Case study: Direct air capture (DAC) economics & deployment — a city or utility pilot and the results so far

In June 2024, the US Department of Energy announced $3.5 billion in funding for two Regional Direct Air Capture Hubs under the Bipartisan Infrastructure Law, selecting Project Cypress in Louisiana and South Texas DAC Hub as the first large-scale deployments in the Western Hemisphere. By early 2026, Climeworks' Mammoth plant in Iceland had reached 36,000 tonnes of CO2 capture capacity per year, making it the largest operational DAC facility globally. Yet the economics remain daunting: the IEA's 2025 assessment found that operational DAC costs range from $400 to $1,000 per tonne of CO2 captured, far above the $100 to $200 per tonne threshold widely considered necessary for gigatonne-scale deployment. The gap between current performance and commercial viability makes city and utility-scale pilot projects essential proving grounds for cost reduction pathways.

Why It Matters

The Intergovernmental Panel on Climate Change's Sixth Assessment Report identifies carbon dioxide removal as necessary across virtually all modeled pathways that limit warming to 1.5 degrees Celsius. The IPCC's median estimate calls for 6 to 10 gigatonnes of CO2 removal per year by 2050, while current global DAC capacity stands at roughly 0.01 megatonnes per year. Closing this six-order-of-magnitude gap requires a deployment trajectory comparable to solar photovoltaics in the 2000s: rapid iteration, learning-by-doing at progressively larger scales, and public-private financing structures that de-risk early projects.

For municipalities and utilities, DAC pilots serve multiple strategic purposes. Cities with binding net-zero commitments face residual emissions from sectors such as waste management, legacy buildings, and transportation that cannot be fully decarbonized by 2030 or even 2040. A credible DAC procurement contract allows a city to address these hard-to-abate emissions while building local expertise in carbon management infrastructure. Utilities, particularly those operating combined heat and power or waste-to-energy facilities, can integrate DAC systems that leverage waste heat to reduce the thermal energy penalty that accounts for 60 to 80% of DAC operating costs.

The economic multiplier effects are also significant. The DOE estimates that each Regional DAC Hub will create 4,000 to 5,000 construction jobs and 500 to 1,000 permanent operational positions, with supply chain benefits extending across chemical manufacturing, heat exchanger fabrication, and geological storage services (DOE, 2024).

Key Concepts

Liquid solvent DAC uses an aqueous alkaline solution (typically potassium hydroxide) to absorb CO2 from ambient air in large contactors, then regenerates the solvent at high temperatures (roughly 900 degrees Celsius) using a calciner. Carbon Engineering (now part of Occidental Petroleum's 1PointFive subsidiary) is the primary developer of this approach, which favors large-scale centralized plants of 500,000 to 1,000,000 tonnes per year.

Solid sorbent DAC passes air through filters coated with amine-based sorbents that chemically bind CO2. Regeneration occurs at lower temperatures (80 to 120 degrees Celsius), enabling integration with industrial waste heat, geothermal energy, or heat pumps. Climeworks and Global Thermostat are the leading solid sorbent developers. Solid sorbent systems are more modular, with individual collector units capturing 50 to 500 tonnes per year.

Levelized cost of carbon removal (LCOCR) is the fully loaded cost per tonne of CO2 permanently removed from the atmosphere, including capital expenditure, energy, sorbent or solvent replacement, monitoring, reporting, and verification (MRV), and geological storage. LCOCR provides a standardized metric for comparing DAC approaches and tracking cost reduction over time.

Technology Readiness Level (TRL) for DAC ranges from TRL 6 to 7 for most commercial systems, indicating that technology has been demonstrated in relevant environments but has not yet achieved routine commercial operation at scale. The DOE's target is to advance DAC to TRL 9 (proven in operational environment) while reducing costs to $100 per tonne by 2032.

