1PointFive, Occidental Petroleum’s subsidiary that’s developing the world’s largest direct air capture (DAC) plant, and TD Bank Group (TD), 6th largest bank in North America, entered into one of the finance industry’s biggest purchase deals of carbon removal credits.
The credits will come from STRATOS, 1PointFive’s DAC plant currently under construction in Texas. The facility has already sold several advance purchases of carbon removal credits (CDR) to other major companies seeking to offset their emissions.
Under their agreement, TD Securities agreed to buy 27,500 metric tons of carbon dioxide removal credits over 4 years. The amount of the CDR credits is one of the largest bought so far by a financial institution.
TD has over 16 million active online and mobile customers, with $1.9 trillion in assets on July 31, 2023.
First Large-Scale DAC Technology Deployment
Direct air capture, popularly known as DAC, is one of the emerging carbon removal technologies. The U.S. Department of Energy believes that it’s a game-changing technology that has the potential to help the economy head toward net zero.
1PointFive’s STRATOS can capture and remove up to 500,000 metric tons of carbon dioxide from the atmosphere annually. It’s also designed to be the world’s first large-scale commercial deployment of DAC technology for secure and durable storage in geologic formations.
This DAC project is one of the DOE’s $1.2 billion grant awardees, alongside Climeworks’ Project Cypress.
The CDR credits from 1PointFive’s DAC plant will provide a high-integrity solution for companies to reach their net zero targets. The facility can remove up to 1 million tons of CO2, which is scalable up to 30 million tons a year. Thus, if that happens, it would be one of the world’s biggest experiments in DAC.
STRATOS will use DAC technology from Carbon Engineering’s (CE), a company acquired by Occidental for $1.1 billion. The technology uses giant fans to suck in CO2 that would be pumped underground or utilized to make valuable products.
The image illustrates how CE DAC technology works in capturing CO2.
As per 1PointFive’s President and Michael Avery, the credits from DAC will be “measurable, transparent and durable, with the goal of providing a solution for organizations to address their emissions.”
The captured carbon underlying the removal credits sold to TD Securities will be particularly stored underground in geologic formations.
Carbon Offsets for TD’s 2050 Net Zero Target
Ernst & Young (EY) projected the volume and contribution of carbon removal credits by 2050. In particular, their outlook includes nature-based and technology-enabled, where DAC belongs, net zero scenarios with removal-based credits.
Remarking on their deal, Global Head of ESG Solutions Amy West said:
“As the need to move from climate commitments to action intensifies, corporations across all sectors are looking for tangible ways to achieve their net zero goals… We’re incredibly proud to partner with 1PointFive to support innovative, technology-based solutions that are intended to advance both our clients’ and our own decarbonization goals.
The move complements TD Securities’ wider ESG Solutions platform focusing on giving clients short, medium and long-term solutions for transitioning to a lower carbon economy. Moreover, the carbon removal credits from the transaction will also be for offsetting TD’s own operational emissions.
TD unveiled its Climate Action Plan to reach net zero emissions associated with its operating and financing activities by 2050.
This ambitious plan also includes the creation of a new TD Finance and Corporate Transitions Group to provide clients with advisory services and essential sustainability-focused financing globally. These sustainable finance activities include the following:
- Listed on the Dow Jones Sustainability World Index for 9 consecutive years
- Currently the top-ranked North American-based bank on the World Index
- An active member of the International Emissions Trading Association (IETA)
- Formed a Carbon Markets Advisory team, focusing on the compliance and voluntary markets
- Invested $10 million in the Boreal Wildlands Carbon Project, the largest private land conservation effort in Canadian history
Bringing Confidence and Scale to Carbon Markets
Moreover, last year, TD Securities became part of Rubicon Carbon’s coalition of corporate sustainability lenders. Their goal is to help scale up the carbon market and bring confidence and innovation across its segments.
This year, the financier revealed its new Sustainable and Decarbonization Finance Target for the next decade. With this initiative, they aim to generate CAD$500 billion through various financial activities, including financing, lending, insurance, and investments.
Transitioning to a low-carbon economy is not easy and it requires revolutionary approaches across industries and adoption of innovative technologies. A senior vice president at TD believes that direct air capture is a promising tool that can help advance progress in this sector.
The groundbreaking purchase deal between 1PointFive and TD Bank Group signifies a pivotal step in bolstering carbon removal efforts. It could help drive a wave of confidence and scale in the emerging carbon removal market.