August 14, 2022 | By Aaron Benjamin, DAC Coalition

The failure of the Build Back Better to pass through the Senate last month left President Biden’s bold climate ambitions in murky waters . Yet on Friday, in quite dramatic fashion, the Inflation Reduction Act (IRA), the largest federal investment in combating climate change, passed through the House of Representatives and awaits the final stamp of approval.

When President Biden signs the bill into law, it will be a momentous moment for the U.S which may have just revived its 2015 Paris Agreement target of slashing emissions in half by 2030. Analysis by Princeton’s REPEAT project estimates that the IRA will reduce the US’s CO2 emissions by 42% below 2005 levels by 2030. For all our readers who strictly work in gigatons and as DAC enthusiasts, this equates to “0.8-1Gt of additional carbon emission reduction in 2030 relative to current policy baseline” analysis by Jesse Jenkins of Princeton’s REPEAT. 

To do this, the IRA earmarks $369 billion for climate initiatives, a large proportion of which will contribute to the continued decarbonization of industry in the U.S, targeting both the production and consumption of renewables, electric cars, heat pumps and alternative fuels. An article in Lexology published this week, sets out a detailed breakdown of all the climate and energy beneficiaries. 

Whilst the focal point of the bill’s climate fund will be clean energy and renewables, a summary below illustrates how Direct Air Capture (DAC) will be affected, starting with the posterboy tax-credit of point-source carbon capture and direct air capture: 45Q. 

45Q’s New Look

Previous to the IRA, the tax credit awarded companies $50 per tonne of CO2 captured and durably stored or $35 per tonne for utilizing it in their manufacturing process (for instance in concrete or alternative fuels). While this was positive, frustrations ruminated amongst the nascent DAC companies, the majority of which still at pilot stage, simply did not have the 100,000 ton/yr capture capacity required to benefit from the credit. At a time where assuring capital would be essential to scaling efforts, the credit was ineffective.

The IRA changes everything, providing “more money, more time and [benefitting] smaller projects” put succinctly by Lucy Hargreaves, a policy expert at Patch. To break this down, the new 45Q more than triples the previous credit to $180/ton for durable CO2 storage and boosts CO2 utilization to $130/ton. However, as mentioned above, providing more finance is ineffective if companies cannot meet the minimum capture requirement. The fact that the IRA states that companies only need to capture 1000 ton/year to access the credit, will provide financial reassurance to the plethora of DAC start-ups, university spin-outs, and small-scale facilities that make up the majority of the emerging DAC ecosystem. Smaller projects will also be boosted by the fact they will now be able to receive direct pay for the full value of the credits for the projects first five years, providing capital to aid their no-doubt ambitious scaling plans.

Additionally, the enhanced 45Q will provide DAC companies with a seven year extension on the deadline for the construction of eligible facilities (until Jan 1st 2033). This will provide research projects and those still early in their DAC technology readiness, more time and peace of mind to realize their plans.

Support Extended for CO2 Utilization and Renewables

Elsewhere in the bill, is a hefty $2.15Bn investment into low-carbon buildings and the use of low-carbon materials (a big win for CO2 utilization companies such as CarbonCure and CarbonBuilt), plus a further $100m to help build out low-embodied carbon labelling. In conjunction with the 45Q revisions, both these funds will support DAC companies looking to use the sequestered CO2 in making low-carbon concrete. However, concrete is not the only DAC+utilization pathway benefiting from the bill. Credits on alternative fuels (otherwise known as syn-fuels) have been extended until the end of 2024 alongside a $250m injection into the exploration of sustainable aviation fuel. 

The cost of renewable energy is projected to come down even further with a $30Bn assigned to production tax-credits. The ramifications of having a clean, cheap source of energy goes far beyond our carbon dioxide removal ecosystem, however, the energy-intensive regeneration step of many DAC operations, may have just been handed a solution and in turn, a rebuttal to many of their critics.

Above all, the IRA sends a strong signal to the rest of the world that the US is backing the  reality of a carbon capture and removal industry. This, alongside the CHIPS and Science Act (passed 9th August 2022) which commits $1 billion in funding for carbon removal R&D over a four year period (2023-2026) “galvanizes carbon removal not only through direct federal support, but also by signaling the strength of the market to the private sector” said Ben Rubin, Executive Director of the Carbon Business Council

Casting our minds forward to 2030, I have a strong inclination that we will look back on 2022 as a transformative year for carbon removal policy. As a quiet optimism sweeps through all those working on climate, we should be cautious not to sensationalize. The road is long and winding but it certainly is pleasant not to be wandering in the desert anymore.

June 15, 2022 | By Aaron Benjamin, Project Associate at The DAC Coalition

Two weeks ago, we launched The Direct Air Capture Coalition, the first and only, multi-stakeholder coalition, driving forward the global deployment and mobilization of DAC.

