Do carbon removal suppliers and registries have a responsibility in choosing their customers, or in enforcing how their carbon removals are used? Is it better that the money go to carbon removal than alternative uses? What matters, and at which magnitudes?
In today's episode of Carbon Removal Newsroom, host Radhika Moolgavkar, Nori's VP of Supply and Methodology, is joined by her business panelists Susan Su, a venture capitalist at Toba Capital, and Na'im Merchant, the Co-founder and Executive Director of Carbon Removal Canada.
A spirited debate ensues about Shell Environmental Product's purchase of biochar credits, SWISS and Lufthansa Group's support of Climeworks, as well as the Copenhagen Airport's carbon removal portfolio purchase from Klimate.co. This type of industry interest in carbon removal, while directionally correct, can trigger debate within the carbon removal community. Many are happy for the support in scaling the new industry. Others worry it is better to maintain CDR's independence. This question is unlikely to be settled any time soon, but tune in and listen to some hot and yet considered takes on the matter.
On This Episode
Susan Su
Na'im Merchant
Resources
The ETH Zürich report on DAC costs
Subscribe to Climate Workers Anonymous
My other show, Reversing Climate Change
Books referenced in the podcasts, at Bookshop
Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Radhika Moolgavkar: Hello and welcome to the business edition of Carbon Removal Newsroom. Today, our panelists will be discussing recent developments in carbon removal purchases by Copenhagen Airport, Shell, Environmental Products, and Swiss and Lufthansa Group. I’m Radhika Moolgavkar, VP of Supply and Methodology at NORI, and joining me as always, Susan Hsu, a partner focused on climate investing at Toba Capital, a board member at the Carbon Business Council, a board advisor to the Environmental Voter Project, and host of the Climate Money Podcast. Hello, Susan. Welcome.
Susan Su: Hello.
Radhika Moolgavkar: We also have Na’im Merchant, the Executive Director of Carbon Removal Canada, an Elemental Accelerator Policy Fellow, and the author of The Carbon Curve, a newsletter and podcast about the policies and technologies needed to grow the carbon removal market. Hi, Naeem.
Na’im Merchant: Hey, everyone. Good to be with you.
Radhika Moolgavkar: All right. Let’s start with Shell’s biochar purchase, which is interesting. Naeem, what do you think of Shell picking... 22,500 biochar credits that have been certified by Pure Earth.
Na’im Merchant: I think that the carbon removal community needs to kind of think about not stressing too much about who’s buying biochar credits or carbon removal credits or other sorts of carbon removal strategies. So I think I don’t really make much of it, to be really honest. Like I think Shell is like any other company going to buy carbon removal credits that make sense for, you know, what they, you know, as a member. I think what we need to be more worried about is just like what do companies like Shell that buy carbon removal technologies that have the potential to scale and what companies like Shell decide to do with those technologies.
But I feel like as relates to this particular situation, it’s really just about Shell being like any other major corporate polluter, deciding kind of to buy durable carbon removal on balance, I think is a good thing. And it’s not, their purchases of carbon removal credits shouldn’t be the focus. The focus should be on What are they actually doing in relation to the scale-up of carbon removal and the reduction of emissions of their own activities?
Radhika Moolgavkar: Do you, as a follow-up, have any concerns? Because there is debate about the durability and the permanence of biochar. And so choosing biochar versus another technological solution like another Bikers or Bex Pathway, How do you think about that, if at all?
Na’im Merchant: I think we’re getting a bit more kind of data around kind of the permanence of biochar and we’re seeing kind of, you know, more encouraging studies being done around just like the durability of biochar. I think there’s a lot more to be done. And I think one of the concerns I have about biochar is just how much that varies based on climate conditions and soil conditions and all these sorts of things. But really, like what I’m seeing here, big picture, is a company saying, Let’s buy 22,500 credits of biochar at $100-ish per tonne instead of a $5 carbon offset.
And so for me, like... This is progress. And I have like, you know, is biochar my personal favorite carbon removal method? In some ways, no, because of the kind of concerns that I just already raised. But I think that it’s really encouraging to see more companies and what What we need to see is more companies, regardless of where they are in the spectrum of how carbon intensive their specific industry is, buying more expensive, higher durability carbon removal credits. Directionally, this is exactly More of what needs to happen. Now, the question of like Shell and, you know, their broader business model and how they engage on climate is like, you know, that’s a broader discussion.
