Google and Holocene struck a deal for the forward delivery of 100,000 metric tons of direct air capture credits at $100/mt, "the lowest price on record," the former business announced in a blog post Tuesday.
DAC credits have historically been valued significantly higher. Investment platform Milkywire said in March that the median price requested for pre-purchase agreements by 17 DAC suppliers was $530/mt. Milkywire -- which planned to sign a pre-purchase agreement from Holocene this year, Holocene said in May - also said that some suppliers claimed their capture costs were below $200/mt.
Google and Holocene said that three factors helped bring down costs. First, Google agreed to "provide financial support up front" and receive delivery of credits "in the early 2030s," it said.
Second, Holocene's process avoided the high energy and capital costs of other systems in part through their use of easy-to-procure industrial equipment, Google said. Its facilities capture carbon from ambient air by exposing it to compounds to which it will naturally bond, according to Holocene's website. Its facilities concentrate CO2 through further chemical reactions and produce a storable liquid product.
That method also requires less energy. It is run at 100degC, versus 900degC for other systems, Holocene President Keeton Ross told OPIS.
According to the International Energy Agency, liquid DAC processes are run between 300degC and 900degC, and solid processes run from 80degC-120degC.
The third factor keeping costs down was the 45Q tax credit, for which Holocene's DAC facilities will be eligible, the companies said. The tax credit, extended to 2032 by the Inflation Reduction Act, is worth $180/mt for DAC plants that capture at least 1,000mt per year.
Holocene in May opened its first DAC pilot with a 10mt per year capacity, it said in a news release at the time. In a previous statement to the media in Aug. 2023, it expected to have its first commercial facility in operation by 2025.
Google, in its 2024 environmental report in July, planned to retire carbon removal credits to offset emissions that were not addressed in its own operations and value chain. It had purchased "high-quality carbon avoidance credits" until 2022, it said in the environmental report.
Google last year contracted for an estimated 62,500 mt of credits through carbon removal buyers' consortium Frontier with expected credit deliveries from 2024-2030. In March the company announced it would match the US Department of Energy's program to purchase $35 million in carbon removal credits over the following 12 months.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Emmeline Willey, ewilley@opisnet.com; Editing by Henry Kronk, hkronk@opisnet.com
(END) Dow Jones Newswires
September 11, 2024 15:55 ET (19:55 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments