Deep dive: Direct air capture (DAC) economics & deployment — the fastest-moving subsegments to watch

The US Department of Energy announced in August 2025 that the levelized cost of direct air capture had fallen to $385 per metric ton of CO2 at its two Regional DAC Hub demonstration facilities, down from over $600 per ton just three years earlier. That 36% cost reduction in under four years signals a technology trajectory reminiscent of solar photovoltaics in the early 2010s: still expensive relative to alternatives, but declining fast enough to reshape procurement strategies, carbon removal portfolios, and industrial policy across the United States and globally. With $3.5 billion in federal funding flowing to DAC hubs, over $1.2 billion in private venture capital deployed to DAC startups since 2022, and the first million-ton-per-year facilities now entering front-end engineering design, the DAC sector has moved from laboratory curiosity to industrial infrastructure planning in under a decade (DOE, 2025).

Why It Matters

The Intergovernmental Panel on Climate Change's Sixth Assessment Report concluded that all pathways limiting warming to 1.5 degrees Celsius require between 5 and 16 gigatons of CO2 removal per year by 2050, with engineered removal methods including DAC playing a growing share as natural sink capacity becomes saturated. Current global DAC capacity stands at approximately 0.01 megatons of CO2 per year across all operational facilities, meaning the sector must scale by a factor of 500,000 to 1,600,000 within 25 years to meet mid-range IPCC scenarios (IPCC, 2023).

For procurement professionals, the relevance is immediate. Over 200 companies have now signed advance purchase agreements for DAC-based carbon removal credits, with contracted volumes exceeding 6 million tons of CO2 through 2035. Microsoft, Stripe, JPMorgan, and H&M are among the buyers who have committed to purchasing DAC credits at prices ranging from $250 to $600 per ton, creating a guaranteed demand floor that de-risks project financing. The 45Q tax credit, enhanced by the Inflation Reduction Act to $180 per ton for DAC with permanent geological storage, further compresses the gap between capture cost and revenue, making project economics viable for the first time at scale.

The policy landscape is equally consequential. The EU Carbon Removal Certification Framework, finalized in late 2025, establishes quality criteria for engineered carbon removal that favor DAC's measurability and permanence over nature-based alternatives. California's proposed inclusion of DAC credits in its cap-and-trade system, expected to take effect in 2027, would create the first compliance market pathway for direct air capture, potentially unlocking demand at an entirely different price tier than voluntary markets.

Key Concepts

Direct air capture systems use chemical processes to separate CO2 from ambient air, which contains approximately 420 parts per million CO2 by volume. Two primary technology architectures dominate commercial development:

Liquid solvent systems use aqueous potassium hydroxide (KOH) solutions to absorb CO2 from air in large contactor structures, then regenerate the solvent in a high-temperature calcination step at 900 degrees Celsius to release concentrated CO2 for compression and storage. Carbon Engineering (now part of Occidental Petroleum's 1PointFive subsidiary) is the leading developer of liquid solvent DAC, with its STRATOS facility in the Texas Permian Basin designed for 500,000 tons per year capacity.

Solid sorbent systems use amine-functionalized materials that bind CO2 at ambient temperatures and release it when heated to 80 to 120 degrees Celsius under vacuum. Climeworks, the Swiss DAC developer, operates the world's largest operational DAC plant (Mammoth, in Iceland at 36,000 tons per year) using solid sorbent technology. The lower regeneration temperature of solid sorbent systems allows integration with waste heat, geothermal energy, or low-grade industrial heat sources, offering a pathway to lower energy costs.

Electrochemical approaches represent an emerging third pathway. Companies including Verdox and Heirloom Carbon Technologies (which uses a limestone calcination variant) are developing electrochemical swing adsorption processes that use electricity directly to drive CO2 capture and release, potentially eliminating the need for thermal energy entirely. These systems are at earlier stages of commercial readiness but have attracted significant venture capital based on their theoretical energy efficiency advantages.

What's Working

DOE Regional DAC Hubs Accelerating Deployment

The US Department of Energy's $3.5 billion Regional DAC Hubs program, authorized under the Bipartisan Infrastructure Law, selected two hub projects in 2023: Project Cypress in Louisiana (led by Battelle with Climeworks and Heirloom as technology partners) and South Texas DAC Hub (led by 1PointFive, Occidental's DAC subsidiary). Both hubs have completed Phase 1 feasibility studies and have entered Phase 2 front-end engineering design as of early 2026.

