Direct air capture — pulling carbon dioxide directly from the atmosphere — has seen significant cost reductions over the past decade. Early facilities operated at costs exceeding $1,000 per tonne of CO₂ removed. More recent estimates from operating facilities and research programmes suggest costs in the range of $300–600 per tonne, with some research-stage processes targeting lower figures. The trajectory is encouraging, but the gap between laboratory results and commercial-scale deployment remains significant.

How Direct Air Capture Works

Existing direct air capture facilities, like those operated by Climeworks in Iceland and Carbon Engineering (now part of Oxy) in Canada, use fans to push air through a chemical sorbent that binds CO₂, then apply heat to release the CO₂ for storage or utilisation. The heat requirement is the primary cost driver, which is why co-location with geothermal or other low-cost energy sources matters significantly.

Electrochemical approaches — using electricity rather than heat to drive the capture process — are an active area of research. Several academic groups have published results showing improved energy efficiency in laboratory settings, though scaling these processes to commercial volumes introduces engineering challenges that laboratory results do not capture.

The Cost Context

The US EPA estimates the social cost of carbon — the estimated economic damage caused by each tonne of CO₂ emitted — at approximately $185 per tonne (2020 dollars). Current commercial direct air capture costs remain above this figure, though the gap has narrowed substantially. The US Inflation Reduction Act provides a tax credit of $180 per tonne for direct air capture with permanent geological storage, which has significantly improved the economics for US-based projects.

The Scale Challenge

The world emits approximately 37 billion tonnes of CO₂ per year. Current direct air capture capacity is measured in thousands of tonnes per year — a gap of roughly six orders of magnitude. Even with aggressive cost reductions, removing a meaningful fraction of annual emissions would require trillions of dollars of investment and decades of deployment. The technology is a necessary part of the climate solution portfolio, but not a substitute for emissions reductions.

Emerging Approaches

Beyond the established liquid solvent and solid sorbent approaches, several emerging technologies show promise. Enhanced weathering — spreading crushed silicate rock on agricultural land to accelerate natural CO₂ absorption — is low-cost but difficult to measure accurately. Bioenergy with carbon capture and storage (BECCS) combines biomass energy generation with geological CO₂ storage, but competes with food production for land. Ocean alkalinity enhancement — adding minerals to seawater to increase its CO₂ absorption capacity — is in early research stages but could theoretically operate at enormous scale.

Investment and Policy Landscape

The US Inflation Reduction Act's $180/tonne tax credit for direct air capture has catalysed significant private investment. Stripe, Shopify, and Microsoft have committed to purchasing carbon removal credits, creating demand that is helping to fund early commercial facilities. The EU's Carbon Removal Certification Framework, adopted in 2024, provides a regulatory basis for carbon removal markets in Europe. Australia's Safeguard Mechanism reforms have created demand for high-quality carbon credits, though direct air capture remains too expensive for most Australian compliance buyers.

The Path to $100 Per Tonne

The US Department of Energy has set a target of $100 per tonne for direct air capture by 2030 — a target that would make DAC cost-competitive with the social cost of carbon and economically viable at scale. Reaching this target requires a combination of technology improvements, manufacturing scale, and cheap clean energy.

The most promising pathway involves co-locating DAC facilities with geothermal or nuclear power plants, which provide the low-cost, low-carbon heat and electricity that the capture process requires. Iceland's Climeworks facility benefits from abundant geothermal energy, which is why it can operate at lower cost than facilities in other locations. The US Southwest, with its abundant solar resources, is another promising location for large-scale DAC deployment.

Carbon Utilisation vs. Storage

Not all captured CO₂ needs to be stored underground. There is a growing market for CO₂ as a feedstock for synthetic fuels, concrete, and chemicals. Synthetic aviation fuel — made by combining captured CO₂ with green hydrogen — is one of the most promising applications. Airlines are under increasing pressure to decarbonise, and sustainable aviation fuel made from captured CO₂ is one of the few viable pathways for long-haul aviation.

The economics of CO₂ utilisation are more favourable than geological storage in some applications, because the captured CO₂ has commercial value rather than being a cost. However, most utilisation pathways eventually release the CO₂ back into the atmosphere — only geological storage provides permanent removal. For climate purposes, permanent storage is the gold standard.

Sources & Further Reading