But, you know, based on just kind of thinking about their specific decision here to be buying carbon removal or biochar credits from Puro, I think, you know. I think we’re moving in the right direction. We need to see more. You know, so far we have seen high margin, low emissions companies make carbon removal purchases. And what we need to see are companies with a higher carbon intensive coming from higher carbon intensity industries like Shell, but like You know, in companies in steel and cement and all across heavy industry, you know, investing in carbon removal.
So I’m encouraged that directionally this is where we kind of want to see things go, where we have a broader spectrum of companies getting involved in the durable carbon removal market.
Radhika Moolgavkar: Susan, the next 150 plans to expand its biochar production capacity with at least two additional plants that are scheduled to come online in 2024 and 2025. What do you make of that announcement, which maybe signals that at least biochar is moving from early phase financing to more traditional style financing?
Susan Su: I think this is actually a very significant piece of news overall because of the things that you can read between the lines. First of all, the Next150 is a company that has been in existence for, I’m like looking at my month and date here, about a year and some change. So it’s a very new, it’s a very young company and yet they’ve already managed to get Shell as a partner, I mean, not only everything that Naeem said, which I think was some really great points about not just these high margin, ultimately quite low emissions companies, but the opposite.
But also it’s just like a very big logo and it’s a huge corporate player to be already partnering with at such an early stage of inception. We’ve had carbon removal companies. That we all know and love that have been around for far longer than 13, 14 months that cannot claim that level of corporate partner in their buyer list. So I think that’s really interesting. And then the other thing about this company is that they are operating. So let me back up for a second. When we think about a lot of the carbon removal purchases that have already happened, they have been from The next 150 is very different from that.
These facilities are in Mexico, and they are deliberately so. In fact, it’s a core part of their strategy that they are doing carbon removal in emerging economies. This is going to be a theme that comes up in another one of our news items later, but I think that is absolutely fascinating. That’s the trend that we should all be picking up on and looking at. Is this going to be something that continues in the future? Are we going to see more geographical diversification, a more global distribution to carbon markets? And is that a good thing?
I mean, it seems good because it’s sort of spreading Carbon wealth around and it’s creating buy-in from local economies and it’s potentially, you know, sort of leveraging comparative advantage that certain geographies have. I mean, Mexico produces a lot of agricultural waste that is then fairly cheap to process into biochar as compared to in other locales where you have to, you know, obtain those input feedstocks in a different way. But it also probably has cultural and political ramifications that are hard to foresee today. But I just think it’s a very big deal that this very new company operating in Mexico was able to sell any amount of carbon credits, let alone 22,000, which is not huge, but it’s not tiny to shell.
So I think it’s pretty cool. And it’s something that I’ll definitely be keeping an eye on in the future.
Radhika Moolgavkar: So Naeem, you kind of touched on this briefly, but what do you think public perception will be of Shell, you know, a purchase by Shell? There’s, I think, a lot of division within the carbon removal, you know, space about working with oil and gas. What’s your thinking around this?
Na’im Merchant: Yeah, there is. You’re absolutely right about that. I think public perception for Shell would be, you know, this is more greenwashing, right? And I think ultimately the perception for Shell is going to be like, how does this fit within your broader set of activities as relates to climate? But in terms of like how this helps or potentially hurts, biochar is a carbon removal solution. I think this helps Biochar as a carbon removal solution. Purchases help companies. If this was Shell buying this particular company and then deciding what to do with it, I would not be able to answer this question.
But because I fundamentally think that carbon removal companies need... You know, sources of revenue and validation that comes from purchases in order to grow and expand. Like, I see this as something that helps biochar as a carbon removal solution. And then, you know, when I think about Puro as like a certifying body, I think like, I don’t know how much of an impact it has on Puro in particular. I don’t know that... As Piro, the group that sells or facilitates the sale of these carbon credits should be the certifying body necessarily.
But I will just say net positive purchases for carbon removal credits are net positive and it should be celebrated, whoever it comes from. But we’ll have to see how the public perception breaks down for Shell in particular.
Radhika Moolgavkar: So Susan, I don’t know if you know this, but do you have a sense of how these purchases fit within Shell’s broader environmental strategy?