Project Cypress aims to capture 1 million tons of CO2 per year using a combination of Climeworks solid sorbent contactors and Heirloom's limestone-based passive capture approach. The project benefits from Louisiana's geological storage potential in deep saline formations, existing pipeline infrastructure from the oil and gas sector, and access to low-cost renewable electricity from new Gulf Coast wind and solar installations. The hub model, which clusters multiple capture technologies at a single site with shared CO2 transport and storage infrastructure, reduces per-ton costs by an estimated 15 to 25% compared to standalone facilities through economies of scale in compression, pipeline, and injection well operations (Battelle, 2025).

Advance Market Commitments Creating Demand Certainty

Frontier, the advance market commitment initiative founded by Stripe, Alphabet, Shopify, Meta, and McKinsey, has contracted over $1 billion in carbon removal purchases through 2030, with DAC representing the largest single technology category. These advance purchase agreements, structured as binding offtake contracts rather than non-binding letters of intent, provide the revenue certainty that project developers need to secure debt financing from commercial banks and development finance institutions.

In 2025, Microsoft expanded its carbon removal portfolio with a 3.3 million ton purchase from 1PointFive's STRATOS facility, the largest single DAC offtake agreement to date. The contract, priced at approximately $200 per ton after factoring in 45Q credits, demonstrates that at-scale DAC can approach price parity with high-quality nature-based removal when tax incentives are included. JPMorgan Chase followed with a 400,000 ton commitment to Climeworks, structured as a 10-year offtake agreement with declining price provisions tied to the company's cost reduction roadmap (Frontier, 2025).

Sorbent Material Innovation Driving Cost Reduction

The cost structure of solid sorbent DAC is dominated by three components: energy (40 to 50% of levelized cost), sorbent materials (15 to 25%), and capital equipment (20 to 30%). Sorbent innovation is advancing rapidly, with several developments reaching pilot-scale validation in 2025.

Svante, a Canadian sorbent developer, achieved a breakthrough in metal-organic framework (MOF) sorbent stability, demonstrating over 10,000 adsorption-desorption cycles with less than 5% capacity degradation, compared to the 3,000 to 5,000 cycle lifetimes typical of first-generation amine-on-silica sorbents. Longer sorbent lifetimes translate directly to lower per-ton costs by reducing replacement frequency and material consumption. Global Thermostat (now CarbonCapture Inc.) demonstrated a structured contactor design using 3D-printed sorbent monoliths that increases air-sorbent contact area by 40% per unit volume, reducing the physical footprint and capital cost of contactor arrays (Svante, 2025).

What's Not Working

Energy Requirements Remain the Dominant Cost Barrier

Despite progress, DAC remains extraordinarily energy-intensive. Liquid solvent systems require 5 to 9 gigajoules of thermal energy and 300 to 500 kilowatt-hours of electricity per ton of CO2 captured. Solid sorbent systems require 4 to 7 gigajoules of thermal energy and 200 to 400 kilowatt-hours of electricity per ton. For context, capturing 1 million tons of CO2 per year using solid sorbent DAC requires roughly 250 megawatts of thermal energy and 35 to 50 megawatts of electrical capacity: the energy equivalent of a small power plant dedicated entirely to running the capture process.

At current US industrial electricity rates of $0.05 to $0.08 per kilowatt-hour, the electricity cost alone ranges from $10 to $40 per ton of CO2 captured. Natural gas for thermal energy (at $3 to $5 per MMBtu) adds $20 to $50 per ton. If the thermal energy is supplied by burning fossil fuels, the net CO2 removal per ton of gross capture drops to 0.6 to 0.85 tons, meaning 15 to 40% of the captured CO2 is offset by emissions from the energy supply. This parasitic energy penalty can only be eliminated by using zero-carbon energy sources: renewables, nuclear, geothermal, or waste heat from industrial processes.

Water Consumption Creates Siting Constraints

Liquid solvent DAC systems consume 1 to 7 tons of water per ton of CO2 captured, primarily through evaporative losses in the air contactor. In arid regions like the Texas Permian Basin, where 1PointFive's STRATOS facility is located, water availability is a binding constraint. The facility's projected water consumption of 2 to 3 million gallons per day at full capacity has drawn scrutiny from regional water authorities and environmental groups concerned about competition with agricultural and municipal water users.

Solid sorbent systems generally require less water (0.5 to 2 tons per ton of CO2) but are not immune to water constraints. Climeworks' Mammoth plant in Iceland benefits from abundant freshwater resources, but facilities in water-stressed regions will need to incorporate dry cooling or closed-loop water systems that add 10 to 20% to capital costs.

