Trend analysis: Direct air capture (DAC) economics & deployment — where the value pools are (and who captures them)

Direct air capture (DAC) has moved from laboratory curiosity to industrial deployment in under a decade. Global DAC capacity reached approximately 27,000 tonnes of CO₂ per year by late 2025, and announced projects pipeline exceeds 85 million tonnes per year by 2035. With over $6.4 billion committed across government programs and private investment since 2022, the question is no longer whether DAC will scale but where the economic value will concentrate and which players will capture it.

Why It Matters

Climate models from the IPCC consistently show that limiting warming to 1.5 degrees Celsius requires removing 6 to 16 gigatonnes of CO₂ per year by 2050. Nature-based solutions alone cannot fill that gap. DAC offers a scalable, measurable, and permanent pathway to carbon removal that is not constrained by land availability or seasonal variation. The sector is also one of the few carbon removal approaches that produces verifiable, high-permanence credits, making it central to emerging compliance and voluntary carbon markets. For investors, operators, and policymakers, understanding where value pools form across the DAC value chain determines who benefits from the next phase of growth.

Key Concepts

Solid sorbent vs. liquid solvent systems: The two dominant DAC technology architectures. Solid sorbent systems (used by Climeworks) operate at lower temperatures (80 to 120 degrees Celsius) and cycle faster but face sorbent degradation challenges. Liquid solvent systems (used by Carbon Engineering/Occidental) operate at higher temperatures (300 to 900 degrees Celsius) but can leverage existing industrial equipment and achieve larger plant capacities.

Levelized cost of carbon removal: The all-in cost per tonne of CO₂ removed, including capital expenditure, energy, maintenance, and storage. Current costs range from $400 to $1,000 per tonne, with credible projections targeting $150 to $300 per tonne by 2035 at scale.

45Q tax credits: The U.S. federal tax credit providing $180 per tonne for DAC-captured CO₂ stored geologically, the single largest subsidy mechanism driving DAC deployment in North America.

Offtake agreements: Long-term purchase commitments from corporate buyers that de-risk project financing. Frontier, the Stripe-led advance market commitment, has contracted over $1 billion in future carbon removal purchases.

What's Working

Government funding is catalyzing first-of-a-kind plants. The U.S. Department of Energy's Regional DAC Hubs program allocated $3.5 billion to support two flagship projects: Occidental's Stratos hub in Texas (initially 500,000 tonnes per year) and Battelle's South Texas hub (targeting 1 million tonnes per year). These projects are advancing through engineering, procurement, and construction phases. Iceland's Climeworks Mammoth plant (36,000 tonnes per year) reached mechanical completion in 2024 and began operations, establishing a reference design for modular solid sorbent deployment.

Corporate advance purchase agreements are building a forward market. Microsoft committed to purchasing 315,000 tonnes from Heirloom Carbon Technologies. Shopify, JPMorgan Chase, and H&M Group have signed multi-year DAC credit offtakes through Frontier. Airbus contracted with 1PointFive (Occidental's DAC subsidiary) for 400,000 tonnes of removal. These agreements provide revenue visibility that enables project financing, a critical bottleneck for capital-intensive first plants.

Integration with low-cost energy sources is reducing operating costs. In Iceland, Climeworks uses geothermal electricity and heat, cutting energy costs to among the lowest in the industry. Projects sited in West Texas leverage cheap wind and solar electricity. Heirloom's limestone-based approach uses solar thermal energy for calcination, reducing reliance on grid electricity. The trend toward co-locating DAC with renewable energy assets is emerging as a primary cost reduction lever, with energy representing 40 to 60 percent of total operating costs.

What's Not Working

Cost reductions are lagging optimistic projections. While proponents projected $250 to $300 per tonne by 2025, actual costs remain above $600 per tonne at operating plants. The gap reflects slower-than-expected learning rates, supply chain premiums for novel equipment, and the challenge of maintaining sorbent and solvent performance at scale. Cost curves will steepen with deployment, but current pricing limits DAC to premium voluntary market buyers and government-supported projects.

