Why cheap carbon capture can’t wait
It’s now clear that we can’t hit Net Zero without taking billions of tonnes of CO₂ out of the atmosphere — alongside massive efforts to curb emissions. At Planet A we’ve long been excited by direct air capture’s potential to remove carbon at a scale that truly moves the needle — and brings emissions back within our planet’s boundaries.
In Phlair, our first investment in this space, we’ve finally found what we’re looking for. So what’s taken so long? Why now? What’s pioneering about their tech? And why can’t the world wait?
Here’s our take on why the time is right for DAC.
FIRST UP, WHAT IS DAC EXACTLY?
For centuries, humans have been digging up carbon-based fuels and burning them, releasing carbon dioxide into the air in the process. Direct air capture (DAC) technology essentially reverses that process — capturing CO₂ out of the air. After that it can be used in carbon neutral / negative products or returned underground to be stored away safely in geologic formations — forever.
Exciting right? Check out what our portco 44.01 is building in this space to find out more.
The challenge is that we now need to figure out how to remove centuries’ worth of excess carbon in just a few years’ time. For even a chance to limit global warming to <1.5C or even <2C we need to remove ~500–900 bn tonnes of CO₂ from the atmosphere before 2100 (c. 6–11 Gt CO₂/yr of CDR).
By removing large amounts of carbon from the atmosphere, DAC could be a significant part of this effort. These technologies are favourable due to their reduced land, water, and material requirements, along with enhanced verifiability.
THERE’S NO NET ZERO WITHOUT CARBON REMOVAL
Until now, the conversation around hitting Net Zero has, rightfully, focused on cutting CO₂ emissions. But scientists now believe we can’t make it without also capturing and removing huge amounts of CO₂ that are already in the atmosphere.
- Annual GHG emissions are relatively stable or increasing slowly at 55 Gt/yr (of this, CO₂ is 41 Gt/yr).
- As of January 2024, the remaining carbon budget for a 50% chance to limit global warming to 1.5°C has been reduced to 275 billion tonnes of CO₂
- At 2023 emission levels, this budget will be used up in seven years
- The latest carbon budget calculation factors in “carbon removal” for the very first time
“For reaching the Net Zero emissions targets, massive efforts to reduce emissions are essential first and foremost. To offset emissions that are hard to avoid, a strong expansion of carbon removal technologies will further be necessary.” (Clemens Schwingshackl — Scientist)
The latest IPCC report also underscores the critical role of carbon capture and storage (CCS) technologies. It highlights that CCS is central to most mitigation pathways that aim to keep global warming below 1.5ºC with limited overshoot, emphasising the necessity of capturing and storing a median average of 665 gigatonnes of CO₂ cumulatively by 2100.
The report also points out the current lag in the deployment of carbon capture technologies compared to the required schedule for meeting climate goals, also indicating the need for increased policy ambition, public support, and technological innovation to overcome existing barriers.
The IPCC sees a carbon removal potential for DACS of 5–40 Gt CO2/yr.
Ultimately, it’s clear there is no Net Zero and, ultimately, no life on earth without tremendous efforts to remove and store carbon at scale.
WHAT’S THE HOLD UP?
Despite its potential, however, today global DAC capacity is still limited, sitting at 0.01 MtCO₂. Less than 0.001% of the amount of carbon removal required under IPCC projections post 2050.
That’s because although DAC has been around for some time, nobody has succeeded in deploying the technology at a scalable price point.
To scale up DAC, startups have to find a way to reduce costs and reach a target price below the golden threshold of $100/tCO₂ removed to ensure large-scale deployment is financially viable.
Achieving this price point is crucial for outcompeting grey CO₂ pricing and aligning with carbon compliance market rates.
HOW THIRD-GEN DAC SOLVES THE PRICE PROBLEM
Capturing tonnes of CO₂ requires an absorbent material that binds ‘easily’ with carbon in the air. Basic chemistry tells us that in general, when it’s easy to bind with something, it requires a lot of energy to break that bond — in other words to separate the CO₂ for sequestration or utilisation.
For that reason, first-generation DAC technologies primarily focused on a thermal-swing approach to carbon desorption — which requires significant amounts of heat such as that supplied by geothermal sources. This, however, creates a significant geographical constraint and curtails the unit economics for these first-gen systems.
Thanks to advancements in electrochemical technology — especially membrane reliability and lifetime — emerging third-generation DAC technologies (DAC 3) like Phlair are showing the potential to overcome these constraints by switching to electrical energy over heat.
When coupled with a renewable source, these approaches are on track to break through the $100/tCO₂ cost floor.
Huge!
WHY THE TIME IS RIGHT FOR DAC
Naturally this is a space we have been watching closely for a long time. So far we have invested in trading solutions that support nature-based carbon dioxide removal (CDR) with goodcarbon and The Landbanking Group, and sequestration technology with 44.01.
DAC has been a missing piece in our carbon removal investment strategy.
