HomeCarbon CreditsAre Direct Air Capture Plants Facing Massive Clean Energy Challenge in the...

Are Direct Air Capture Plants Facing Massive Clean Energy Challenge in the U.S.? A S&P Global Report

With Direct Air Capture (DAC) technology gaining momentum, some companies involved are facing the significant challenge of securing enough clean power to sustain their energy-intensive operations in the US. S&P Global has scrutinized the situation and has reported the challenges and potential solutions to overcome the massive clean energy demand of DACs.

As DACs Expand, So Does the Quest for Clean Energy                                                       

Earlier this year, Climeworks launched the world’s largest DAC plant in Hellisheiði, Iceland. The location was ideal, offering abundant geothermal heat and power. But as Climeworks shifted its focus to the U.S., drawn by federal subsidies and opportunities for expansion, the company faced a new hurdle: energy procurement.

Well, Douglas Chan, Chief Operating Officer of Climeworks, emphasized the importance of understanding the U.S. grid, which the company has studied for nearly three years. They pioneer in absorbing CO2 from the atmosphere and sell the carbon offsets to major corporations such as Microsoft. However, without a reliable source of clean power, the entire purpose of this technology i.e. reducing carbon emissions could be compromised.

In another instance, Max Scholten, Head of Commercialization at Heirloom Carbon Technologies, explained the critical need for low-carbon electricity sources. He stressed that what DAC companies sell must be a net removal of CO2, meaning they cannot emit more CO2 than they capture. This need for clean energy has placed added pressure on DAC plants to prove that their electricity sources are zero-emission, new, and “additional” to the grid.

Is Funding Enough to Navigate the U.S. Energy Landscape?

Last year, in August, the DOE announced a whopping $1.2 billion in funding to develop two major DAC facilities led by Climeworks and Occidental (Oxy). The funding was part of President Biden’s Investing in America agenda, marking the beginning of the Bipartisan Infrastructure Law’s Regional DAC Hubs program, designed to create a nationwide network of large-scale carbon removal sites.

Secretary of Energy Jennifer M. Granholm emphasized the importance of these investments by remarking,

“Addressing climate change requires not just reducing emissions but also removing existing CO2 from the atmosphere. This historic investment will help build a crucial industry for combating climate change while supporting local economies.”

For example, the landmark project is led by 1PointFive, a subsidiary of Occidental. This project will initiate the installation of the South Texas Direct Air Capture (DAC) Hub. The hub on King Ranch in Kleberg County aims to become the world’s first DAC plant capable of removing up to 1 million metric tons of CO2 annually.

Clean Power Solutions for DAC Expansion

As the U.S. power consumption continues to rise, DAC companies face long grid connection queues, some stretching over the years. Thus, many DAC companies are choosing to follow strict carbon accounting standards to meet the expectations of buyers and carbon credit exchanges.

Thus, funding is not a problem for DAC plants, but energy procurement is. S&P Global reported that Puro.earth, the carbon removal certifier requires detailed energy emissions analysis for DAC projects listed on its exchange. Such projects must use renewable energy certificates or similar instruments to offset grid emissions, ensuring that the electricity is generated and consumed within the same physical grid and calendar year.

DAC Projects in the U.S.

direct air capture

source: Reuters

The good news is the challenge of securing sufficient clean power has not deterred the sector’s growth. Consequently, Climeworks’ upcoming facility, part of the Battelle-led Project Cypress hub in Louisiana, is set to capture about 1 MMTCO2 annually. This is much more than its current Iceland plant, Mammoth. This project also comes under DOE’s 1.2 billion funding program. Notably, Climeworks is working with renewable energy developers to secure virtual power purchase agreements to achieve this target.

Meanwhile, Heirloom’s initial projects, also part of Project Cypress, will rely on additional wind, solar, and storage facilities. This approach is crucial as DOE has committed around $600 million each to support large-scale DAC hubs on the Gulf Coast.

Furthermore, this level of scrutiny highlights the importance of “additionality”—a concept ensuring that the clean power used by DAC plants is genuinely new and not merely diverted from other uses.

In conclusion, DAC offers great potential in combating climate change. However, as it expands in the U.S., securing clean energy to power operations is a major challenge. S&P Global has scooped this paramount factor and analyzed it focusing on innovative energy solutions and sustainability. With these viable solutions, major carbon capture companies like Climeworks and Heirloom are bound to succeed.

Most Popular
LATEST CARBON NEWS

Solar-Plus-Storage: The Hybrid Solution Revolutionizing America’s Clean Energy Landscape

Solar-plus-storage systems are rapidly emerging as a game-changing solution in renewable energy. These systems tackle two critical issues: the intermittency of solar power and...

EU Launches €2 Billion Second Renewable Hydrogen Auction to Fuel Net Zero

The European Commission (EC) has launched a nearly €2 billion hydrogen auction as part of its broader €4.6 billion initiative to accelerate net-zero technologies....

Laconic Teams Up with Planet to Revolutionize Forest Carbon Insights for Smarter Carbon Credits Trading

Planet Labs PBC a leading provider of global, daily satellite imagery and geospatial solutions announced that they have signed a multi-year, seven-figure deal with...

SolarBank Charges Ahead with $3M Boost for Battery Energy Storage System Projects

SolarBank Corporation, a pioneer in clean and renewable energy in Canada and the U.S., is entering the battery energy storage market by securing $3...
CARBON INVESTOR EDUCATION

What’s Shaping North America’s Natural Gas in 2024? Insights from Wood Mackenzie

The natural gas market has immensely benefitted this year from robust storage levels and stabilized prices after the sharp spikes of 2022. However, challenges...

EU’s Green Bonds to Slash 55 MTS of CO₂ Annually. Can it Hit Europe’s 2050 Net Zero Target?

The European Commission released its NextGenerationEU (NGEU) Green Bonds Allocation and Impact Report 2024 explaining how proceeds from green bonds are being used to...

What is COP29 and Why Is It Hailed as The “Finance COP”?

As climate change worsens, the UN’s 29th annual climate conference, a.k.a. COP29, taking place from November 11 to 22, 2024, in Baku, Azerbaijan, is...

Carbon Credits vs. Carbon Offsets

Carbon Credits vs. Carbon Offsets: What's the Difference? At their core, both carbon credits and carbon offsets are accounting mechanisms. They provide a way to...