What's Working

Climeworks Mammoth Plant in Iceland

Climeworks' Mammoth facility, commissioned in stages from mid-2024 through early 2025, represents the most advanced operational DAC deployment. Located adjacent to the Hellisheidi geothermal power plant, Mammoth uses Iceland's abundant geothermal energy for both electricity and low-temperature heat for sorbent regeneration. The plant's 72 collector containers, each containing modular fan-and-filter units, draw ambient air and capture CO2 onto solid amine sorbents.

Captured CO2 is dissolved in water and injected into basaltic rock formations at depths of 700 to 2,000 meters through Carbfix's mineralization process. Independent verification by the Carbfix research team has confirmed that over 95% of injected CO2 mineralizes into stable carbonate minerals within two years, providing functionally permanent storage (Carbfix, 2025). Mammoth's reported capture rate reached 36,000 tonnes per year by Q1 2025, with sorbent degradation rates running 15% lower than projected, suggesting that the third-generation sorbent formulation is performing well in field conditions.

The facility sells verified carbon removal credits at approximately $600 to $800 per tonne to corporate buyers including Microsoft, Shopify, and Swiss Re through multi-year offtake agreements. While this price point remains well above the long-term target, the willingness of blue-chip buyers to sign advance purchase commitments has been critical for project financing.

1PointFive STRATOS Plant in Texas

Occidental Petroleum's 1PointFive subsidiary broke ground on the STRATOS DAC plant in Ector County, Texas, in 2022 and began commissioning in late 2024. STRATOS uses Carbon Engineering's liquid solvent technology at a designed capacity of 500,000 tonnes of CO2 per year, making it the largest DAC facility under development globally. The plant is co-located with Occidental's existing CO2 pipeline and enhanced oil recovery (EOR) infrastructure, which provides a ready destination for captured CO2 and reduces transport costs.

The DOE awarded STRATOS $600 million through the Regional DAC Hubs program, covering approximately 40% of the estimated $1.3 billion total project cost. Initial commissioning data from the first operational modules (representing roughly 10% of total capacity) showed energy consumption of 6.6 gigajoules of thermal energy and 366 kWh of electricity per tonne of CO2, tracking within 8% of design specifications (1PointFive, 2025). The project's integration with natural gas combined heat and power, with the combustion emissions themselves captured by the system, demonstrates a pathway to near-zero lifecycle emissions even when using fossil energy inputs.

Project Cypress in Louisiana

Project Cypress, led by Battelle in partnership with Climeworks and Heirloom Carbon Technologies, received $600 million in DOE funding in 2024 for deployment in Calcasieu Parish, Louisiana. The project is notable for combining two distinct DAC technologies at a single site: Climeworks' solid sorbent system and Heirloom's limestone-based passive carbon mineralization approach. Heirloom's technology spreads limestone (calcium oxide) on large trays exposed to ambient air, where it passively absorbs CO2 and converts to calcium carbonate over several days. The calcium carbonate is then heated in a renewable-energy-powered kiln to release concentrated CO2 for storage and regenerate the limestone.

This dual-technology approach provides valuable comparative data on cost trajectories and operational characteristics. Project Cypress targets initial capture of 100,000 tonnes per year in its first phase, scaling to over 1,000,000 tonnes per year. The Louisiana site was selected partly for its extensive geological storage potential in deep saline formations and depleted oil reservoirs, with estimated storage capacity exceeding 100 billion tonnes of CO2 across the Gulf Coast region (Battelle, 2024).

What's Not Working

Cost reduction is slower than projected. Despite improvements, no operational DAC facility has demonstrated costs below $400 per tonne. Climeworks' costs at Mammoth are estimated at $600 to $1,000 per tonne, while 1PointFive's STRATOS targets $400 to $500 per tonne at full scale. The DOE's aspirational target of $100 per tonne by 2032 requires a roughly 75 to 90% cost reduction in six years, a rate that even the most optimistic learning-curve models struggle to justify without transformative breakthroughs in sorbent chemistry or energy integration.

