How do you define the price of a new climate technology that’s rapidly evolving day-by-day? The answer to this question is far from simple, with so many aspects playing into the price of direct air capture and its product: concentrated atmospheric CO2.
As direct air capture scales, the current price tag of this technology is naturally a major consideration for those looking to invest – but what exactly goes into it? How can we accurately measure the cost of pulling a tonne of CO2 from the atmosphere? And which of the widely-ranging figures being quoted across the industry are trustworthy?
We’ve summarised the biggest factors impacting direct air capture price, sharing our insights on how to suss out which numbers add up, and which ones are bolstered by overly-optimistic, or over-simplified, economic assumptions. Exploring these cost drivers is essential for putting an accurate price on atmospheric CO2 and understanding how we can continue to bring it down.
Direct air capture CapEx costs
We’ve split our direct air capture price analysis into capital expenditures (CapEx) and operating expenses (OpEx), as well as a few other outlying factors. There is some overlap between these categories, and you might see other variations on this split across the DAC industry. We’ve reflected on what we think are the most significant factors influencing atmospheric CO2 cost today – all of which should be taken into consideration as part of the bigger picture.
What does CapEx cover? Capital expenditures are major, one-off purchases, including physical assets and the installation of essential infrastructure. Here’s a look at the main CapEx cost drivers.
Hardware
One of the biggest upfront costs when installing a direct air capture system is of course, the hardware itself, which covers everything that makes up the physical technology. Costs can be brought down here in two ways; by spending more on building a bigger system, to benefit from economies of scale, and by tapping into existing supply chains and harnessing off-the-shelf components which are tried, tested, and readily available. At Mission Zero, we are massive proponents in the latter — and have used proven technology to quickly deploy three DAC systems in the real world.
Utility requirements
Though the ongoing costs of consuming electricity, water, and heat are considered OpEx, the installation of utilities infrastructure falls into the CapEx camp. Electricity costs cover upgrading or extending power lines to connect the DAC plant to the grid, adding on-site substations or transformers, the installation of backup power systems, and integration with renewable power sources. The addition of a water supply could call for wells, pipelines, or storage tanks, and in some cases water treatment facilities or cooling towers.
Where heat is needed (our electrochemical technology is heat-free, but not all direct air capture technologies are built equal), equipment for generating and managing heat is required, particularly if the process requires high-temperature regeneration. Investment in waste heat recovery, and piping and insulation may also be necessary. The reduction of heating requirements often means a large reduction in atmospheric CO2 cost.
One-off costs
One-off costs can differ quite dramatically depending on the design of a direct air capture unit or plant, covering both the delivery and commissioning of technology. This includes the amount of human involvement required at this stage, from bespoke engineering to site staff, both of which need to be factored into the cost of installation. Depending on whether a DAC system is being added to an existing facility, the cost of land (including surveys) can also mark a significant fixed capital investment.
Direct air capture OpEx costs
What does OpEx cover? Operating expenses cover ongoing day-to-day needs, including energy costs, the replacement of chemicals or parts, employee salaries, and transportation. Let’s dive into the ones with the biggest impact on direct air capture price.
Energy
It’s no secret that direct air capture requires energy to operate and that there’s a cost to this – but exactly what this tallies up to can vary depending on the location of the system, as well as how it's been designed. R&D is playing a big part in continually boosting the efficiency of DAC, thereby bringing its price down.
Our electrochemical direct air capture technology is heat-free and can be run using just electricity and water. This means that our DAC can be situated alongside the build-out of renewable energy, wherever it’s abundant and affordable.
Where heat is required, the most expensive option is to generate this using electricity. Thermal energy consumption can be reduced by using waste heat, though this does mean an increase in CapEx to account for the installation of further infrastructure to enable this. Yet, this doesn’t always mean a guaranteed cost reduction, since syncing up with waste heat comes with a range of often pricey challenges. For example, attempting to source (waste) heat from industrial, or nuclear sources means a lack of geographic flexibility for siting DAC. This also comes with additional risks as a result of relying on external operations. On top of this, every DAC deployment using waste heat must be bespoke, to match up with its source. Whilst generating heat using electricity from grids might cost more per kilowatt-hour, on the flip side, connecting to the grid is a uniform process across jurisdictions — meaning one system design can work anywhere, lowering risk factors and bringing down costs.
