Takeaways from DAC Day 2024: Hopes, Hubs, and Hurdles

Direct air capture (DAC) technologies are an essential part of the toolkit needed to reach net-zero emissions, and the United States is leading the world in DAC demonstration and early deployment thanks to key government initiatives like the Regional Direct Air Capture Hubs program and strong private sector investments in carbon removal. However, several challenges and uncertainties must be addressed in the coming decade by industry leaders and policymakers to ensure the long-term success of this technology and to support our climate goals.

On February 8, the Bipartisan Policy Center hosted our second annual DAC Day, which brought together policymakers, industry leaders, and experts to dissect crucial technical and policy challenges that need to be addressed for scaling up DAC. The event included keynotes and panel discussions (here are links to the full agenda and recording). Below are five takeaways from this half-day event.

1) DAC is a necessary complement to emissions reductions and is needed at tremendous scale, yet is just getting started today.

The science is clear; the IPCC and other independent experts continue to emphasize that meeting our climate goals will require a combination of emissions reductions and carbon dioxide removal (CDR), including DAC, in the coming decades. DAC technologies are proven, durable CDR solutions which serve as a baseline for best-in-class permanence of CO₂ stored. Yet the gigaton scale (billions of tons) of CDR required by mid-century for meeting climate targets dwarfs today’s durable carbon removal capacity. DAC technologies are operating at around 5,000 tons/year today with facilities operating in Iceland, California, and Colorado, and even larger projects are under construction today in Texas. Policy support from the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act are catalyzing industry interest in deploying DAC, and we can expect to see millions of tons of DAC capacity deployed in the United States in the coming years.

2) The DAC Hubs are accelerating shovel-ready technologies and elevating earlier-stage technologies to the commercial scale.

The BIL’s $3.5 billion DAC Hubs program is poised to accelerate DAC projects through shared infrastructure and new private-sector partnerships with government-backed support. Two potential hubs—in Texas and Louisiana—are well along in their negotiations with DOE, and 19 additional hub proposals are in earlier stages of scoping across the country. As the nascent DAC industry begins to take flight, the hubs program has helped forge new partnerships between industrial actors and DAC companies around a common purpose. Right now is an important moment for the program, as we near the end of negotiations on a first round of funding and questions are being asked about how to effectively structure future funding to meet industry where it stands today. DAC companies at earlier stages of technology readiness undoubtedly have a role to play, but the hubs are squarely about enabling scale. Companies at earlier stages today will eventually benefit from shared infrastructure at the hubs, but DOE is carefully examining barriers that hub applicants face today in order to set the industry up for success in future years.

3) We need to be serious about what it will take to build out infrastructure, which includes a knowledgeable workforce, capital, permitting, and industry engagement at hubs.

In the United States, the climate movement faces a huge problem: we have a hard time building physical infrastructure in a timely manner. This applies to nascent technologies like DAC and hydrogen as well as established technologies like nuclear, solar energy, and even transmission lines. Fortunately, progress is being made on a bipartisan permitting deal that could help alleviate some of these challenges, but much more is needed. For carbon management infrastructure, several existing industries have the workforce and skillsets necessary for DAC to succeed. The chemical manufacturing sector has expertise in amine solvent and sorbent manufacturing at scale, the oil and gas sector has expertise in subsurface exploration and operating large-scale industrial equipment, and the finance sector has tools for deploying capital and assessing risk around large projects that will be key to financing the transition. Given the scale of the challenge at hand, we need to leverage all existing expertise and keep a wide tent with a common set of goals.

4) Carbon markets are a near-term opportunity for financing DAC, but more demand pull will be needed in the future.

There are a lot of reasons for optimism with voluntary funding put toward DAC, and voluntary carbon markets (VCMs) are growing rapidly in support of CDR, providing another promising pathway for funding the operation of DAC. VCMs face challenges with regard to trust and integrity, but the durability and clear accounting of DAC paired with geologic storage offers benefits relative to other carbon credit projects. While the government’s role in ensuring credit quality could take different forms, improvements to the VCM are needed to ensure transparency and accountability.

Even with improvements to the VCM, however, voluntary commitments to funding DAC are unlikely to be sufficient to meet U.S. climate goals. Gigaton scale carbon removal at DOE’s ambitious carbon negative shot goal of $100/ton means more than $100 billion USD/year by 2050 will need to go towards carbon removal. This is the scale of the most optimistic projections of the total size of the VCM in 2050, which will need to fund both removals and avoided emissions. This means that demand pull policies—either through tax incentives, compliance markets, procurement, or some combination thereof—will be needed to achieve the necessary scale of DAC in the future. The DOE’s pilot purchasing program along with the bipartisan CREST Act offer optimism for future progress.

5) Investments in DAC today drive innovation and cost declines that unlock scale tomorrow.

As with other early-stage technologies, DAC is expensive to build and operate today.  As this initial round of commercial DAC projects are built, experience and economies of scale will help bring costs down. This experience will also help differentiate and alleviate some sources of risk, which will, in turn, unlock even larger sources of capital for future DAC projects. This snowball effect for cost declines and scale-up is already showing signs today, as large project finance deals are on the horizon for DAC projects tomorrow.

For more on DAC technology progress, see work from BPC’s DAC Advisory Council and sign up for updates from BPC’s energy team.