Energy consumption remains a fundamental constraint. Thermodynamic minimum energy for capturing CO2 at ambient concentrations (roughly 420 ppm) is approximately 21 kJ per mole, but real systems consume 5 to 10 times this theoretical minimum. For solid sorbent systems, the thermal energy for sorbent regeneration accounts for 60 to 80% of total energy input. Scaling DAC to megatonne capacity requires dedicated clean energy supply: a 1 million tonne per year solid sorbent plant would consume approximately 1.5 to 2.0 TWh of thermal energy annually, equivalent to the output of a mid-sized geothermal or nuclear facility.

Sorbent and solvent degradation creates ongoing operational costs. Amine-based sorbents degrade through oxidative and thermal mechanisms, with typical lifetimes of 3,000 to 10,000 adsorption-desorption cycles. At current sorbent costs of $30 to $80 per kilogram, sorbent replacement represents 15 to 30% of total operating costs. Liquid solvent systems face calcium hydroxide and potassium hydroxide consumption rates that scale linearly with capture volume.

Geological storage capacity is unevenly distributed. While the US Gulf Coast and Iceland's basalt formations offer excellent storage, many regions lack proximate geological storage. Transport of captured CO2 via pipeline adds $10 to $30 per tonne for distances of 100 to 500 kilometers, and pipeline permitting faces growing community opposition following incidents such as the 2020 Satartia, Mississippi CO2 pipeline rupture that hospitalized 45 residents (PHMSA, 2024).

MRV standardization is incomplete. Different registries and verification bodies use varying methodologies for quantifying net carbon removal, accounting for lifecycle emissions, and confirming storage permanence. The lack of a universally accepted MRV standard creates uncertainty for buyers and risks undermining credit quality.

Key Players

Established Companies: Occidental Petroleum (1PointFive subsidiary, STRATOS plant developer), Climeworks (solid sorbent DAC, Orca and Mammoth plants in Iceland), Equinor (Northern Lights CO2 transport and storage project in Norway), Chevron (investor in Carbon Clean and DAC integration), Air Liquide (gas separation and processing technology supplier)

Startups: Heirloom Carbon Technologies (limestone-based passive DAC), CarbonCapture Inc. (modular solid sorbent DAC, Project Bison in Wyoming), Verdox (electrochemical DAC using electrically activated sorbents), Noya (DAC retrofits for cooling towers), Carbfix (mineral carbonation storage technology)

Investors and Funders: US Department of Energy (Regional DAC Hubs program, $3.5 billion), Breakthrough Energy Ventures (Heirloom, CarbonCapture), Frontier (Stripe, Alphabet, Meta advance purchase coalition), Microsoft Climate Innovation Fund (Climeworks, Heirloom offtake agreements), Canada Growth Fund (DAC investments in Alberta)

Action Checklist

• Conduct a residual emissions inventory to quantify the volume of hard-to-abate emissions that DAC procurement could address within your jurisdiction's net-zero plan
• Map local energy resources (geothermal, waste heat, nuclear, curtailed renewables) that could supply low-cost thermal energy for DAC sorbent regeneration
• Assess geological storage potential within 200 kilometers, including deep saline formations, depleted hydrocarbon reservoirs, and basalt formations suitable for mineral carbonation
• Evaluate eligibility for DOE Regional DAC Hubs funding, 45Q tax credits ($180 per tonne for DAC with geological storage under the Inflation Reduction Act), and state-level incentive programs
• Issue a request for information to DAC technology providers to benchmark current costs, energy requirements, and deployment timelines against your jurisdiction's carbon removal needs
• Establish MRV requirements aligned with emerging standards from the International Organization for Standardization (ISO 27914 for geological storage) and registry-specific protocols from Puro.earth or Isometric
• Develop community engagement and permitting strategies early, addressing concerns about CO2 pipeline safety, water consumption, and land use impacts before project design is finalized
• Structure procurement as multi-year offtake agreements with price decline schedules that incentivize technology providers to achieve cost reductions over time

