Explainer: Direct air capture (DAC) economics & deployment — what it is, why it matters, and how to evaluate options

Direct air capture (DAC) pulls carbon dioxide directly from the ambient atmosphere using engineered systems, then either stores the CO2 permanently underground or channels it into industrial applications. Unlike point-source capture at smokestacks, DAC operates independently of emission sources, which means facilities can be sited wherever cheap clean energy and suitable geological storage exist. The technology has moved from laboratory curiosity to commercial reality over the past five years, with global operational capacity reaching approximately 0.02 million tonnes of CO2 per year by the end of 2025 and over 130 DAC projects in various stages of development worldwide. Understanding the economics, deployment trajectories, and evaluation criteria for DAC is now essential for sustainability professionals navigating corporate carbon removal strategies, compliance planning, and investment decisions.

Why It Matters

The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report identifies carbon dioxide removal (CDR) as necessary in virtually all pathways limiting warming to 1.5 degrees Celsius, with modeled removal volumes ranging from 5 to 16 gigatonnes of CO2 per year by 2050. Nature-based removal approaches such as reforestation and soil carbon sequestration face permanence concerns and land-use constraints that limit scalable deployment. DAC offers a pathway to durable, verifiable removal with storage permanence measured in thousands of years when paired with geological sequestration.

From a regulatory perspective, the EU Carbon Removal Certification Framework (CRCF), adopted in late 2024, establishes quality criteria for carbon removals including permanence thresholds, monitoring requirements, and additionality standards. This framework creates a regulatory foundation for integrating DAC-based removals into EU compliance markets. The European Commission's 2040 Climate Target Communication explicitly references the need for industrial carbon removals, signaling future demand for DAC at scale within the European market.

Corporately, demand for high-quality carbon removal credits has grown rapidly. Frontier, the advance market commitment co-founded by Stripe, Alphabet, Meta, Shopify, and McKinsey, has committed over $1 billion in future purchases of permanent carbon removal. Microsoft's 2024 Environmental Sustainability Report disclosed contracts for over 5.3 million tonnes of carbon removal through 2030, with DAC representing a growing share of its portfolio. For sustainability professionals, understanding DAC economics is no longer optional; it is a prerequisite for credible net-zero planning.

Key Concepts

Solid Sorbent DAC uses solid materials, typically amine-functionalized sorbents supported on porous substrates, to chemically bind CO2 from ambient air. Air passes over or through structured contactors coated with sorbent material. Once saturated, the sorbent is heated to 80-120 degrees Celsius to release concentrated CO2, which is then compressed for storage or utilization. The relatively low regeneration temperature allows integration with low-grade waste heat or geothermal energy. Climeworks, the Swiss company operating the world's largest DAC plant in Iceland, employs this approach. The modular design of solid sorbent systems enables incremental scaling, but sorbent degradation over thousands of cycles remains a key cost driver, with sorbent replacement contributing 15-25% of operating expenses.

Liquid Solvent DAC passes ambient air through a potassium hydroxide (KOH) solution in large air contactors, forming potassium carbonate. A series of chemical steps, including causticization with calcium hydroxide and high-temperature calcination at 900 degrees Celsius, regenerates the solvent and produces a concentrated CO2 stream. Carbon Engineering (now part of Occidental Petroleum's 1PointFive subsidiary) pioneered this approach. The high calcination temperature demands significant energy input but enables very large individual plant capacities. The Stratos hub in Texas, currently under construction, targets 500,000 tonnes of CO2 capture per year from a single facility.

Electrochemical DAC represents an emerging third pathway using electrochemistry to shift the pH of aqueous solutions, enabling CO2 absorption and release without the thermal energy requirements of sorbent or solvent systems. Companies including Verdox and CarbonCapture Inc. are developing variants of this approach. Electrochemical systems promise lower energy penalties and compatibility with intermittent renewable electricity, but remain at technology readiness levels 4-6 as of early 2026.

Geological Sequestration involves injecting captured CO2 into deep saline aquifers or basaltic rock formations where it mineralizes over time, effectively turning back into stone. In Iceland, Carbfix has demonstrated that CO2 injected into basalt mineralizes within two years, providing near-permanent storage. Deep saline aquifer storage in sedimentary basins offers vastly larger global capacity, estimated at 8,000 to 55,000 gigatonnes of CO2 by the IPCC, but requires careful site characterization and monitoring to ensure containment integrity.