Chemicals
An integral component to how direct air capture works, both solid sorbents and liquid solvents used to capture atmospheric CO2 will need to be either topped up or replaced over time. The lifetime of these chemicals can vary massively depending on how much wear and tear they’re subject to. For example, sorbents that require heat to release CO2 tend to need replacing at a much quicker rate as they degrade over time. The larger the amount of heat involved in the capture and release processes, the more of a toll taken on the chemical materials enabling these reactions. Most sorbents also tend to work as part of batch processes, and need to be regenerated between each use. Our technology uses a solvent as part of a continuous loop, which can be recycled immediately after use.
Labour
The cost of labour can add up quickly and is a vital consideration in bringing down direct air capture’s price. As with many of the factors we’ve covered, introducing higher temperatures or pressure to the DAC process is a surefire way to bump up the cost of labour. Higher risk parts of an industrial process (such as these) require more supervision, especially when heat and pressure are above certain ranges and could take longer to come down to safe levels in an emergency. Heat-free DAC technology can be switched off quickly and easily if necessary, and is suited to remote operation and low maintenance. At Mission Zero, we use proven components that have been run for decades in other applications, meaning they can be trusted without the need for round-the-clock monitoring.
Transportation
If your direct air capture system isn’t co-located on the site where CO2 will be used or stored, transportation costs are unavoidable. Most DAC plants output CO2 as a gas, introducing the need for liquefaction before transport, both of which bring additional costs; the addition of this process not only increases OpEx, but CapEx too, with the need for additional equipment and infrastructure. One of the benefits of our direct air capture technology is its locational flexibility – just add air, water, and electricity (all of which are available across the globe).
What else impacts direct air capture price?
On top of CapEx and OpEx, there are a number of more nuanced elements that play into direct air capture’s price.
Subsidies
Depending on where you plan to build your direct air capture plant, an array of subsidies are available which differ across jurisdictions. This is something to be incredibly mindful of when purchasing DAC, as many advertised atmospheric CO2 costs factor in these subsidies without disclosing them, making it impossible to have a transparent view of the price of DAC across the board. Subsidies can fluctuate or expire, which should also be taken into account. For example, the 45Q tax credit — a key incentive in the Inflation Reduction Act (IRA) for carbon capture, utilisation, and storage projects in the US — offers an 11 year subsidy, although most DAC plants will be around for much longer than this. At Mission Zero, we work alongside buyers to assess the subsidies available in their jurisdiction, explicitly stating when these have been integrated into their direct air capture price.
R&D
As a relatively new technology, R&D teams across the industry are working to improve the efficiency of DAC. This comes as an integrated up-front expense that impacts all buyers; the more DAC units are made, the more this cost is spread evenly across multiple projects, investors and customers.
By-products
Carbon capture processes, including DAC, can sometimes release by-products which can both positively and negatively impact costs. If we take ocean-based carbon capture as an example, we know that this method results in the creation of carbonic acid. At the moment, there’s a market for this, which can offset some of the costs of the carbon capture. However, once this is scaled up, supply far exceeds demand, and the storage of such a by-product becomes a costly challenge to solve. Our direct air capture technology doesn’t create any by-products.
How to bring down atmospheric CO2 cost
- Don’t buy into blanket DAC prices — the immense economic variables surrounding direct air capture means price points can vary wildly from project to project, location to location, technology to technology, and industry to industry. Every technology has its own Goldilocks Zone for cost-optimal performance.
- Focus on low-heat and low-pressure direct air capture technologies — most of DAC’s energy consumption takes place during the release stage of the process (learn more here), making this the biggest cost driver by far.
- Low direct air capture prices can hide the inclusion of subsidies — unsurprisingly, jurisdictions offering the biggest tax reliefs on DAC projects are seeing some of the greatest investment. Be sure to dig deeper into pricing calculations to find out whether regional subsidies have already been accounted for, and where they apply.