FAQ

Q: What is the realistic cost trajectory for DAC over the next decade? A: Most independent analyses project DAC costs declining to $200 to $400 per tonne by 2030 to 2035, driven by manufacturing scale-up, sorbent improvements, and energy integration optimization. Reaching the DOE's $100 per tonne target likely requires a combination of next-generation sorbent materials with 3 to 5 times current CO2 capacity, integration with near-zero-cost waste heat or geothermal energy, and factory-scale modular manufacturing. The experience curve from other clean energy technologies suggests 10 to 15% cost reduction per doubling of cumulative capacity, which would require hundreds of megatonnes of cumulative capture to reach $100 per tonne from current costs.

Q: How does the 45Q tax credit under the Inflation Reduction Act affect DAC project economics? A: The enhanced 45Q credit provides $180 per tonne of CO2 captured via DAC and stored in geological formations, or $130 per tonne for CO2 used in enhanced oil recovery. At current DAC costs of $400 to $1,000 per tonne, the 45Q credit covers 18 to 45% of total costs, significantly improving project economics but not achieving breakeven without supplemental revenue from voluntary carbon credit sales. The credit is available for 12 years from the placed-in-service date and can be transferred or used as direct pay for the first five years, providing flexible financing structures for project developers (IRS, 2025).

Q: What are the water consumption implications of DAC at scale? A: Liquid solvent DAC systems consume approximately 1 to 5 tonnes of water per tonne of CO2 captured, primarily through evaporative losses in the air contactor. Solid sorbent systems generally consume less water (0.5 to 2 tonnes per tonne of CO2) but still require water for cooling and sorbent preparation. At megatonne scale, water consumption can be significant: a 1 million tonne per year liquid solvent plant would consume 1 to 5 million cubic meters of water annually. In water-stressed regions, this creates potential conflicts with agricultural and municipal water demands, making closed-loop cooling systems and dry or hybrid cooling designs important considerations.

Q: How do cities evaluate whether DAC procurement is preferable to other carbon removal options such as enhanced weathering or biochar? A: The decision depends on permanence requirements, cost tolerance, local conditions, and verification confidence. DAC with geological storage offers the highest permanence (thousands to millions of years for mineralized CO2) and the most robust MRV, but at the highest current cost. Enhanced weathering costs $50 to $200 per tonne but has higher MRV uncertainty and permanence measured in centuries rather than millennia. Biochar costs $50 to $150 per tonne with permanence of decades to centuries depending on production conditions. Cities with strong net-zero commitments and corporate partners willing to pay premium prices often allocate 10 to 30% of their carbon removal portfolio to DAC as a high-permanence anchor, complemented by lower-cost nature-based and hybrid approaches.

Sources

• International Energy Agency. (2025). Direct Air Capture: A Key Technology for Net Zero. Paris: IEA.
• US Department of Energy. (2024). Regional Direct Air Capture Hubs: Program Overview and Selected Projects. Washington, DC: DOE Office of Clean Energy Demonstrations.
• Carbfix. (2025). Mineral Carbonation Performance Report: Hellisheidi Storage Site 2020-2025. Reykjavik: Carbfix ehf.
• 1PointFive. (2025). STRATOS Direct Air Capture Facility: Initial Commissioning Performance Summary. Houston, TX: 1PointFive LLC.
• Battelle. (2024). Project Cypress: Regional Direct Air Capture Hub Proposal and Technical Design. Columbus, OH: Battelle Memorial Institute.
• Pipeline and Hazardous Materials Safety Administration. (2024). Carbon Dioxide Pipeline Safety: Incident Analysis and Regulatory Recommendations. Washington, DC: US Department of Transportation.
• Internal Revenue Service. (2025). Section 45Q Credit for Carbon Oxide Sequestration: Final Regulations and Guidance. Washington, DC: US Department of the Treasury.
• Intergovernmental Panel on Climate Change. (2023). AR6 Synthesis Report: Climate Change 2023. Geneva: IPCC.