Myths vs. realities: Direct air capture (DAC) economics & deployment — what the evidence actually supports

Direct air capture has attracted over $4.8 billion in announced project investment globally as of early 2026, yet the technology captures fewer than 30,000 tonnes of CO2 annually, a fraction of the gigatonne-scale removal that climate scenarios require. This gap between investment enthusiasm and operational reality has generated a rich mythology around DAC economics, scalability, and role in the energy transition. Separating evidence-backed claims from speculative projections is essential for investors evaluating this rapidly evolving sector.

Why It Matters

The Intergovernmental Panel on Climate Change's Sixth Assessment Report identifies carbon dioxide removal (CDR) as necessary in virtually all pathways that limit warming to 1.5 degrees Celsius, with modeled DAC deployment ranging from 0.5 to 5 gigatonnes per year by 2050. The US Department of Energy's Carbon Negative Shot initiative targets a cost of $100 per tonne of CO2 captured, a benchmark that would make DAC competitive with many avoided-emission alternatives. The European Union's Industrial Carbon Management Strategy, published in 2024, sets a target of 50 million tonnes of annual CO2 storage capacity by 2030, with DAC identified as one of several capture pathways.

Policy support has accelerated dramatically. The US Inflation Reduction Act's Section 45Q provides tax credits of $180 per tonne of CO2 captured via DAC and permanently stored in geological formations, the most generous subsidy for any carbon removal technology in the world. The UK's Greenhouse Gas Removal (GGR) business model framework allocates up to $280 million for engineered removal projects. Switzerland, Iceland, and several Nordic countries have established procurement mechanisms for permanent carbon removal.

For investors, the question is not whether DAC will matter, but when it will reach cost levels and deployment scales that generate risk-adjusted returns. Answering that question requires clearing away the accumulated mythology that distorts market expectations.

Key Concepts

Solid sorbent DAC uses chemically functionalized solid materials to bind CO2 from ambient air. Air is drawn through contactor arrays where sorbent materials adsorb CO2 at ambient temperature. The sorbent is then heated to 80-120 degrees Celsius to release concentrated CO2 for compression and storage. Climeworks and Global Thermostat employ variations of this approach. The primary energy demand is thermal, making integration with low-grade industrial waste heat or geothermal energy attractive.

Liquid solvent DAC passes air through an aqueous potassium hydroxide solution that reacts with CO2 to form potassium carbonate. The solution is processed through a series of chemical loops, ultimately regenerating the solvent and producing a concentrated CO2 stream. Carbon Engineering (now part of Occidental Petroleum's 1PointFive subsidiary) is the principal developer of this approach. Regeneration requires temperatures of 900 degrees Celsius, typically supplied by natural gas with carbon capture, though electrification pathways are under development.

Electrochemical DAC represents an emerging approach using electrochemical cells to shift the pH of a solution, enabling CO2 absorption and release with electricity as the primary energy input. Companies including Verdox and Heirloom (using a calcium looping variant with electrified calcination) are developing systems that could achieve lower energy penalties than thermal approaches.

Lifecycle carbon efficiency measures the ratio of net CO2 removed to gross CO2 captured, accounting for energy-related emissions, material production, construction, and transport. A DAC plant powered by unabated natural gas might capture 1 tonne of CO2 but emit 0.3-0.5 tonnes in the process, yielding a lifecycle efficiency of only 50-70%. Plants powered by dedicated renewable energy or geothermal achieve lifecycle efficiencies of 85-95%.

DAC Cost and Performance Benchmarks

Metric	Current (2025-2026)	Near-Term Target (2030)	Long-Term Target (2040+)
Cost per tonne CO2 (solid sorbent)	$600-1,000	$250-400	$100-200
Cost per tonne CO2 (liquid solvent)	$400-600	$200-300	$100-150
Energy requirement (GJ per tonne CO2)	6-10	4-6	2-4
Sorbent/solvent lifetime (cycles)	2,000-5,000	10,000+	20,000+
Capacity factor (%)	60-80%	85-90%	90-95%
Lifecycle carbon efficiency (%)	85-90% (clean energy)	90-95%	>95%

What's Working

Climeworks Mammoth Plant, Iceland

Climeworks' Mammoth facility in Iceland, which began operations in mid-2024, represents the largest operational solid sorbent DAC plant globally with a nameplate capacity of 36,000 tonnes of CO2 per year. The facility uses geothermal energy for both heat and electricity, achieving lifecycle carbon efficiency above 90%. CO2 is mineralized in basaltic rock formations through partnership with Carbfix, providing permanent geological storage. Climeworks has disclosed that current costs at Mammoth remain in the range of $600-800 per tonne but projects that its next-generation plants will reduce costs to $400-500 per tonne by 2028 through modular manufacturing improvements and sorbent optimization.

1PointFive STRATOS, Texas

Occidental Petroleum's 1PointFive subsidiary is constructing STRATOS in Ector County, Texas, the world's largest planned DAC facility with a design capacity of 500,000 tonnes of CO2 per year. The project uses Carbon Engineering's liquid solvent technology and will store captured CO2 in deep saline formations. STRATOS has secured advance purchase agreements from major corporate buyers including Airbus, which committed to purchasing 400,000 tonnes of carbon removal credits over a multi-year period. The project benefits from the $180 per tonne 45Q tax credit, which significantly improves its economics, though final per-tonne costs have not been publicly disclosed.

Heirloom Carbon Technologies, California

Heirloom operates a commercial DAC facility in Tracy, California, using an enhanced mineral weathering approach where calcium oxide is exposed to ambient air to absorb CO2, then heated in an electric kiln to release concentrated CO2 and regenerate the sorbent. The approach is notable for its relatively low energy intensity and use of abundant, low-cost limestone as the primary sorbent material. Heirloom has secured contracts with the US Department of Energy and corporate buyers including Microsoft, which committed to purchasing 315,000 tonnes of carbon removal over a 10-year period. The company reports current costs in the $500-700 per tonne range.

What's Not Working

Cost Reduction Trajectories Are Uncertain

The most common projection in DAC investment theses posits a solar-panel-like cost decline, from current levels above $600 per tonne to below $100 per tonne within 15-20 years. This analogy is misleading. Solar photovoltaic costs declined primarily through semiconductor manufacturing scale, silicon purification improvements, and module standardization, all enabled by a product that is largely identical regardless of deployment location. DAC systems are more analogous to chemical process plants, where cost reductions come through engineering optimization rather than mass production of identical units. Historical learning rates for chemical process technologies suggest 10-15% cost reductions per doubling of cumulative capacity, compared to 20-25% for solar PV. Reaching $100 per tonne likely requires cumulative deployment in the tens of millions of tonnes, which at current growth rates would not occur until the late 2030s at the earliest.

Energy Requirements Remain Substantial

A single megatonne-scale DAC facility requires 5-10 TWh of energy annually, equivalent to the output of a mid-sized natural gas power plant or approximately 2-4 GW of dedicated solar capacity. Scaling DAC to gigatonne levels would require energy inputs equivalent to 2-4% of current global electricity generation, raising legitimate questions about whether this energy would be better used to directly displace fossil fuels. The IEA's 2025 Net Zero Roadmap notes that DAC energy demand could compete with electrification priorities in regions with constrained clean energy supply.

Permanence Verification Needs Standardization

While geological storage in saline formations and basaltic mineralization offer high-confidence permanence (thousands to millions of years), verification and monitoring frameworks remain immature. The EU's Carbon Removal Certification Framework, finalized in 2024, establishes monitoring requirements but does not yet specify technical standards for geological storage verification. Investors face the risk that purchased carbon removal credits may face retroactive challenges to their permanence claims as standards evolve.

Myths vs. Reality

Myth 1: DAC costs will follow the same decline curve as solar panels

Reality: Solar cost declines were driven by semiconductor manufacturing scale economies for an essentially standardized product. DAC involves complex chemical engineering with site-specific energy integration, material handling, and air contacting challenges. Learning rates for chemical process industries suggest 10-15% cost reduction per capacity doubling, roughly half the rate observed in solar PV manufacturing. Costs below $200 per tonne are plausible by the mid-2030s, but projections of $50-100 per tonne by 2030 lack engineering basis.

Myth 2: DAC is too expensive to ever be viable

Reality: Current costs of $400-1,000 per tonne are high relative to many mitigation options, but they are already within range of compliance carbon prices in the EU Emissions Trading System, which exceeded $90 per tonne in 2023 and could reach $150-200 per tonne by 2030 under tightening caps. Combined with the US $180/tonne 45Q credit, near-term DAC projects can achieve positive economics. More importantly, DAC addresses residual emissions from hard-to-abate sectors (aviation, cement, agriculture) where direct mitigation costs may exceed $200-500 per tonne.

Myth 3: DAC competes with renewable energy deployment

Reality: At current scales, DAC energy demand is negligible relative to global clean energy additions. The entire DAC industry consumes less energy than a single large data center. At gigatonne scale, energy competition becomes a legitimate concern, but this scenario is decades away. In the near term, DAC projects are often co-located with stranded or underutilized energy assets (geothermal in Iceland, curtailed wind in West Texas) that would not otherwise displace fossil generation.

Myth 4: Natural climate solutions can replace DAC entirely

Reality: Nature-based carbon removal (afforestation, soil carbon, enhanced weathering) is essential and generally less expensive than DAC at current prices, but it faces fundamental limitations. Land availability constrains afforestation potential, and biological carbon stores are vulnerable to reversal through wildfire, drought, and land-use change. The Intergovernmental Panel on Climate Change estimates that nature-based solutions can contribute 5-12 GtCO2 per year in removal, but scenarios limiting warming to 1.5 degrees Celsius typically require an additional 1-5 GtCO2 per year from engineered removal, including DAC, by mid-century.

Myth 5: Only governments can finance DAC at the required scale

Reality: While public funding is currently essential for first-of-a-kind projects, the voluntary carbon removal market is growing rapidly. Frontier, the advance market commitment organized by Stripe, Alphabet, Meta, McKinsey, and others, has committed over $1 billion to permanent carbon removal purchases. Microsoft alone has contracted for over 5.5 million tonnes of carbon removal. As costs decline and compliance markets begin recognizing high-permanence removals, private capital will increasingly drive deployment.

