Occidental Petroleum revealed plans to acquire Canadian Direct Air Capture supplier Carbon Engineering through its subsidiary Oxy for $1.1 billion.
The oil major’s Oxy Low Carbon Ventures subsidiary advances technologies and solutions that economically grow the company while reducing emissions.
Carbon Engineering (CE) provides climate solutions focusing on deploying large-scale direct air capture (DAC) technology. It captures carbon directly from the atmosphere and stores it in geologic formations or uses it to make valuable products.
Accelerating DAC Deployment and Technology Breakthroughs
Occidental and CE have been working on DAC technologies for almost five years now. The buyout will allow Occidental to establish multiple direct air capture sites to deliver climate change solutions.
DAC is Occidental’s low-carbon strategy toward its net zero goal. Last year, it signed a net zero oil deal with South Korean refiner SK Trading.
Occidental plans to build about 100 DAC plants to rapidly advance the technology breakthroughs and ramp up deployment. That way the energy giant can help make DAC a cost-effective global carbon removal solution.
Buying out Carbon Engineering is a good opportunity to make that happen while aligning with Occidental’s net-zero strategies. CE’s DAC technology applies standardized and proven processes.
The image shows how CE’s DAC technology works. It uses giant fans powered by solar energy to suck in CO2. The liquid sorbents draw in carbon that will be heated to get pure CO2, which would be injected underground or used in making valuable products.
Carbon Engineering DAC Process
Highlighting the importance of their agreement in scaling up DAC, Occidental President and CEO Vicki Hollub said:
“Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”
Hollub added that it will bring new revenue streams for Occidental, adding to its profitability.
Occidental will buy CE’s equity for cash in 3 annual payments, with the first due when their agreement turns official.
Their deal will close before this year closes, subject to regulatory approvals in both the United States and Canada. After this Carbon Engineering would be a wholly owned subsidiary of Oxy Low Carbon Ventures. Its R&D activities and Innovation Center will remain as is in BC, Canada.
The DAC company’s personnel will also continue their usual DAC tech development efforts while working closely with Occidental and 1PointFive to provide DAC solutions.
1PointFive is a Carbon Capture, Utilization, and Sequestration (CCUS) platform aimed at curbing global warming by deploying climate solutions. And this particularly includes CE’s DAC solution.
A Growing Support for DAC
Carbon Engineering CEO Daniel Friedmann expressed their appreciation of the acquisition as the next chapter in their journey. The deal shows their commitment to “accelerate implementation of DAC-based climate solutions in the U.S. and around the world.”
The deal comes as part of the US government’s intent to employ DAC, alongside other carbon removal technologies, to reach net zero emissions by 2050.
Just last week, the US Department of Energy made a huge bet on DAC technology by planning to spend over $1.2 billion on two DAC projects in Texas and Louisiana. Together, these facilities can potentially remove over 2 million metric tons of carbon emissions each year.
Some of the dollars will be under Oxy’s hands as it manages the West Texas-based DAC project called Stratos.
1PointFive is building Stratos in Ector County, Texas. Occidental and CE are adapting the project’s front-end engineering and design study for a planned DAC facility at Kleberg County. This new plant will be part of the DAC Hub that won DOE’s federal grant.
Employing Carbon Engineering’s DAC technology, Stratos would be the largest DAC plant worldwide in 2025. The other recipient of the grant is Climeworks-led Project Cypress in Louisiana. Climeworks said its DAC hub construction will start as soon as possible, targeting 2025 or 2026.
Right now, the US government is pioneering massive support programs for advancing DAC and scaling it up. But other countries like the UK and EU are keeping pace with their recent announcements of DAC funding programs.
The world needs to remove 1 billion tons or 1 gigatonne of CO2 annually by 2030 to prevent catastrophic disasters. Though it can’t deliver such a big amount of carbon removal, DAC is one option entities have at their disposal.
As governments and industries prioritize DAC, Occidental’s vision aligns with the growing support for innovative carbon capture solutions worldwide.