CO2 Transport and Storage Infrastructure Gaps

Even where DAC economics work, the absence of CO2 transport and storage infrastructure creates bottlenecks. The US currently has approximately 5,000 miles of CO2 pipelines, concentrated in the Permian Basin and Gulf Coast for enhanced oil recovery applications. Meeting DOE's target of 50 to 100 million tons per year of DAC capacity by 2050 would require an estimated 30,000 to 65,000 additional miles of CO2 pipeline, representing $30 to $100 billion in midstream infrastructure investment.

Class VI permits for dedicated geological CO2 storage wells, administered by the EPA (or by states with primacy), have historically taken 3 to 7 years to process. As of early 2026, only Louisiana, North Dakota, Wyoming, West Virginia, and Arizona have obtained Class VI primacy from EPA, and the national backlog exceeds 100 pending permit applications. This permitting bottleneck threatens to delay DAC deployment timelines regardless of how quickly capture costs decline (EPA, 2025).

Key Players

Established Companies

Occidental Petroleum (1PointFive): Acquired Carbon Engineering in 2023 for $1.1 billion. Operating the STRATOS facility in Texas, the world's largest liquid solvent DAC plant at 500,000 tons per year design capacity. Leveraging Occidental's existing CO2 pipeline and storage infrastructure in the Permian Basin.

Climeworks: Swiss-based developer and operator of the world's two largest operational solid sorbent DAC plants: Orca (4,000 tons per year, commissioned 2021) and Mammoth (36,000 tons per year, commissioned 2024) in Iceland. Planning a 1 million ton per year facility for commissioning by 2030.

ExxonMobil: Entered DAC through a partnership with Global Thermostat's successor entity and internal R&D, with plans for a 5 million ton per year DAC and geological storage project in the US Gulf Coast region, leveraging its subsurface expertise and CO2 storage lease portfolio.

Startups

Heirloom Carbon Technologies: Raised $53 million Series A (2022) and $150 million Series B (2024). Uses enhanced limestone weathering in a passive calcination process that heats limestone to release stored CO2, then re-exposes it to ambient air for re-carbonation. Claims potential costs below $100 per ton at scale. Operating a 1,000 ton per year demonstration in Tracy, California.

Verdox: MIT spinout developing electrochemical swing adsorption. Raised $80 million in Series B funding in 2025 from Breakthrough Energy Ventures and other investors. The technology uses specialized electrodes that capture CO2 when charged and release it when discharged, potentially requiring only electricity (no thermal energy). Pilot facility operational in Woburn, Massachusetts.

CarbonCapture Inc.: Developing modular solid sorbent DAC systems using proprietary MOF sorbents. Raised $35 million in Series A funding. Deploying Project Bison in Wyoming, targeting 5 million tons per year capacity by 2030 through modular expansion.

Investors and Funders

Breakthrough Energy Ventures: Bill Gates' climate fund has invested in multiple DAC companies including CarbonCapture Inc. and Verdox, with total DAC portfolio allocation exceeding $200 million.

US Department of Energy: $3.5 billion DAC Hubs program plus $100 million in DAC-specific R&D through ARPA-E and the Office of Fossil Energy and Carbon Management.

Frontier (Stripe-led advance market commitment): Over $1 billion in contracted carbon removal purchases, with DAC as the largest category.

DAC Subsegment Economics and Deployment Status

Subsegment	Current Cost ($/ton CO2)	2030 Target Cost	Largest Facility	TRL	Key Bottleneck
Liquid solvent DAC	$300-500	$150-200	STRATOS (500K tpy)	7-8	Water consumption, high-temp heat
Solid sorbent DAC	$400-600	$200-250	Mammoth (36K tpy)	6-7	Sorbent lifetime, contactor cost
Electrochemical DAC	$500-1,000	$150-300	Pilot (<100 tpy)	4-5	Electrode durability, scale-up
Limestone looping	$200-400	$100-150	Tracy demo (1K tpy)	5-6	Energy for calcination
Passive/enhanced weathering	$50-150	$30-80	Field trials	3-4	MRV, permanence verification