Susan Su: Well, I mean, the short answer is I don’t have a lot of context on this, but I will say one thing we haven’t mentioned yet is that this purchase has been by Shell environmental products, not Shell overall. And that’s different. So it’s not necessarily Shell buying credits to offset their enormous considerable, you know, scope one, two or three emissions, or even just like scope one for Shell. This is, I think Shell Environmental Products will operate somewhat as a reseller. So they build portfolios of credits and then they work with their different partners and enterprise customers.
So they have a whole pretty built out and seemingly rigorous team and framework for evaluating anything that they bring into the portfolio. So I think it’s kind of a vote of confidence that it’s gone through that screening and they’re willing to And offer it because it’s almost like more, right? If you’re going to sell it to your customers than if you’re just going to consume it for yourself, right? Like if you’re going to serve somebody a meal, you’re going to make sure it’s better than you would do if you were just making lunch for yourself.
And so that’s kind of an interesting thing to notice, which, you know, you hear in the name Shell and it actually means so many things, right? So that like which entity within Shell is doing And then also, I’ll just call out that something interesting about Shell Environmental Products’ carbon credits portfolio is that they do tend to look for opportunities that seem to have some kind of story value, in addition to simply being, you know, the transaction of the credits and having, you know, kind of the verifiability of the credits themselves.
You know, way to talk about their business model, but they do have to sort of promote these on to their own partners, their own clients. And so the narrative piece is really important. And that’s where I think being able to say, we’re, you know, doing this, not just from the usual suspects, but in these, you know, unusual regions, unusual for carbon removal so far, but maybe not for the future. And there’s this kind of other feel good aspect to it. I think that’s important too. The broader implication for this is that as carbon removal continues to diversify, and there’s just so much now, which is really cool, but I think part of the unique selling proposition for different carbon removal solutions is going to have to be that narrative value.
It’s not simply price. I think price is for sure number one, and that’ll be a given. But then on top of price, let’s say all else being equal, how else do you compete? I do think being able to come out with really strong story value if you’re a supplier is important. So like we’re getting into, it’s like crazy that it’s happening so soon, but we’re kind of like getting into the marketing era for carbon removal, which I actually personally think is really exciting and fun.
Radhika Moolgavkar: So, Naeem, last question for you on this topic is, what challenges do you see in the long-term viability and effectiveness of biochar projects in countries like the U. S. and Canada, where maybe their feedstock is much higher than a competing facility in Mexico?
Na’im Merchant: Yeah, I mean, I think some of the key challenges that we need to think about in terms of the long-term viability of biochar projects is, you know, one of them is kind of getting into the point that you referenced earlier, Radhika, was around just how much do we know about biochar as an effective carbon removal method? You know, are there, you know, are some of the questions that exist around durability and Measurability, you know, being effectively addressed. You know, how much can we really stand behind biochar as a carbon removal approach?
You know, if we think about direct air capture, And so I think purchases like the one we’ve seen from Shell here are... You know, useful, but I think ultimately, you know, for the long-term viability and effectiveness of biochar, that’s going to come down to just like the overall climate and environmental benefits that are claimed. I think biochar is pretty far along in a lot of ways in terms of scalability today, but I still think that there’s some questions in those areas that need to be resolved, and I think that’s going to really drive the long-term viability here.
Radhika Moolgavkar: Yeah, that could be a generic comment for all open systems, probably. Let’s pivot to Jack a little bit and air travel. So as I’m sure most of our listeners know, air travel is still considered a very hard to decarbonize sector. And it’s pretty expensive to decarbonize this industry as well. So Naeem, starting with you again, how do you think direct air capture is? Compliments Swiss and Lufthansa Group’s existing efforts to reduce emissions, i. e. sustainable aviation fuel, which is very expensive.
Na’im Merchant: Yeah, well, I’m glad we’re talking about this because it lets me get on my soapbox and complain about sustainable aviation fuel because I had the opportunity to look into this when I kind of had a project with Clean Air Task Force around sustainable aviation fuel and wrote a white paper with them, which I can send a link on around just like the fact that a lot of what we consider to be sustainable aviation fuel is by no means sustainable. These aviation biofuels have a lot of challenges in terms of their land use impacts, in terms of They’re LCAs in terms of the supply chain challenges that a lot of these face in terms of when you think about what it’s going to take to scale up biofuels for the aviation sector.
