable. Siting of DAC plants must consider that today’s DAC systems require a significant amount of energy and, if powered by renewables, a significant amount of land. Meaningful community engagement will be crucial to help determine siting and ensure that host communities consent to these projects and receive their benefits.

Project developers will need to report on equity and community engagement for funding provided by DOE. At the same time, it is likely that some projects will face community pushback or concern, which could be related to several aspects of proposed plants:

  • Local health and environmental impacts of operating direct air capture plants. Research finds that overall, direct air capture plants are expected to produce zero or almost zero onsite emissions that could negatively impact human health or the environment. However, few plants exist today and there is little data available on which to base a more comprehensive environmental impact assessment.
  • Health, safety and environmental impacts of geologic sequestration facilities and CO2 pipelines, which would likely be needed to support large-scale direct air capture build out. For example, the city of New Orleans voted in June 2022 to ban carbon capture, utilization and storage (CCUS) projects, including infrastructure for transport and underground sequestration, due to concerns over safety and protection for human health and the environment. Rather than banning CCUS projects outright, jurisdictions have the opportunity to instead set rigorous standards for health, safety and environmental protection that could address local concerns and set a high standard for direct air capture developers. Proposed CO2 pipelines are also receiving pushback in Iowa. Use of already disturbed land (such as existing pipeline or electric transmission routes) that avoids population centers and use of eminent domain could help reduce conflict.
  • Use of natural gas to power direct air capture systems. One of the leading direct air capture systems today uses natural gas with carbon capture and storage (CCS) to power DAC because its technology requires high temperatures that can be difficult to generate with renewable electricity. While this system includes capture of the CO2 emissions from natural gas combustion, some communities may be opposed to use of fossil fuels to power a direct air capture plant. Jurisdictions have the option to preclude geologic sequestration facilities from storing CO2 captured from fossil fuel power sources.
  • DAC-CO2 for enhanced oil recovery. In addition to being sequestered underground for dedicated storage, CO2 captured by direct air capture can also be used for enhanced oil recovery (EOR) where it is injected into depleted oil wells to produce additional oil. The practice is controversial even though the process would likely continue to use CO2 mined from natural underground domes if DAC-CO2 isn’t used. There has been some movement toward geologic sequestration due in part to consumer demand, and California recently enacted legislation banning the use of CO2 for enhanced oil recovery. But higher oil prices (above $100/bbl) could re-incentivize EOR in jurisdictions that allow it.

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