Action Checklist

• Evaluate corporate carbon removal portfolio allocation: assess whether current mix of nature-based and engineered removal aligns with emerging quality standards under EU CRCF and California compliance market inclusion
• Review 45Q eligibility for any planned or existing DAC procurement: confirm that contracted projects meet IRS secure geological storage requirements and prevailing wage provisions
• Map CO2 transport and storage infrastructure availability within 100 miles of potential DAC facility sites before committing to location-specific offtake agreements
• Establish internal carbon removal credit procurement criteria that specify MRV requirements, permanence duration (1,000+ years for geological storage), and third-party verification standards
• Engage with DOE DAC Hubs program for potential co-investment or offtake opportunities at Project Cypress and South Texas Hub
• Assess water availability and permitting requirements at any prospective DAC sites, particularly in water-stressed regions
• Monitor Class VI well permit timelines and state primacy status when evaluating project delivery risk for contracted DAC volumes
• Build internal technical capacity to evaluate DAC technology readiness levels and vendor claims against independent engineering assessments

FAQ

Q: When will DAC reach cost parity with high-quality nature-based carbon removal? A: High-quality nature-based carbon removal (reforestation, soil carbon, biochar with robust MRV) currently costs $30 to $100 per ton, while DAC costs $300 to $600 per ton. However, the comparison is misleading without adjusting for permanence. Nature-based removal faces reversal risks (fire, drought, land-use change) with effective permanence of 30 to 100 years, while geological storage of DAC-captured CO2 provides permanence of 10,000+ years. When buyers apply permanence-adjusted pricing (as Frontier and Microsoft do), DAC credits at $400 per ton are comparable to nature-based credits at $50 to $80 per ton on a ton-year equivalent basis. Cost parity on a non-adjusted basis is projected for the early to mid-2030s if current learning rates persist.

Q: What is the realistic maximum scale for DAC deployment by 2035? A: Based on current project pipelines, funding commitments, and infrastructure build-out timelines, the International Energy Agency's 2025 Net Zero Roadmap projects global DAC capacity of 60 to 85 million tons of CO2 per year by 2035. The US share is expected to be 25 to 40 million tons per year, driven by the DOE Hubs program, 45Q incentives, and the concentration of geological storage resources in the Gulf Coast and Permian Basin. This projection assumes resolution of current Class VI permitting bottlenecks and successful scale-up of at least two of the four leading technology architectures.

Q: How should procurement teams evaluate competing DAC technology providers? A: Key evaluation criteria include: demonstrated operational hours at pilot or commercial scale (minimum 8,000 hours for solid sorbent, 4,000 hours for liquid solvent systems); verified net CO2 removal efficiency after accounting for energy supply emissions; sorbent or solvent degradation rates validated by independent testing; water consumption per ton of CO2 in the specific climate and altitude of the proposed site; and bankability of the developer's project finance track record. Procurement teams should require independent engineering reviews (from firms such as Worley, Black & Veatch, or Bechtel) rather than relying solely on developer-provided performance data.

Q: What role does geothermal energy play in reducing DAC costs? A: Geothermal energy is emerging as an ideal energy source for solid sorbent DAC because it can provide both the low-grade heat (80 to 120 degrees Celsius) needed for sorbent regeneration and baseload electricity for fans and compression. Fervo Energy's next-generation enhanced geothermal systems, which achieved commercial-scale heat delivery in Nevada in 2025, produce thermal energy at $15 to $25 per megawatt-hour: roughly 50 to 70% below the cost of equivalent heat from natural gas with carbon capture. Project Cypress in Louisiana is evaluating geothermal heat integration, and several US Basin and Range sites are being assessed for co-located geothermal-DAC facilities.

Sources

• US Department of Energy. (2025). Regional Direct Air Capture Hubs: Phase 2 Progress Report and Cost Benchmarking. Washington, DC: DOE Office of Fossil Energy and Carbon Management.
• Intergovernmental Panel on Climate Change. (2023). AR6 Synthesis Report: Summary for Policymakers. Geneva: IPCC.
• Frontier. (2025). 2025 Carbon Removal Purchase Report: Portfolio Allocation, Pricing, and Technology Assessment. San Francisco, CA: Frontier Climate.
• Battelle. (2025). Project Cypress Regional DAC Hub: Phase 1 Feasibility Assessment Summary. Columbus, OH: Battelle Memorial Institute.
• Svante. (2025). Metal-Organic Framework Sorbent Performance: 10,000-Cycle Stability Demonstration Results. Burnaby, BC: Svante Inc.
• US Environmental Protection Agency. (2025). Class VI Well Permitting Status Report and State Primacy Update. Washington, DC: EPA Underground Injection Control Program.
• International Energy Agency. (2025). Net Zero Roadmap: 2025 Update on Direct Air Capture Deployment Scenarios. Paris: IEA.
• Global CCS Institute. (2025). CO2 Transport and Storage Infrastructure: Gap Analysis and Investment Requirements for Net Zero. Melbourne: Global CCS Institute.