Permitting and CO₂ storage infrastructure create deployment bottlenecks. Class VI well permits for geological CO₂ storage in the United States averaged 4 to 6 years for approval from the EPA as of 2025. The backlog has delayed multiple project timelines. Several states have pursued primacy to issue their own permits (Louisiana, North Dakota, Wyoming have received it; Texas is pending), but building storage characterization capacity and monitoring infrastructure remains a multi-year process.

Sorbent and solvent degradation at scale is an unresolved engineering challenge. Climeworks has reported sorbent replacement cycles of 2 to 3 years under operational conditions, a significant ongoing cost. Liquid solvent systems face corrosion and energy penalty issues at high-temperature regeneration cycles. No DAC plant has yet demonstrated 10-plus years of continuous operation, leaving long-term maintenance costs uncertain.

The voluntary carbon market alone cannot support gigaton-scale DAC. At current DAC credit prices of $400 to $1,000 per tonne, total addressable demand from voluntary corporate buyers is estimated at only 5 to 15 million tonnes per year by 2030. Reaching gigatonne scale requires either dramatic cost reductions or inclusion in compliance carbon markets, neither of which is guaranteed on the timeline needed.

Key Players

Established Leaders

• Occidental Petroleum (1PointFive): Acquired Carbon Engineering in 2023 for $1.1 billion. Building the Stratos DAC hub in the Permian Basin, Texas, with initial capacity of 500,000 tonnes per year. Leverages existing oil and gas expertise in subsurface CO₂ injection and storage.
• Climeworks: Swiss company operating the world's first commercial DAC plants. Mammoth plant in Iceland reached 36,000 tonnes per year capacity. Has sold over 500,000 tonnes in future removal credits to Microsoft, Stripe, and others.
• ExxonMobil: Investing in DAC through its Low Carbon Solutions division. Announced plans for a 1 million tonne per year DAC hub on the U.S. Gulf Coast, leveraging its CO₂ pipeline and storage infrastructure.

Emerging Startups

• Heirloom Carbon Technologies: Uses limestone-based enhanced weathering approach with solar thermal energy. Signed 315,000-tonne offtake with Microsoft. Raised $183 million in Series B funding in 2024.
• CarbonCapture Inc.: Modular solid sorbent DAC system designed for mass manufacturing. Selected for DOE funding and developing Project Bison in Wyoming with Five Star Energy.
• Global Thermostat: Developed monolithic sorbent contactor technology. Partnered with ExxonMobil and is licensing technology for third-party deployment.
• Verdox: MIT spinout developing electrochemical DAC that avoids thermal energy needs entirely. Raised $80 million and targets sub-$200 per tonne costs through an electroswing adsorption process.

Key Investors and Funders

• U.S. Department of Energy: $3.5 billion for Regional DAC Hubs, plus $100 million in DAC Prize funding.
• Frontier (Stripe-led coalition): Over $1 billion in advance market commitments for carbon removal, with DAC as a primary technology category.
• Breakthrough Energy Ventures: Bill Gates-backed fund that invested in Carbon Engineering, CarbonCapture Inc., and Verdox.

Where the Value Pools Are Forming

Value Pool	Current Size (2025)	Projected Size (2030)	Key Capture Players
DAC plant construction and EPC	$2 billion pipeline	$15 to $25 billion pipeline	Occidental, Worley, Black & Veatch
Sorbent and solvent manufacturing	$50 to $100 million per year	$500 million to $1 billion per year	Climeworks (in-house), specialty chemical firms
CO₂ transport and storage	$200 million per year	$3 to $5 billion per year	Occidental, ExxonMobil, Equinor
Carbon removal credits	$100 to $200 million per year	$2 to $5 billion per year	Climeworks, Heirloom, 1PointFive
MRV and verification services	$10 to $20 million per year	$200 to $400 million per year	Puro.earth, Isometric, third-party verifiers
Equipment and component supply	$100 to $200 million per year	$2 to $4 billion per year	Air contactor manufacturers, heat exchanger suppliers

The largest near-term value pool is in plant construction and EPC services, driven by government funding. Over time, recurring revenue from carbon removal credit sales and CO₂ storage fees will likely become the dominant value pool, rewarding integrated operators who control both capture and storage assets.