And so what we frequently call sustainable aviation fuel, we really like the term we should be driving for is zero carbon aviation fuels or low carbon aviation fuels because sustainable aviation fuels Can have a pretty high carbon footprint. And I don’t think people really fully realize that. I also had the opportunity to talk to, you know, Anna Stukas from Carbon Engineering about this. And they’re thinking about sustainable aviation fuel and how the aviation sector can use direct air capture. And even when you have the best sustainable aviation fuel, you’re going to have residual emissions from that process as well.
And so I think direct air capture is a great complement for airlines like Swiss and Lufthansa to consider in their efforts to reduce emissions. Aviation for so many reasons, not just the fact that sustainable aviation fuel is hard to come by and is expensive and has a number of challenges, as you rightly pointed out, Radhika. I think that, like, you know, you think about all the other elements of, like, what it’s going to take to get... You know, the aviation sector to zero. And it’s, it feels almost impossible, you know, without outright and complete demand destruction for flying.
And so we think direct air capture technology and carbon removal So, I think that we should... When I think about what’s a great sweet spot for direct air capture technology, I think it’s within the aviation sector to help them reduce emissions because it is turning out that something that turns out to be probably in some ways more expensive and even more supply constrained than direct air capture in the near to medium term, it might actually be sustainable aviation fuel.
Radhika Moolgavkar: Susan, what are the expected volumes of carbon dioxide removal from this partnership and what do you think of its impact, maybe both environmentally and sort of from a business perspective?
Susan Su: Well, that’s the interesting part, Radhika. It actually is cleverly omitted. The actual volume of purchase is omitted in any kind of announcements that I’ve seen about the partnership, at least. Look, I mean, I think there’s a lot of greenwashing when it comes to air travel and the whole actually, you know, global travel industry. There’s obviously so much more that they can do first. I mean, even in terms of efficiency, like I think these numbers have been improving dramatically actually in the last few years, but you know, there’s still only 85% of flights fly full.
So that’s like another 15% of flights that they’re not empty, but they still have seats and they’re still flying and There’s probably a lot of other little things like that we non-experts don’t think about on a regular basis where we can be looking for sort of better bang for our emissions buck. First of all, when you see companies kind of do these really splashy announcements and Without any of the fine print or any of the details, I always get kind of, I feel a little bit skeptical. We’re going to talk a little bit more about aviation in our last story.
So I’ll save some of this for that one. But, um, you know, I do appreciate the Climeworks comment on this, that a company, um, that is as cost sensitive as any airline would be, would only be doing this if they, um, You know, have really thought about reduction first, but then, you know, that doesn’t really specify the size of this purchase. And by the way, do we all know how much PR costs? Like PR is pretty expensive. And if you can get like an amazing PR bump from this, you know, it might just be, and I’m like very, this is a very cynical comment, but I think we in the carbon removal community need to be really aware of that.
Like, Are these purchases actually land and expand purchases or are they simply flyer checks as we call them in venture where they’re sort of just like never meant to be anything more than something kind of surface level to get the story value out there on the part of the buyer. And I think it’s our job as people who talk about carbon removal Publicly and sort of commentate on it to be realists about this and not to be overly, not to play into the narrative trap too much. So yeah, I’ll kind of just leave it at that.
I’m a little bit, as you can tell, I’m a little bit skeptical of this one overall, specifically because why don’t we know how much it is or how much money it costs? Those are sort of the key factors that will give confidence And a real concrete underpinning for the industry, and they’re missing here.
Radhika Moolgavkar: All right, well, I’m going to switch us to the last topic that Susan alluded to, which is coming from the Copenhagen Airport, another initiative out of the aviation industry, where Copenhagen Airport is partnering with Compatriate Carbon Dioxide Removable Marketplace, Climate. So, Susan... How do you see this impacting the perception of the aviation’s industry commitment to net zero goals? And as you mentioned, there are a lot of other ways potentially where they could get to net zero, like filling up their planes.
Susan Su: I don’t know if Taylor Swift has something to do with this as she seems to have something to do with everything, but there’s been so much attention on flight emissions lately. And I think it affects, I mean, you know, these people, these executives at these companies, whether it’s an airport executive or an airline executive, they see what’s in the headlines. And I think it’s kind of made them hustle a little bit. And I think to answer the question specifically, how do I see it impacting the perception? Well, they are definitely thinking, how is this going to impact perception?
And we hope positively. And I think that’s fine to a certain extent, but again, to connect back to my previous comment, we have to be realists about whether this is a land and expand or whether it just kind of stops at checking the box and, you know, we get some of the PR lift from it and then we quietly, you know, go away once this whole thing blows over. I will also say one thing that’s kind of cool or interesting about this story that goes back to our first one about the next 150 is that the purchase is actually, that the Kastrup Airport purchase is actually investing in carbon removal projects in India and Nepal.
So again, this like theme, another theme, which is carbon removal is really starting to become this global supply chain. And Wow, gosh, we should talk about that on a whole separate episode because I think it’s going to continue to emerge. I find it fascinating and I think it’s probably positive and it’s probably has some interesting implications for cost, but it’s just a notable thing that this one is not a Climeworks purchase, for example.
Radhika Moolgavkar: Which tees up the next question from Naeem perfectly, which is how do you think this compares to the ClimbWorks purchases we just talked about? And also when you think about sustainable aviation fuel and all the issues you mentioned earlier.
Na’im Merchant: I mean, I think it’s... I mean, I think it’s obviously different in terms of the, you know, the carbon removal purchases from climate are going to be a variety of short duration and long duration carbon removal methods. But I think like generally positive, right, to shift away from avoidance based credit. And so I think that’s, that’s great to hear. Ultimately, we see like kind of more of an interest around, you know, long duration carbon removal methods with the, with the partnership with Swiss and Lufthansa, though I think to Susan’s point, we don’t know what the volume of that purchase is going to be.
I actually don’t know that the airlines really want to commit to anything. I don’t know why they would publicize the volumes of direct air capture credits that they would actually purchase. I think what airlines are realizing is sustainable aviation fuel is hard to come by and is extremely expensive. We better lock up some other alternatives here. And I’m very happy about, I would say, for the splashy announcements of airlines working with direct air capture companies around their work here, even if they can’t be very specific. We need to just see more companies seeing the value of even just understanding why they should be thinking about something like direct air capture in the first place.
And just like we just need to see the news that’s released from Copenhagen, you know, the airport in Copenhagen around moving, ditching avoidance-based credits for removal-based credits with a marketplace like Climate. Generally speaking, like... I’m kind of worried about people working in carbon removal and those of us have been working in this for a while on just like burnout of just like, like we got to be able to celebrate some of these wins here. Like this is like we, we were. We were in a position where we were hopeful that maybe we would see something where the DOD would maybe buy some, get into investing in research and development for direct air capture, for aviation fuel that they might be able to use on a military base somewhere so many years down the line.
And recently we’re seeing all this great policy wins around carbon removal. You know, major companies buying carbon removal or, you know, partnering with carbon removal companies, like, we got to take the wins where we can get them. And we’ve got to be able to say, like, hey, this is a step in the right direction. Like, Swiss and Lufthansa run... And the airline industry in general, not an easy business to be in, not an easy business to take some of your profits and go and buy several hundred dollar a tonne carbon removal credits.
But they’re doing it, at least they’re announcing that they’d like to do it. And that’s a move in the positive direction. I really think it’s important that when companies go and do this and they do it for the PR bump, of course, they do it for the greenwashing, of course, but they have to have a basis in which to justify. We need to justify some of these decisions to their investors, especially in particular if they’re working in sectors that are not, you know, that they’re not held down by kind of compliance requirements or whatever mandates that are existing to reduce their emissions.
So there needs to be that PR bump. We need to show that we have... That we need to let them kind of play the PR card if we want them to continue doing this. And certainly there’s a role that we can play to be like, hey, like a year ago, Swiss and Lufthansa, you know, they announced some Climate Works partnership. I wonder if anything. Nothing ever came of that. We should look into it and we should make sure that we call them out if that was in fact just a PR announcement and nothing real came of it.
But I do think like all of this stuff that we talked about today, like the biochar purchase, the partnership with Swiss and Lufthansa and Climeworks, Copenhagen Airport investment, like these are all positive developments for carbon removal. And I think we got to remind ourselves of that because when you, like Radhika, you’ve been in this for a long time now. It’s, you’re like running up against a wall a lot of the time. And you kind of just need to be like, you know what? Wasn’t perfect. I wish Swiss and Lufthansa said they’re buying X number of tonnes over this amount of time.
