The month of May marked the official groundbreaking of the world’s first direct air capture (DAC) megaproject. With an investment of over $1 billion, the project’s developers expect it to herald the start of a new, booming industry. However, myriad risks could end these hopes. This Carbon Capture Update, powered by our CCUS Projects Table, takes a look at the project queues of the top five DAC developers.
- Global power plant operator RWE announced three CCUS projects at combined cycle natural gas power plants in the UK. Even though commercial-scale CCUS has never before been installed on a natural gas power plant, certain natural gas power operators, like Calpine, have been rapidly announcing new CCUS projects. RWE now joins the fray with more capacity under consideration than even Calpine. Totaling a combined capture capacity of 11 Mt/y, all three RWE projects are notable for being among the largest CCUS projects proposed in Europe.
- Announcements from the U.S. Department of Energy revealed funding for a spate of FEED studies at U.S. power plants, including several coal plants. Potentially the world’s largest single-source CCUS development, one project by Enchant Energy and NTEC at the Four Corners Power Plant in New Mexico would capture upwards of 10 Mt/y. While this scale could theoretically achieve low unit costs, retrofit projects like this one are risked by the age of the underlying assets. The remaining units at Four Corners are all over 50 years old and currently scheduled to retire in 2031. Enchant Energy faced related obstacles in an earlier abandoned project at the coal-fired San Juan Generating Station.
Spotlight: The World’s First Direct Air Capture Megaproject Officially Breaks Ground
After several months of pre-construction activities, Occidental Petroleum, via subsidiary 1PointFive, officially broke ground on their flagship DAC facility in the Texas Permian. Unlike other forms of carbon capture, which generally source CO2 from industrial sites or power plants, DAC is one of several carbon removal technologies that separate and remove CO2 directly from the atmosphere. A handful of pilot and small commercial DAC projects are already operational, but Occidental’s 500,000 t/y facility will have a capacity 125x the size of the world’s current largest DAC project.
While it remains to be seen how this first-of-a-kind project will perform technically or economically, the ambition of developers is scaling quickly. Beyond their flagship project, BTU Analytics is tracking 56.5 Mt/y of DAC capacity being considered by Occidental to be deployed by 2037. CarbonCapture and Frontier Carbon Solutions are jointly developing a 5 Mt/y project in Wyoming to rival Occidental’s near-term goals. Climeworks has plans to build a megaton-scale facility in the U.S., while its operational 4,000 t/y facility in Iceland is already delivering carbon direct removal (CDR) credits for customers, like Microsoft. However, Occidental’s stated ambitions in this field still far outstrip any peer, even though many projects are only in the most preliminary phases.
As these projects progress, with megaton-sized projects expected online by mid-2026, the business case for DAC will be tested. DAC is expensive compared to other forms of carbon capture, with cost projections generally ranging between $400–600/t of captured CO2. Even with government incentives, such as a $185/t tax credit in the U.S. under the current 45Q, the revenue model will depend on customers’ interest in purchasing CDR credits. Despite a few early adopters, largely from the tech sector, these particularly expensive carbon credits are only trading at small volumes.
Additionally, DAC-based credits may face competition from other emerging forms of carbon removal technology that promise to yield lower costs. These include direct ocean capture (DOC), enhanced rock weathering, and various biomass-based pathways. While DAC developers appear ready for the industry to boom, development will remain highly risked until the CDR marketplace matures.
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