The need for carbon removal at gigaton scale is not a new revelation. It has been murmured in academic circles, targeted by DAC pioneers, hedged by VCs, and cautiously (too cautiously, some might say) approached by policymakers. However, this is not surprising given how nascent this industry truly is. Yet, for us to avoid the most concerning of IPCC scenarios, we need to find solutions that solves the ‘hard-to-abate’ emissions problem as well as removing yesterday’s CO2 at a pace that unduly embodies the urgency of our planetary mission: rebalancing the climate. In contrast to this, our mission is simple: to educate, engage, and mobilize society around DAC so that we can present a unified and unwavering approach on how we can achieve gigaton carbon dioxide removal by 2030.

The Engine Driving the Coalition

Amongst all the tons, targets, and temperatures, it is easy to think that some things are out of our control. However, if human behavior got us into this current situation, then human action will find the solutions. This hope is something that underpins the coalition.

Propped up by ten volunteers spread across six different countries (some of whom left their full-time jobs) meeting weekly throughout the pandemic and into 2022, the DAC Coalition embodies this human dimension. With backgrounds spanning the whole climate spectrum from climate risk management to finance, through the murky waters of climate policy and into global marketing and science communication; we draw upon this rich palette of skills to connect and engage with the societal sectors that gigaton carbon removal involves.

Our bottom-up vision that puts the needs of our coalition members at the center of what we do, is one that has been supported by the Grantham Foundation whose catalytic grant will kickstart our metaphorical calciners.

Our Three-Pronged Approach

Fleshing out the skeleton of the nascent carbon removal market requires a huge coordination and requires that actors are reading from the same hymn sheet. Misperceptions and misinformation surrounding DAC is already a real and current problem experienced by our coalition members (see figure below).

To effectively target these concerns, we developed a three-pronged approach that will not only target the most pressing of these perceptual hazards but help the industry accelerate past them.

  1. Awareness and Education – There is a dire need to shorten the time-lag between onboarding new actors and decision-makers and the frontline of DAC. Therefore providing clear and credible information will be at the heart of our approach. In commissioning the first DAC report (direct from the voices of frontline actors) and providing a curated library of DAC resources and topical sector events, we hope to free up time and resources within the DAC companies, so that more time can be spent on scaling their business objectives.
  2. Connectivity and Collaboration – Facilitating active and action-orientated discussions between coalition members and key societal players will be the foundations of enabling a robust DAC market. We aim to provide a space for influential voices to collaborate on aspects of policy, finance, equity, technology and innovation.
  3. Engagement and Enablement – We are well aware that this space will continue to evolve and critical parts of our collective puzzle will be unearthed revealing lessons that all stakeholders can learn from. By creating clear bi-directional communication with the public, NGOs and research institutions, we will continue to grow our knowledge base and keep those who wish to be informed and well-prepared to make decisions in their respective settings.

Drawing parallels to new markets of the recent past, time and time again we see common catalysts for market creation: Advanced Market Commitments (AMCs), favorable market influencing policies, and the idea of what Dai Ellis calls “quarterbacking” in his recent blog. Taking the metaphor from football, the idea that action is most effective when threaded through a few archetypes rather than individual spontaneous action. Acting as the quarterback for the DAC community, we will be able to pinpoint our efforts based on the needs and recommendations of the numerous players in the coalition. Serving as both a reactive and proactive driver, this may take the form of policy recommendations, filling knowledge gaps, or finding talent. By becoming a one-stop-shop for all things DAC, we can scale this nascent technology faster and more robustly.

Time is of the Essence.

Over the last few years, the interest in DAC has skyrocketed. Looking back to 2018, even the keenest of DAC enthusiasts knew of only a handful of companies actually removing tonnes CO2 (literally, not metaphorically) away from the lab bench. Fast forward four frantic years and we count over 45 projects varying in technology readiness levels (TRLs) . This number will continue to rise synonymous with increasing public interest in DAC, an auspicious funding landscape (from both public and private funds), and ever-increasing hunger for innovation, driven by competitions like XPRIZE with eye watering prize pots big enough to make the winning the lottery look like pocket money. Most importantly, governments are beginning to chime in and have started to lay the groundwork for supportive public policy – a paradigm that opened the floodgates for the cost of solar PVs to start coming down the learning curve. Whether it be in the US’s DOEs Carbon Negative Shot by 2030 or their $3.5Bn investment into DAC Hubs or the UKs £100m DAC and greenhouse gas removal competition to help first-of-a-kind projects commercialize. Eyes are fixated on this space and invested in its evolution, keen to see how the price per ton will move down with it.

As more actors enter this space and our coalition grows, more voices will be added to the choir of companies capturing carbon. We believe that by providing a concerted orchestrated voice for DAC, we will be able to amplify the needs of our members, help find communal solutions by coordinating our global multi-stakeholder members, partners and observers. In a time where bravery is needed at both corporate and state-level, it is vitally important that our leaders and decision-makers have access to experts and up-to-date educational resources (see our DAC Report Library) and, so that robust science-based decisions can be made in the shortest time possible.

It is our shared hope that we can kickstart a thriving community amongst all DAC enthusiasts. From policy-makers to those of you looking to #workonclimate, we hope that you will join us on our collective mission to make tomorrow a cleaner, more equitable future for all.

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