DAC Economics: Current Costs and Trajectories

Cost Component	Solid Sorbent (2025)	Liquid Solvent (2025)	Target (2030)	Target (2040)
Capture Cost (per tonne CO2)	$600-1,000	$400-600	$200-300	$100-150
Energy Requirement (GJ/tonne)	5-7 (thermal) + 1.5-2.5 (electric)	5.3 (thermal) + 1.5 (electric)	4-5 (total)	3-4 (total)
Capital Intensity ($/tonne annual capacity)	$2,000-4,000	$1,200-2,500	$800-1,500	$400-800
Sorbent/Solvent Replacement	15-25% of OPEX	5-10% of OPEX	8-12% of OPEX	5-8% of OPEX
Storage Cost (per tonne CO2)	$10-30	$10-30	$8-20	$5-15

Energy represents the dominant operating cost, accounting for 40-60% of total capture expenses. The cost trajectory for DAC follows learning rates observed in other clean energy technologies. Analysis from the International Energy Agency estimates learning rates of 15-20% cost reduction per doubling of cumulative installed capacity, consistent with historical patterns for solar PV and wind. Reaching the $100-150/tonne range by 2040 requires scaling from today's kilotonnes to tens of megatonnes of annual capacity, demanding sustained investment in both technology development and deployment infrastructure.

What's Working

Climeworks Mammoth Plant, Iceland

Climeworks commenced operations at its Mammoth facility in Iceland in mid-2024, scaling to 36,000 tonnes of CO2 capture capacity per year across 72 collector containers. The plant runs entirely on Icelandic geothermal electricity and heat, achieving near-zero operational emissions. Captured CO2 is injected into basaltic rock formations via the Carbfix mineralization process. Climeworks has signed multi-year offtake agreements with Microsoft, JPMorgan Chase, and the Swiss government, with credit prices reportedly ranging from $600 to $1,100 per tonne. The modular design allows capacity additions without redesigning the core facility, providing a template for iterative scaling.

1PointFive Stratos Hub, Texas

Occidental Petroleum's 1PointFive subsidiary broke ground on the Stratos DAC hub in the Permian Basin in 2023, targeting 500,000 tonnes of annual capture capacity in its first phase. The project uses Carbon Engineering's liquid solvent technology powered by a combination of natural gas with carbon capture and renewable electricity. The US Department of Energy awarded up to $600 million in funding through its Regional DAC Hubs program, and the facility benefits from the enhanced 45Q tax credit providing $180 per tonne of CO2 permanently stored underground. The project demonstrates how policy incentives can close the gap between current costs and market willingness to pay.

Frontier Advance Market Commitment

The Frontier initiative has committed over $1 billion to advance purchase agreements for permanent carbon removal, with DAC representing a significant share of contracted volume. By aggregating demand from large technology companies, Frontier provides the revenue certainty that project developers need to secure financing for first-of-a-kind facilities. The commitment includes pre-purchase agreements with Climeworks, Heirloom Carbon Technologies, and other DAC developers. This demand aggregation model has proven effective at de-risking early deployment, enabling developers to move from pilot to commercial scale with contracted revenues rather than speculative pricing.

Key Challenges

Energy Requirements at Scale

Capturing one million tonnes of CO2 per year via solid sorbent DAC requires approximately 1.5 to 2.5 terawatt-hours of thermal and electrical energy annually, equivalent to the output of a 200-300 megawatt solar farm operating at typical capacity factors. Scaling DAC to gigatonne levels would require dedicated energy infrastructure measured in hundreds of gigawatts. In the EU, where grid decarbonization is still underway, running DAC on grid electricity could result in net-positive emissions in some hours, undermining the purpose of the technology. Dedicated renewable energy procurement or geothermal integration is essential for credible lifecycle carbon negativity.

Cost Gap and Market Formation

Current DAC costs of $400-1,000 per tonne far exceed voluntary carbon market prices for conventional offsets ($5-50 per tonne) and most compliance market allowance prices (EU ETS allowances traded at approximately 65 euros per tonne in early 2026). Closing this gap requires a combination of technological learning, policy support, and premium voluntary demand. The US 45Q tax credit at $180/tonne and EU Innovation Fund grants partially bridge the economics, but sustained policy support through the 2030s is necessary for DAC to reach cost-competitive levels.

Siting and Permitting

DAC facilities require access to cheap clean energy, geological storage capacity, water resources (particularly for liquid solvent systems), and permitting approval. In the EU, CO2 storage regulations under the CCS Directive (2009/31/EC) govern injection site selection, monitoring, and liability transfer. Permitting timelines for storage sites range from 3 to 7 years in most EU jurisdictions, creating project development bottlenecks. Countries including Denmark, Norway, and the Netherlands have moved to streamline permitting for CO2 storage, while others lag behind.

Evaluation Framework for Sustainability Professionals

When assessing DAC options for corporate carbon removal portfolios, sustainability professionals should evaluate:

Permanence and Verification: Prioritize DAC paired with geological storage providing 1,000+ year permanence. Require third-party verification of injection volumes, storage integrity monitoring, and alignment with the EU CRCF or equivalent standards. Avoid DAC-to-utilization pathways (such as synthetic fuels or carbonated beverages) where CO2 is re-released within months or years unless specifically procuring for non-removal use cases.

