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New BPC Study Finds Nascent Direct Air Capture Industry Entering Critical Inflection Point

Washington, DC – A new report from the Bipartisan Policy Center’s Direct Air Capture Advisory Council assesses the commercial landscape for the direct air capture (DAC) industry and identifies key risk types these startups must navigate to reach full scale-up and commercial viability. The authors provide recommendations for designing Department of Energy programs to meet the unique near- and medium-term needs of DAC companies. 

The Biden administration has called for roughly 500 million metric tons per year of carbon dioxide removal capacity by 2050. In order to deliver, carbon dioxide removal technologies—including DAC—need to come down the cost curve and be demonstrated at scale. The council’s report, Navigating the Stages of Commercialization to Deploy Direct Air Capture at Scale, shows that the number of DAC companies has increased in recent years, a promising sign, yet most DAC companies are still at a relatively early level of technology readiness. Further support is needed to move the industry to the next stage.  

“Direct air capture is at an exciting place in the innovation life-cycle with some technologies ready to launch and many others ready for a test flight” said Xan Fishman, BPC director of energy policy and carbon management. “To achieve our climate goals, we need to make sure we deploy the DAC Hubs effectively and fund pilot projects so we can scale DAC to wide-spread commercialization.” 

Over 20 DAC startups have each raised at least $1 million of private capital to date, with most launched within the last five years. Additional federal funding, leveraged effectively, coupled with implementation of DOE’s DAC Hubs program, can help catalyze the deployment of a broad range of DAC technologies in the coming years. 

The report identifies different forms of private-sector and federal funding that may be appropriate at different stages to overcome the four product development risk categories which include: 

  • Science risk: the risk that a process proves to be scientifically or physically infeasible. 
  • Engineering risk: the risk that a process cannot be reproduced cost-effectively at scale and under real-world conditions. 
  • Commercial risk: the risk that there is insufficient demand for the product being offered, or that the product being offered is not competitive in the marketplace, or that a company is not likely to be profitable. 
  • Financing risk: the risk that a company cannot access capital or manage its debt. 

Although each DAC company is unique, they face similar risks and must consider appropriate forms of private and public capital to support their development phases. Simultaneously accelerating progress in both scale and innovation remains the core challenge for the DAC industry—one that is key to the industry’s long-term commercial prospects and to achieving America’s climate goals. 

Read the Report 

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