Action Checklist

1. For project developers: Secure CO₂ storage rights and Class VI permits early. Storage access is becoming the primary competitive moat, not capture technology alone.
2. For corporate buyers: Lock in multi-year offtake agreements now at current prices. DAC credit prices may increase in the near term as demand from compliance markets grows faster than supply.
3. For investors: Focus on companies with integrated capture-plus-storage models and government funding awards. Standalone capture technology without storage partnerships faces higher execution risk.
4. For equipment suppliers: Invest in manufacturing capacity for air contactors, heat exchangers, and sorbent materials. Component supply chains are nascent, and early entrants can capture outsized margins during the scale-up phase.
5. For policymakers: Expand compliance market eligibility for DAC credits. Including DAC in the EU Emissions Trading System and California Cap-and-Trade would unlock demand at prices needed to sustain deployment.

FAQ

What is the current cost per tonne of DAC? Operating plants report costs of $400 to $1,000 per tonne of CO₂ removed and stored. Government-supported projects aim for $150 to $300 per tonne at scale by 2035. The U.S. DOE's target is below $100 per tonne as a long-term goal, though no clear pathway to that price point has been demonstrated yet.

How does DAC compare to other carbon removal methods? DAC offers higher permanence (geological storage lasts thousands of years) and lower land requirements than forestry or soil carbon. However, it is currently 10 to 50 times more expensive per tonne than nature-based removal. Enhanced rock weathering and biochar fall between DAC and nature-based approaches in both cost and permanence.

Where are DAC plants being built? The largest projects are in the United States (Texas, Wyoming, Louisiana) driven by 45Q tax credits, and in Iceland driven by geothermal energy availability. Kenya, Norway, and the United Kingdom have announced smaller pilot facilities. The Asia-Pacific region has limited DAC deployment to date but is seeing growing interest from Japan and South Korea.

Will DAC credits be accepted in compliance carbon markets? Several jurisdictions are exploring inclusion. The EU Innovation Fund already finances DAC projects, and discussions are underway to recognize DAC credits within the EU ETS post-2030. California's Air Resources Board is evaluating DAC for inclusion in Cap-and-Trade. Full compliance market integration would significantly expand demand.

What role does energy source play in DAC economics? Energy is the single largest cost component, representing 40 to 60 percent of operating expenses. DAC plants powered by low-cost renewables or waste heat have structurally lower costs. Using fossil energy for DAC raises lifecycle emissions concerns and reduces net removal efficiency, making clean energy co-location essential for both economics and credibility.

Sources

1. International Energy Agency. "Direct Air Capture: A Key Technology for Net Zero." IEA, 2025.
2. U.S. Department of Energy. "Regional Direct Air Capture Hubs: Program Update." DOE Office of Clean Energy Demonstrations, 2025.
3. Climeworks. "Mammoth Plant Operational Report." Climeworks AG, 2025.
4. Frontier. "2024 Annual Report: Advance Market Commitment for Carbon Removal." Frontier Climate, 2025.
5. Intergovernmental Panel on Climate Change. "AR6 Working Group III: Mitigation of Climate Change, Chapter 12." IPCC, 2022.
6. BloombergNEF. "Carbon Removal Market Outlook 2025." BNEF, 2025.
7. Rhodium Group. "Taking Stock: U.S. Carbon Removal Policy Landscape." Rhodium Group, 2025.