Lifecycle Carbon Intensity: Request full lifecycle assessments covering energy source emissions, construction materials, chemical inputs, and transportation. Credible DAC operations should achieve at least 90% net removal efficiency, meaning that for every tonne of CO2 claimed as removed, at least 900 kilograms are permanently sequestered after accounting for all lifecycle emissions.

Cost Trajectory and Contract Structure: Current prices of $600-1,100/tonne will decline as the industry scales. Multi-year purchase agreements with price step-downs aligned to capacity milestones allow buyers to support early deployment while capturing future cost reductions. Contracts should specify delivery schedules, performance guarantees, and remedies for underdelivery.

Additionality and Regulatory Alignment: Ensure purchased removals meet additionality criteria under applicable frameworks. As EU and national regulations evolve to potentially credit carbon removals against emissions obligations, early procurement at verified quality standards positions organizations favorably for future compliance value.

Action Checklist

• Assess your organization's residual emissions that cannot be eliminated through efficiency and electrification
• Determine the volume of permanent carbon removal needed to support credible net-zero claims
• Evaluate DAC providers against permanence, lifecycle carbon intensity, and verification standards
• Request independent lifecycle assessments and third-party verification documentation from providers
• Consider multi-year advance purchase agreements to secure supply and support industry scaling
• Monitor EU CRCF implementation and national regulations for emerging compliance value of removals
• Budget for carbon removal costs of $300-600/tonne for near-term procurement, declining over time
• Integrate DAC procurement into broader climate strategy alongside abatement and nature-based removals

FAQ

Q: Is DAC just a license for companies to keep polluting? A: No credible climate strategy relies on DAC as a substitute for emissions reduction. The science-based targets framework and the Oxford Offsetting Principles both require companies to prioritize deep abatement first and use carbon removal only for genuinely residual emissions. DAC addresses the 10-20% of emissions that remain after maximum feasible abatement, particularly in sectors like aviation, cement, and agriculture where zero-emission alternatives do not yet exist at scale.

Q: How does DAC compare to tree planting and other nature-based removals? A: The primary differences are permanence and scalability. Forests can release stored carbon through wildfires, disease, or land-use change within decades. DAC with geological storage provides permanence measured in millennia. However, nature-based solutions offer co-benefits including biodiversity and ecosystem services at much lower cost ($5-50/tonne). Most expert frameworks recommend portfolios combining both approaches, using nature-based solutions for near-term volume and DAC for long-term durable removal.

Q: When will DAC costs reach levels comparable to compliance carbon market prices? A: Most projections estimate DAC reaching $100-200/tonne between 2035 and 2045, contingent on deployment scaling to tens of megatonnes per year. EU ETS prices are projected to rise to 100-150 euros per tonne over the same period, narrowing the gap from both directions. However, cost convergence is not guaranteed and depends on sustained policy support, technology advancement, and manufacturing scale-up.

Q: What role does the EU play in global DAC deployment? A: The EU has established critical policy infrastructure through the CRCF, Innovation Fund (which has awarded over 1.2 billion euros to CCUS projects), and the CCS Directive governing CO2 storage. Northern Europe offers favorable geology for CO2 storage, and countries including Iceland, Norway, and Denmark are emerging as storage hubs. However, the US currently leads in deployment capacity due to the 45Q tax credit's direct financial incentive of $180/tonne.

Sources

• International Energy Agency. (2024). Direct Air Capture: A Key Technology for Net Zero. Paris: IEA Publications.
• Intergovernmental Panel on Climate Change. (2023). AR6 Synthesis Report: Climate Change 2023. Geneva: IPCC.
• Climeworks AG. (2024). Mammoth Plant: Technical Specifications and Performance Data. Zurich: Climeworks.
• National Academies of Sciences, Engineering, and Medicine. (2019). Negative Emissions Technologies and Reliable Sequestration: A Research Agenda. Washington, DC: The National Academies Press.
• European Commission. (2024). Carbon Removal Certification Framework: Regulation (EU) 2024/XXX. Brussels: Official Journal of the European Union.
• US Department of Energy. (2024). Regional Direct Air Capture Hubs: Program Overview and Selections. Washington, DC: DOE Office of Clean Energy Demonstrations.
• Fasihi, M., Efimova, O., and Breyer, C. (2019). "Techno-economic assessment of CO2 direct air capture plants." Journal of Cleaner Production, 224, pp. 957-980.
• McQueen, N., et al. (2021). "A review of direct air capture (DAC): scaling up commercial technologies and innovating for the future." Progress in Energy, 3(3), 032001.