Key Players

Technology Developers

Climeworks (Switzerland) operates the world's largest solid sorbent DAC facilities in Iceland. The company has raised over $800 million in equity and project financing, with investors including Partners Group, GIC, and John Doerr.

1PointFive (US), a subsidiary of Occidental Petroleum, is developing the STRATOS mega-facility using Carbon Engineering's liquid solvent technology. The project has attracted investment from BlackRock's climate infrastructure fund and advance purchase commitments from major airlines and industrial companies.

Heirloom Carbon Technologies (US) uses an enhanced mineralization approach with electrically heated kilns. The company has raised over $150 million from Breakthrough Energy Ventures, Microsoft's Climate Innovation Fund, and others.

Verdox (US) is developing an electrochemical DAC system that uses electric potential swings rather than thermal energy to capture and release CO2, potentially achieving lower energy penalties than thermal approaches.

Key Investors

Breakthrough Energy Ventures has invested across multiple DAC technology pathways, including Heirloom, CarbonCapture Inc., and several early-stage companies.

Lowercarbon Capital has deployed significant capital into engineered carbon removal, with investments spanning DAC, enhanced weathering, and ocean-based approaches.

Partners Group co-led Climeworks' $650 million equity raise in 2022, one of the largest private investments in DAC to date.

Action Checklist

• Assess portfolio exposure to hard-to-abate sectors (aviation, cement, steel, agriculture) where DAC may become a compliance requirement
• Evaluate DAC investments based on disclosed, third-party-verified cost per tonne rather than projected future costs
• Prioritize projects with secured clean energy supply and geological storage with established monitoring protocols
• Review advance purchase agreements and offtake contracts as indicators of demand validation and revenue certainty
• Monitor regulatory developments in the EU Carbon Removal Certification Framework and evolving 45Q implementation rules
• Diversify carbon removal portfolios across technology types (solid sorbent, liquid solvent, electrochemical) and geographies
• Demand lifecycle carbon efficiency data that accounts for energy source, construction emissions, and material production
• Model DAC investment returns under multiple carbon price scenarios, including EU ETS price trajectories and potential US compliance market development

FAQ

Q: What is a realistic cost per tonne for DAC in 2030? A: Based on disclosed project economics, engineering analyses, and historical learning rates for chemical process technologies, expect $250-400 per tonne for solid sorbent systems and $200-300 per tonne for liquid solvent systems by 2030. These estimates assume continued policy support and successful completion of first-of-a-kind commercial facilities. Projections below $150 per tonne by 2030 are not supported by current evidence.

Q: How should investors evaluate DAC project risk? A: Focus on four dimensions: technology maturity (has the system operated at commercial scale?), energy supply security (is clean energy contracted or co-located?), storage permanence (geological storage with established monitoring?), and revenue certainty (advance purchase agreements, tax credits, or compliance market access?). Projects scoring well on all four dimensions represent lower risk, though expected returns will also be lower.

Q: Will compliance carbon markets recognize DAC credits? A: The EU is developing its Carbon Removal Certification Framework with explicit provisions for engineered removal, including DAC. Switzerland already includes DAC in its compliance framework. The US does not currently have a federal compliance carbon market, but California's cap-and-trade program is evaluating protocols for high-permanence carbon removal. Investor timelines should anticipate 3-5 years before major compliance markets fully integrate DAC credits.

Q: How does DAC compare to other carbon removal approaches on a cost basis? A: Afforestation and reforestation cost $10-50 per tonne but face permanence and additionality challenges. Enhanced rock weathering costs $50-200 per tonne with emerging verification methods. Biochar costs $100-300 per tonne with moderate permanence (centuries). DAC with geological storage costs $400-1,000 per tonne currently but offers the highest permanence confidence (millennia to geological time). The appropriate comparison depends on whether permanence, scalability, or near-term cost is the primary investment criterion.

Sources

• Intergovernmental Panel on Climate Change. (2022). Climate Change 2022: Mitigation of Climate Change, Working Group III Contribution to the Sixth Assessment Report. Cambridge: Cambridge University Press.
• International Energy Agency. (2025). Net Zero Roadmap: A Global Pathway to Keep the 1.5C Goal in Reach, 2025 Update. Paris: IEA Publications.
• US Department of Energy. (2025). Carbon Negative Shot: Progress Report and Technology Assessment. Washington, DC: DOE Office of Fossil Energy and Carbon Management.
• Climeworks AG. (2025). Mammoth Plant: First Year Operational Performance Data. Zurich: Climeworks AG.
• Frontier Climate. (2025). Advance Market Commitment for Carbon Removal: Portfolio and Deployment Update. San Francisco: Frontier.
• European Commission. (2024). Carbon Removal Certification Framework: Final Regulation Text and Implementation Guidance. Brussels: European Commission.
• National Academies of Sciences, Engineering, and Medicine. (2019). Negative Emissions Technologies and Reliable Sequestration: A Research Agenda. Washington, DC: The National Academies Press.
• 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.