We believe that now is the right moment to invest in DAC, as it will play a crucial role in scaling up carbon removal efforts and ensuring that we stay within the rapidly shrinking carbon budget.
Here’s why.
PERMANENCE
- DAC provides high quality, verifiable, permanent carbon removal, making it more attractive than less durable options.
FAVOURABLE MARKET & REGULATORY CLIMATE
- Demand for DAC is anticipated to surge in both voluntary and compliance markets as these technologies become more scalable and come down the cost curve.
- The IEA estimates the need for DAC removals of ~65 Mt CO2/year by 2030 and ~980 Mt CO2/year by 2050.
- DAC will be a competitive option for companies with Net Zero commitments and those seeking to offset emissions.
- Supportive regulatory policies in the EU and UK are expected to facilitate the inclusion of DAC in compliance markets (e.g. this year’s Carbon Removal Certification Framework).
APPLICATIONS
- At this price point, DAC-captured CO₂ could be utilised not only for carbon sequestration to generate carbon credits but also in various industrial applications.
- It could become a viable alternative to grey CO₂ and serve as a precursor in the chemical industry for producing synthetic fuels and other chemicals.
- For context, the cost of grey CO₂ in 2021 was between $65 and $110 per tonne for commercial uses.
- With the EU ETS (world’s largest carbon compliance market) projecting carbon prices at around 108 EUR/Mt for 2035, achieving removal costs of $100/tCO₂ for DAC will be crucial.
PLANET A x CARBON CAPTURE
We’ve been actively looking for DAC solutions that address key scaling challenges — such as high energy consumption and capital expenditure — while also identifying teams skilled at iterating technology in a capital-efficient manner and possessing the commercial acumen for scaling up.
In Phlair, we’ve finally found what we’d been looking for. The team’s innovative electrochemical system uses cheap intermittent renewable power and has a concrete pathway to drive down costs to <$75/tCO₂ at scale (1 Mt per year).
It’s hard to overstate how exciting this is.
WHY PHLAIR
Phlair is unlocking affordable CO₂ capture, at scale. We’ve explained why this is critical. Now we’ll explain how they do it.
Pioneering technology. Phlair’s first-of-a-kind hydrolyzer-based DAC solution leverages a pH swing process, leading to significant energy efficiency improvements compared to existing technologies.
Making DAC viable. Its technology uses off-the-shelf components and is highly compatible with renewables, truly running on intermittent supply without almost any additional battery storage. It can scale through mass manufacturing via existing supply chains leading to ultra low cost.
Led by an A-Team. Phlair has extensive engineering expertise and a strong focus on scaling. The components of their tech are a good balance between off-the-shelf components (membranes, non-toxic solvents, air contactors) and innovation (electrochemical cell functioning and optimisation). The team has proven to be strong in execution while at the same time being capital efficient, having achieved an impressive TRL with pre-seed funding only.
Diversified business model. Relying solely on carbon credit returns can pose risks. Diversifying revenue streams — like technology sales and services — mitigates these risks and underscores the value of a multifaceted approach. Phlair’s scalable technology not only ensures high additionality but also generates multiple revenue sources, it’s a win-win!
WHAT’S NEXT IN DAC?
Looking at the wider space, DAC’s journey down the cost curve — whilst far from straightforward — is underway.
Reducing energy needs: R&D efforts in the near term will be focused primarily on industrialising breakthrough membrane technologies — such as bipolar membranes (BPMs) and anion exchange membranes (AEMs) — to further reduce the energy intensity of acid-base regeneration in a pH-swing system.
Optimising efficiency: In parallel, improvements are required in absorption efficiency — ie. maximising the concentration of CO₂ captured per unit of sorbent material. Breakthrough innovations are mostly likely to come from sorbent chemistry, but absorber hardware design and engineering also has an important part to play.
Enhancing flexibility: Long term, successful approaches to DAC will be characterised by integration and adaptability. Technology such as Phlair’s flexible electrochemical processes have exciting second-order benefits when coupled with renewable generation facilities, where they can be deployed as a curtailment avoidance tool.
Adaptability: The ability to adapt DAC systems to serve point-source applications, integrate with variable power inputs, and produce valuable carbon-to-X offtakes in partnership with industrials, will serve to grow the market for this technology to the scale required to bring global carbon emissions back within our planet’s boundaries.
COMPLEMENTARY SOLUTIONS WE ARE EXCITED BY
It’s seriously time to move the needle in the race to Net Zero — we can’t wait to meet more companies like Phlair working on exactly this. Technologies we’re excited by:
- Innovative solutions capturing CO₂ from ambient air or point sources
- Or using CO₂ to replace fossil-based feedstock
- Working on MRV, transport and storage problems
- Or on the scale-up of renewable energy
Are you a founder building something in the space, or simply keen to join the conversation? We’re curious to hear your thoughts and perspectives. Get in touch!
Authors: Farieha Altaf, Sam Baker, Kritesh Shridhar, and Tobias Seikel
