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    HomeBusinessClimate Startup Removes Carbon From Open Air in Industry First

    Climate Startup Removes Carbon From Open Air in Industry First

    One of the most important technologies to address climate change got a boost Thursday when a startup said it pulled carbon dioxide from the open air and stored it underground. The company has cashed in on the effort, potentially creating a viable business model that could kick-start a new industry.

    Climeworks AG is a leader in the race to remove carbon dioxide from the atmosphere, using a process known as direct-air capture. Customers, including

    Microsoft Corp.

    , paid a significant premium to buy carbon credits generated by Climeworks, allowing them to effectively offset their own emissions.

    Climeworks and others have long promised that using vacuum-like devices to pull in air, filter it and bury carbon underground can help mitigate environmental damage caused by human activities. This is the first time a company has actually done it at a meaningful scale using a third-party verified process. 

    “We hope we are growing from a teenager to a grown-up in this industry,”

    Christoph Gebald,

    co-chief executive of Climeworks, said in an interview.

    Founded in 2009, Climeworks is effectively carrying out what trees do by taking carbon dioxide out of the atmosphere. The process promises to store the carbon in the earth for thousands of years. The company makes money by removing the carbon on behalf of businesses that can claim they are becoming carbon neutral.

    Microsoft, e-commerce company

    Shopify Inc.

    and payments firm Stripe Inc. have prepaid or agreed to pay hundreds of dollars for credits, each of which represents one metric ton of carbon removed. Other carbon credits tied to projects such as keeping trees standing have often been criticized because the projects often don’t reduce emissions as much as promised.

    Companies pay a premium, sometimes 100 times more than basic credits, for the credits from Climeworks because there is more certainty they remove carbon from the atmosphere. The companies are also willing to pay more to help jump-start the industry, hoping that costs decline rapidly.

    “This is an important inflection point in the development of direct-air capture,” said Stacy Kauk, Shopify’s head of sustainability. “It isn’t just science fiction. It’s reality.”

    The promise of the technology has prompted established businesses such as

    Occidental Petroleum Corp.

    to develop their own direct-air capture strategies. 

    How Climeworks uses direct air capture

    Large devices containing fans and sponge-like filters pull in massive amounts of air to trap carbon dioxide on the filter material.

    After the filter contains a lot of carbon dioxide, the device closes and is heated up to around 210 degrees Fahrenheit.

    The trapped carbon dioxide is combined with water so that another startup, Carbfix, can pump it underground into stone for storage for thousands of years.

    Large devices containing fans and sponge-like filters pull in massive amounts of air to trap carbon dioxide on the filter material.

    After the filter contains a lot of carbon dioxide, the device closes and is heated up to around 210 degrees Fahrenheit.

    The trapped carbon dioxide is combined with water so that another startup, Carbfix, can pump it underground into stone for storage for thousands of years.

    Large devices containing fans and sponge-like filters pull in massive amounts of air to trap carbon dioxide on the filter material.

    After the filter contains a lot of carbon dioxide, the device closes and is heated up to around 210 degrees Fahrenheit.

    The trapped carbon dioxide is combined with water so that another startup, Carbfix, can pump it underground into stone for storage for thousands of years.

    Climeworks operates one of the world’s only operational direct-air capture plants in Iceland, which is capable of removing about 4,000 metric tons of carbon dioxide a year, roughly equivalent to the annual emissions of about 800 passenger cars. Other removals to this point had been done using methods such as burying carbon-rich plant material underground. 

    Climeworks declined to say how much carbon it removed. Businesses globally have agreed to purchase credits equivalent to more than 700,000 metric tons of carbon removal from it and other companies, according to data provider CDR.fyi. Scientists estimate billions of metric tons a year need to be removed annually by midcentury to avoid the worst effects of global warming. 

    Bigger companies and investors are flocking to the industry. Occidental recently said it aims to increase the number of planned direct-air-capture facilities it operates to 100 from 70 by 2035, aided by bolstered tax credits that are part of the climate, health and spending legislation known as the Inflation Reduction Act. 

    The tax credits are now up to $180 per metric ton of removal. Occidental is working with a startup on its first large facility in the Texas Permian Basin.

    Airbus

    SE has committed to buy several hundred thousand credits of removal tied to the project. 

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    How effective do you think carbon removal will be at fighting climate change? Join the conversation below.

    Climeworks raised about $650 million in equity from investors including Singapore sovereign-wealth fund GIC Pte. Ltd. and private-equity firm

    Partners Group Holding AG

    early last year. It has also raised debt from Microsoft’s $1 billion climate-innovation fund.

    The company is building a second facility in Iceland that will be capable of removing about 36,000 metric tons a year.

    It is eyeing U.S. expansion with the government doling out about $3.5 billion through the 2021 infrastructure bill to develop four regional direct-air capture hubs. The European Union is also taking steps to grow the sector. 

    “The support that governments have provided is a game changer,” said

    Zeke Hausfather,

    Stripe’s climate-research lead.  

    Carbon removal differs from efforts that capture carbon in factory smokestacks, which are being proposed by energy companies. Carbon removal is one of the potential technological solutions to climate change, but it will be decades before it makes a dent in the greenhouse gases in the atmosphere, and critics say it could provide an excuse for business-as-usual policies on fossil fuels.

    Skeptics question using huge amounts of energy and resources to build massive machines in the name of fighting climate change. Climeworks’ Iceland facility runs on renewable geothermal energy—meaning its associated emissions are minimal—and a different startup pumps the carbon underground after dissolving it in vast amounts of water.

    Industry executives say that direct-air capture is one of the few solutions for large-scale carbon removal that can mitigate unavoidable emissions and that costs will come down as the industry matures. 

    They hope for a future where people pay for carbon removal like how they pay for trash collection. To make that point,

    Jan Wurzbacher,

    co-CEO of Climeworks, threw trash bags on stage during a talk a few years ago in London. 

    Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

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