Technology capable of sucking mass amounts of carbon dioxide from the atmosphere has been dubbed the silver bullet for greenhouse-emission reduction, and Amazon.com Inc. is taking its shot by investing in Downtown-based CarbonCapture Inc.
Through its $2 billion venture investment program The Climate Pledge Fund, the retail goliath anchored CarbonCapture’s first close of an ongoing fundraising round set to be completed within the next month. Neither party would disclose specifics of the deal.
Beyond its venture involvement, Amazon will work with CarbonCapture to distribute 100,000 tons of “carbon removal credits” throughout its business networks, potentially offsetting greenhouse gas emissions among its suppliers and even customers by buying amounts of carbon dioxide set to be taken out of the atmosphere by CarbonCapture.
It’s been a big year for CarbonCapture as the demand for carbon dioxide-absorbing technology, quite literally, heats up. Companies’ slow progress in reducing their emissions of the mother of all greenhouse gases has raised interest in attempts to directly remove carbon from the atmosphere. It’s a risky gamble, considering the technology doesn’t yet exist on a mass scale yet and that many companies seeking to devise viable methods of capturing carbon have failed in their attempts.
Though CarbonCapture’s first-generation prototype has yet to achieve reductions in the carbon dioxide it produces as a company, other companies share Amazon’s confidence in the startup.
This year alone, CarbonCapture has signed carbon-removal credit deals with Microsoft Inc. and the Boston Consulting Group and is in final negotiations with the Energy Department for the funding of a direct air-capture hub in Wyoming.
Outside its investment from Amazon, CarbonCapture has publicly raised $43 million to date from investors including Prime Movers Lab.
Born out of the Pasadena-based incubator Idealab, CarbonCapture has developed a modular system for sequestering carbon dioxide through 40-foot rectangular machines emulating vented shipping containers. Inside these stackable filters are sorbent cartridges, which send streams of carbon dioxide directly underground for permanent storage.
Its primary revenue stream will be companies buying shares of carbon dioxide taken out of the air by CarbonCapture’s modules. For example, a company that emits carbon dioxide from its operations can pay CarbonCapture a fee to reduce carbon, offsetting or even subtracting from its own emissions. Since the Clean Air Act of 1977, U.S.-based entities have been trading greenhouse-emission allowances on the carbon-credit market.
While the general design of its prototype is relatively set, CarbonCapture continues to tinker with the module’s absorbing efficiency in its material lab, which is located at its Arts District headquarters. Helmed by Dr. Omid Nik, director of sorbent development and testing, researchers work to find materials requiring less energy to absorb carbon dioxide compared to the startup’s current prototype. Its first-generation filters need to reach 85 degrees Celsius to function properly, but CarbonCapture says a less energy-intensive second-generation cartridge is near completion.
The goal is to deploy new generations of leaner, more cost-effective sorbent cartridges as the company’s hardware reaches more customers.
CarbonCapture’s design is what is known as “direct air capture” technology. Differentiated from existing “point source” carbon-capture systems first spearheaded by oil companies in the 1970s, this infrastructure aims to pull legacy emissions already in the atmosphere as opposed to preventing further emissions at the source.
Last year, the Intergovernmental Panel on Climate Change published sobering figures on how countries’ net-zero Paris Agreement commitments are no longer enough to keep global warming below the 1.5-degree Celsius limit climate scientists deem the point of no return. The authoritative body said the world needs to remove 1 trillion tons by the end of the century – an astounding goal for economies still trying to get existing emissions down to zero.
The updated guidance propelled numerous direct air-capture startups into the forefront for ESG investing. Of competition headquartered in North America, Svante Inc. leads the pack with almost $500 million in funding, followed by Houston-based Fervo Energy with $187 million and Colorado-based Global Thermostat PBC near $100 million after its latest funding round in May.
CarbonCapture’s Wyoming hub, called Project Bison, could become a grid of modules capable of drawing out 5 million metric tons of carbon dioxide annually by 2030. Even for a fraction of the 1 trillion goal, CarbonCapture’s plan is unprecedented and is premised on the hope that better carbon-absorbing materials will be invented in the next decade.
Jonas Lee, the company’s chief commercial officer, said this funding round will help transition three years of research and development into actual deployment – a push out of the nest necessary to de-risk the new technology’s high cost.
“We’re really just at the beginning,” Lee said. “$43 million helps us move down a technology path. It doesn’t help us materially address the problem; it’s not supposed to.”
Spoils of subsidies
CarbonCapture’s chief executive Adrian Corless spoke with the Business Journal a few days before the events of National Clean Energy Week kicked off on Sept. 26. Amid the gaggle of policymakers interrogating energy executives over tiny cocktail plates in convention halls, Corless had a mission pertaining to one section of the federal tax code, and Project Bison.
“I’ve got a couple of meetings with some senators from Wyoming,” he said. “Which are going to be interesting.”
Corless took the reins from founder Bill Gross two years ago, and since then, government carbon-credit subsidies have accelerated his business’s interest beyond current employee capacity – a problem this new funding will solve.
“We have a backlog of demand for hiring,” Corless said. “We’re going to start to go and bring in those new people.”
In August of last year, President Joe Biden signed the Inflation Reduction Act, legislation that, among other things, distributes unprecedent federal spending through a tax credit called 45Q. The federal government now subsidizes the carbon-removal credits companies purchase from ventures like CarbonCapture through direct cash payments per ton of carbon committed for removal.
Direct air capturing isn’t cheap, because, ironically, a lot of energy is required for it to work properly. The International Energy Agency, an intergovernmental organization made up of 31 member countries, published a direct air capture report estimating carbon credits cost between $600 to $1,000 per ton. While this price tag may seem small for the amount of air that can fill the average household, costs climb into the billions for corporations like Amazon and Microsoft looking to shave tens of millions of metric tons from their own emissions.
The new law allows up to $180 in direct payment per ton for a project’s first five years, meaning Project Bison now has additional cash on hand and time to experiment as premium carbon-credit pricing attracts more customers.
Government funding around the world has led to a growth in capture and storage projects. According to the Global CCS Institute, an Australian-based think tank whose mission is to “accelerate the deployment of carbon capture and storage,” 61 new projects were announced worldwide last year, a 44% jump from 2021 levels.
According to Corless, CarbonCapture has yet to lease land in Wyoming for the Bison Project, but has zeroed in on Sweetwater County for negotiations. Last October, the company hosted two town halls with community members in the area and has another scheduled for on Oct. 26.
Ensuring the hub breaks ground is a task for CarbonCapture’s projects team, a five-person unit set to expand with modules soon shipping to different sites and customers around the country.
For Corless, the side of his business wrangling land leasing, energy suppliers and carbon customers will drift from what he sees as the startup’s parent business. Long term, he wants CarbonCapture to be the tech company mass producing the most efficient open-air carbon dioxide filters, not the company installing such pods. Just like consumer electronics companies deploying software updates from afar, CarbonCapture envisions a future in which iterations of sorbent cartridges can ship out for local installation, all while keeping its personnel here in Los Angeles.
“I personally can’t imagine that the core of this company would be anywhere else but California,” Corless said.