And this is what they were going to, absolutely. But like, we will run out of gas as a community of people who care about this topic. If we don’t take the winds where we can get them and then just continue to build on them. And the building on the winds is what I’ve, frankly, that’s what I’ve seen over the last few years. And that’s been So, Copenhagen Airport, like, do I wish they just focus on durable carbon removal? Yeah, I wish it was just durable carbon removal. But the fact that their, you know, announcement said we’re ditching avoidance-based credits for carbon removal credits, that’s a huge difference.
That’s great. We should celebrate that. And so just to say, I would also just want to say, I also agree with Susan on how exciting it is that this sector is showing that it can have a real impact in places around the world. When I originally started working in carbon removal, I’d only hear about projects or pilots or ideas around carbon removal that were very focused in the US or Europe. And as someone who worked in international development and lived in other parts of the world, I’d always wondered, like, when is this going to become a more international industry?
And when are we going to be able to talk about carbon removal in Kenya and India and China and Vietnam and all these other places in Mexico and outside of the US and Europe context? And we finally are. And that’s really great news, too.
Radhika Moolgavkar: All right. Well, I almost don’t want to bring up the next topic because it was nice to end on something so positive, but I did promise Susan and Naeem we would touch on one last thing, which is I think really important to discuss, which is a recent study from ETH Zurich that basically questioned whether DAC pricing could get to the level’s Of $200 or lower, even $100, which is thrown out there a lot. So Susan, I’m going to turn it over to you because I know that you were really interested in this study.
And can you give us an overview and what it said, basically?
Susan Su: Yeah, so a group of researchers at ETH Zurich in collaboration with another institution actually found that they did a bunch of cost analysis looking at experience curves for different subcomponents for direct air capture and they found that for You know, three exemplary direct air capture technologies that they chose to call out, specifically liquid solvent systems, such as carbon engineering, solid sorbent direct air capture, which would be Climeworks, and then calcium oxide ambient weathering, which would be heirloom, that for those three types, and they’re not, you know, covering all the potential flavors of DAC that are increasingly proliferating and You know, very much at the frontier of technology development, but just for these three, for companies that we know well and that are often kind of held up as examples in the space that they did not see costs getting to $100 per tonne, which Radhika, as you’ve mentioned, it gets thrown out there a lot.
Nobody’s ever said that. So I think it comes from Frontier and Frontier I think it just kind of got out there and then the International Energy Agency picked up on it. The World Economic Forum also says that DAC should and can be at 100. So there are like some pretty legitimate institutions out there saying these prices, but this research found by looking at all the subcomponents that go into DAC that was not feasible. By 2050, and that prices would be more in the median range of, you know, 340 to 370, but that they would have ranges from as low as $230 per tonne, which is getting there is close.
As high as $835 per tonne. The calcium oxide ambient weathering, that’s heirlooms approach, had the biggest range. So the biggest number of variable factors there. So I just thought this was interesting because we all, I think, operate under some assumptions around technology cost curves and learning curves that Assume that what we’ve seen in other technologies will, of course, has to map to every technology that’s out there. And in fact, it’s more helpful to be specific and to be realistic. I agree with Naeem’s previous comment about celebrating wins. I also would say that my job as an investor is not to celebrate wins.
My job as an investor is to understand where the market is going and make informed decisions that will honestly generate returns. That’s my job. Now, as a climate person, of course, I’d love to celebrate wins, but, you know, and my role in this podcast, I’m both, but investors will want to see that things are getting cheaper, getting more widely adopted, growing. And so that’s, you know, Just one consideration here that this is going to potentially affect how things go.
Radhika Moolgavkar: So Naeem, I’ll turn it over to you now because within the carbon removal industry, there were some people who questioned some of the outcomes of that study. So if you don’t mind kind of discussing what Robert Hoagland posted on his, I think it was on Milky Wire after this came out.
Na’im Merchant: Yeah, I think everything that Susan said is dead on in the sense that we have to be careful about how we think about learning curves, especially with something like direct air capture. I don’t think it’s going to match the trajectory of solar or battery. I think we have to be clear-eyed about that. I also totally agree. I don’t know where we came up with this $100 per tonne. Susan, I think you’re right. It was thrown about and it just kind of caught on for direct air capture. My hope has been that across a diverse portfolio of durable carbon removal methods that we can average out somewhere in that range, but direct air capture is likely always going to be You know, the most expensive approach here.
