As companies try to meet ambitious ESG goals and reduce their carbon footprint, a new technology that removes carbon dioxide directly from the air may help them do so. 

About a half hour outside of Reykjavik, in the middle of a sparse Icelandic expanse surrounded by moss-covered volcanic boulders, a two-story-high machine — essentially a giant air filter — is removing carbon dioxide directly out of the atmosphere. The company that runs it, Climeworks, is betting that building a lot more of these can help solve the climate crisis. 

Climeworks has been scrubbing carbon from the air for years now to demonstrate the viability of its technology. But as of January, the company is officially delivering carbon offsets to its clients, including Microsoft, Spotify, and Stripe, and the process has been verified by a third-party risk management company, DNV. It’s the first direct air capture company to earn that distinction, according to The Wall Street Journal

The question is: Will the Climeworks’ of the world make a dent in solving the climate crisis?

But buying credits from Climeworks isn’t cheap. The company is reportedly charging its customers over $1,000 per ton now. Because corporate buyers are buying their CO2 in bulk, the prices they pay vary, but Climeworks did say that their costs to remove one ton of carbon is in the high three figures. Other companies say they have technology that can remove carbon for under $100 per ton, the price point at which experts think carbon removal would be commercially viable, but most have yet to demonstrate that they can do so at scale. Climeworks itself isn’t there yet, and has publicly stated that it’s hoping to get its own costs down to between $250 and $300 per ton of CO2 by the end of the decade. 

“If you want to buy direct air capture [credits] today, you can, you just have to outbid everybody else,” said Lucas Joppa, the chief sustainability officer and senior managing director at Haveli Investments, an Austin-based private equity firm with a focus on tech and was formerly the chief environmental officer at Microsoft

While this tech seems very likely to play a significant role in helping companies offset their emissions, it isn’t yet clear that direct air capture will play a significant role in fixing the climate. Humanity dumped an estimated 37 billion tons of carbon dioxide into the atmosphere in 2022 alone. To capture and store just one years’ worth of emissions, we’d need about a million of Climeworks’ Mammoth plants. 

Carbon offsets, which allow companies to reduce their carbon footprint by paying companies like Climeworks to remove carbon from the air — through direct air capture or by other means, like planting trees — are enormously appealing for companies looking to do right by the planet, their investors, and to get ahead of the curve on regulatory compliance. In general, one offset equals one ton of CO2 removed from the atmosphere and prices range widely, from around $2 per ton to several thousand, depending on the process involved. (There has, however, been reporting that some companies selling credits on the cheaper end of the price scale aren’t actually removing carbon from the atmosphere.) 

The climate costs of doing business can be high, and they’re rising. The cost of carbon credits on the EU’s carbon market rose above €100 a ton for the first time this month. Some emissions, like those that result from air travel or the production of certain materials, like steel and cement, just can’t be avoided yet. That’s where direct air capture comes in. 

It’s now clear that we’ll have to figure out how to take carbon out of the atmosphere to keep the planet from completely overheating. The bad news is we’re still increasing our global carbon dioxide emissions year over year. And direct air capture technology is still in early stages of development. 

There are only 18 operational direct air capture plants in Europe, the U.S., and Canada, according to the International Energy Agency. Most of them are capturing CO2 for the beverage industry or other commercial applications. Others are test facilities, operated by companies that are trying to demonstrate their tech and attract investment. Only two plants are storing the carbon they suck out of the air underground for permanent removal from the atmosphere. All of those plants are capturing only around 10,000 tons of CO2 per year, according to the IEA — a tiny fraction of the billions of tons humanity emitted last year. 

Still, Joppa sees the sector growing fast. Keep in mind, he emphasized, that major private investment in direct air capture companies is only just getting started.

“When Microsoft came out with its carbon negative commitment, we were one of the earliest,” he said. “Everyone’s talking about, ‘Can this stuff scale?’ And we really only started two years ago.”

In the brief time since companies like Microsoft and Stripe announced that they’d invest in negative carbon technologies, investment into direct air capture has exploded, a signal to the Climeworks’ of the world that there’s demand for what they’re trying to do. 

Frontier, a fund designed to support future negative emissions projects, backed by companies including Shopify, Alphabet, Meta and Stripe, has gathered nearly $1 billion in order to show that there’s future demand for carbon removal. The federal government is getting in on the action, too, with the Department of Energy investing in direct air capture research. And last year’s Inflation Reduction Act (IRA), President Joe Biden’s landmark climate law, upped the tax incentives for direct air capture. 

The industry has taken notice of the newfound support and companies are racing to market. 

Climeworks is already building a bigger version of its Orca plant, called Mammoth, which will capture 36,000 tons of CO2 per year and is expected to be running in 2024. 1PointFive, using technology developed by Carbon Engineering, plans to open another huge direct air capture plant in Texas. That plant is expected to capture and store up to a million tons of carbon dioxide a year once it’s fully up and running.

“Having the IRA passed, we’re now at a development scenario of 100 [direct air capture] plants by 2035,” said Anthony Cottone, vice president of 1PointFive, a subsidiary of Occidental Petroleum that’s developing a direct air capture business. 

With hundreds of plants that could capture a million tons of CO2 per year each, direct air capture technologies could start to achieve the kinds of impacts on the climate crisis that it hopes to. 

Eleven direct air capture plants are currently in advanced stages of development around the world, the IEA reported in September of last year, and if they’re all built by 2030 they could capture more than 5 million tons of CO2 per year. In order to meet our climate goals, we’d need 10 times that much direct air capture capacity. 

“We went from basically no government support to $3.5 billion” in a very short period of time, said Peter Eisenberger, a professor of earth and environmental science at Columbia University and a co-founder of Global Thermostat, another company in the direct air capture space that’s partnered with Exxon. “Direct air capture is emerging as the single thing that’s scalable and can address the climate threat,” he added. 

Still, scrubbing carbon dioxide from the air isn’t cheap. Climeworks is hoping to get its own costs down to between $250 and $300 per ton of CO2 by the end of the decade. Direct air capture may not solve climate change — but, experts say, no technology that plays a role in taking carbon out of the atmosphere should be discounted.

“If the price of zero emissions technology is affordable, you should buy it. And if it’s not affordable, you should invest in it,” Joppa said, summarizing Bill Gates’s recent book. “If you’re not spending any money on it, you’re doing something wrong.”