How Climeworks kick-started the direct air capture rock race
Since Boston Consulting Group (BCG) was founded in 1963, its mission has been to ‘unlock the potential of those who advance the world’.
Evidence of that unwavering stance (even though the company has grown from a single person to 30,000 employees) is to be found in the latest long-term commitment to Climeworks – the direct air capture (DAC) company literally sucking CO2 out of the air and turning it into rock.
Consulting firm BCG was one of the early backers of Climeworks (signing a deal in 2021) but has now committed to a 15-year agreement to purchase 80,000 metric tons of carbon dioxide – the biggest corporate deal yet for Climeworks.
This move is seen as essential to provide the stability to scale the technology – and significant scale is required. This deal may help BCG with its own efforts to reach net zero, but the world needs to see a similar sea change that the solar panel industry saw, albeit on an accelerated footing.
That’s because ‘useful’ solar panels were introduced by Bell Labs way back in 1954. They only had a solar efficiency (the amount of energy from the sun that is converted by the panel) of around 6%, whereas most domestic panels today are around 20%. Significantly, higher adoption rates and increased manufacturing inevitably brought the prices of those panels down, making the technology viable.
You only have to think back to your first smartphone to see how rapidly modern technology improves.
That’s one reason why BCG has committed to help scale direct air capture via large-scale, long-term investment. The firm hopes to encourage more investment, lower the cost curve, and scale-up this technology.
“We have a responsibility, every one of us in every firm, to accelerate our journey,” said Rich Lesser, BCG’s global chair. “Early investment can change the curve and will benefit everyone.”
Jan Huckfeldt, Chief Commercial Officer of Climeworks, said long-term commitments defined the success of the solar energy transition and will become more frequent in DAC.
This partnership follows on from Climeworks being selected by the US Department of Energy as technology partner for three DAC hubs in the US, on top of partnerships in Canada and Kenya.
“Without carbon removal, net zero is out of reach. This is true for BCG and across industries at large. It’s imperative that we start scaling carbon removal today, in particular high-quality solutions that are verifiable, additional, and permanent, to be able to meet the growing demand in the coming decades,” said David Webb, Chief Sustainability Officer of BCG.
Climeworks operates the Orca facility in Iceland, which is one of only 18 such DAC facilities in the world. Orca extracts 4,000 tons of carbon from the atmosphere each year, out of a global total of just 10,000 tons.
Now you can see the scale of the challenge.
Mammoth escalation in direct air capture is coming
Climeworks is ramping up ‘sucking’, with a new facility – called Mammoth – also due to start operations in Iceland in 2024. Mammoth will be capable of capturing 36,000 tons per year – which Climeworks describes as an order of magnitude larger than Orca. The plan is to hit gigaton capacity by 2050.
Mammoth is clearly not the end game – but it is an important step in building a supply chain.
Climeworks may have hit the headlines as a first-mover in direct air capture, but there are some exciting startups in the works.
Take 1PointFive in Texas, which is due to begin operations in 2025 and capture up to 500,000 tons of CO2 per year – a significant step-change on Mammoth’s 36,000 tons. 1PointFive signed a 10-year deal with Amazon for 250,000 tons of credits.
And here is where it gets interesting. US-based Project Bison is the largest planned DAC, which aims to capture 5 million tons per year by 2030.
In many ways, Climeworks makes this all possible, and it takes visionary backers like BCG, Microsoft, and UBS to kickstart what could become a vital technology in the fight against climate change.
Climeworks will be showcasing its successes at the World Economic Forum Annual meeting in January, looking to tap into companies desperate to meet their own SBTi targets. Climeworks will also be looking for new locations to roll out DAC, and engage with governments to drive adoption.
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