So, you know, whenever I hear $100 a tonne thrown around for direct air capture, I do kind of scratch my head. But Robert did kind of, I think, post something very useful on his Substack. I hope we can get that on the show notes as well in response to this study because it was an important study. Listen, when you’re talking about carbon engineering, Climeworks and heirlooms, direct air capture technologies, you’re talking about the companies that are probably furthest along in terms of their direct air capture technologies. If you can have And incumbent direct air capture technology, like those three are, you know, amongst the top of the list.
So it’s important that they’re there. But we also know that there’s something like 80 to 100 other direct air capture companies working on different technologies right now. And so I don’t know how much I would, you know, We can apply these estimates to what direct air capture looks like 25 years from now. Robert Höglund references a really great article that should also be in the show notes as well about how we’re at direct air capture 3. 0. You know, we can agree whether or not that makes sense. But the point is, is that we are seeing a lot of innovation in the direct air capture space that is not going to be captured by studies like this because it would be impractical for a study like this to capture all the different types of and variations of direct air capture that are being tested right now.
So I would just say that, like, in general, I think we should be careful about what we’re thinking about in terms of the realistic cost reductions around direct air capture. I think that point is very true. But, you know, I also want us to just remember that like estimates of like where DAC is going to be 25 years from now based on the more incumbent technologies that exist right now, recognizing that there are emerging direct air capture technologies that are being built by, you know, companies like Mission Zero and, you know, Air Hive and, you know, another 80 of them today right now that are in development that I don’t know how.
How much we should really take from that study in terms of the actual costs that they land at. Other than to say, let’s be realistic about this whole $100 per tonne target that’s been thrown around. I agree. I don’t know where that’s fundamentally coming from or what that’s based on. So yeah, anyway, Susan, you were going to say something.
Susan Su: Yeah, Naeem, I think you’re right. But like going back to something you were just mentioning, even if it’s not a relevant commentary on all of direct air capture, which it may or may not be, it is sort of a way to call out the incumbents. Which are specifically named, but not in the title, right? It’s not saying, hey, carbon engineering, hey, heirloom. And by the way, these companies have raised hundreds of millions of dollars, hundreds, well, maybe even close to a billion dollars. And so there are a lot of stakeholders implicated in this.
Even if it’s only about these three companies, it’s still significant because it’s like, hey, maybe the incumbent technology is going to be displaced by something cooler down the road, but For everybody that’s already part of the incumbent bandwagon, there are some serious implications. And then I think there’s something else I wanted to just mention from the study that relates to a comment that you made earlier, Naeem, which was about sustainable aviation fuels. So, you know, they did, they were careful to say that even at higher costs, in even worse case, and they’re not able to really go down the curve and at the higher, there’s still going to be a very good alternative To sustainable aviation fuels, even if they’re at the same price as sustainable aviation fuels for a bunch of different reasons, not only that, well, there’s all these questions around the real sustainability of sustainable aviation fuels, number one, but even that aside, it’s like the scalability of sustainable aviation fuels and having to create biofuel from, I mean, land use competition across so many different use cases, then how are we going to satisfy all that need?
And so they’re DAC even at the higher prices becomes a good alternative. And that’s where it wraps actually really nicely back to the story about Swiss and Lufthansa because they’re starting to see that maybe very early on and they’re making a couple of bets. We don’t know of what size, but they’re making some early bets to hedge. And you know, this, Is the exact justification for why they should be doing that, even at the higher prices that DAC might sustain at.
Na’im Merchant: Yeah, 100%. That’s such a good point. And I’m glad you brought it back to that point around sustainable aviation fuel. It’s like if we could just get real about where do we actually need carbon removal costs to land at instead of this in like, you know, arbitrary $100 per tonne level and like, you know, we could actually have an informed conversation. I would just say I think you make a good point around the implications for these three companies and the technologies that they’re using. And I would just love to see How they responded to the study.
I haven’t looked into that, but I would love to see how they responded to it and how they continue to justify some of the claims that make around the costs that they’re looking at when we already know that a study like this can really put that into question.
Susan Su: Yeah, I think it’s interesting that we’ve let a mnemonic You know, it’s a nice round number and easy to remember, but now it’s somehow defining an entire industry and it’s arbitrary. Why not $103 or $97? All right.
Radhika Moolgavkar: Well, Naeem, Susan, we are running out of time, but I appreciate as always the commentary and thoughts and look forward to having you on in about a month. So thank you very much.
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