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Direct air capture is cheaper than you think

A new study was shared widely estimating the cost of direct air capture to be higher than projected, but we show that the cost of DACCS might actually be lower in the near term than people are assuming.

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Robert Höglund

Mar 05, 2024

2 min read

Updated 3 months ago

Yesterday a new study from ETH Zurich was shared widely that estimated the cost of Direct Air Capture with storage (DACCS) won’t reach 340 USD per tonne (226–835 USD confidence interval) until a 1 billion ton per year deployment level. This is a much higher cost than other estimates. 

As a matter of fact, DACCS costs from some companies are already close to, or at this level. The ETH Zurich study by Sievert, Schmidt &Steffen looked at three different “DAC 1.0” methods. But we are already at DAC 3.0 to borrow Jonte Boysen & Torben Schreiter’s wording. There are over 80 different direct air capture companies using at least 10 different types of methods, able to reach much lower costs than the early iterations. 

We are currently assessing proposals for prepurchases through the charitable Milkywire Climate Transformation Fund. The median price requested by 17 DAC suppliers for removed and permanently stored carbon is 530 USD. These suppliers, shortlisted for extended proposals, are all serious contenders.

Since this is all prepurchases there is some uncertainty, but suppliers are willing to sign legal agreements to deliver at these prices. They were also asked what their cost of removal was. Some claim their capture costs are significantly lower than 500 USD today (even below 200 USD) but ask for more to cover uncertainties and overhead. Others have higher costs in 2024 than the price they ask for but are so sure that costs will drop with completion of their next facility that they can offer a lower price. It does not seem to be common to subsidize the capex and opex cost of carbon removal using other capital. 

Of course, the companies have other overhead costs that are significant at an early stage, not the least R&D into improved tech, but that should not be included in cost estimates of removal. Note that some early DAC companies that ask for higher prices should not be excluded from support, the very first tonnes removed with a method are typically very costly. 

Perhaps even more interesting is that these DAC companies estimated future cost is on average 137 USD/t (median 110 USD) already at a megaton (million) scale. This is at a 1000 times lower volume than the gigaton scale analyzed in the ETH Zurich study.

At we saw the weighted average DACCS price go from 1261 to 715 dollar per tonne between 2022 and 2023, a 43% decrease. The dataset includes four companies—Mission Zero, Carbon Capture, Airhive, and Arbon—that have already sold DAC tonnes with storage for $320 to $580 per tonne, (all to Frontier / Stripe).

Boysen & Schreiter at Extantia also did work on modeling future costs of Direct air capture assuming learning rates looking from other technologies. Their results for DAC 1.0 is in line with the ETH Zurich study, but DAC 3.0 is in line with DAC companies own estimates (albeit a little bit slower in the model).

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DAC is of course just one among many durable carbon removal methods. In our call for proposals at Milkywire, we are evaluating over 70 shortlisted CDR proposals across at least seven different pathways, most of which project future costs comparable to or lower than DAC.

If you want to support the acceleration of innovative carbon removal methods, the Milkywire Climate Transformation Fund welcomes additional donors and buyers. For more information, get in touch.

About the author(s)

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Robert Höglund

CTF Fund Manager

Robert Höglund is a carbon dioxide removal (CDR) and climate policy expert. In addition to managing the Climate Transformation Fund, he co-founded the CDR market overview, works with the NGO Carbon Gap, and publishes reports and articles on carbon removal and corporate climate contributions. He is a member of the EU Expert Group on Carbon Removals, the Science-based Target initiative's (SBTi) Technical Advisory Group, and the board of the KTH-led research program Mistra sustainable consumption. Robert previously headed Oxfam Sweden's policy and communications team and founded the Climate Goal Initiative in Sweden.

Related Funds

Climate Transformation Fund

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