Today’s newsletter looks at why investors and buyers are backing futuristic carbon cleanup technologies rather than ones working at scale now. You can read and share the full story on Bloomberg.com. For unlimited access to climate and energy news, please subscribe. 

Backing the future 

By Michelle Ma and Dave Merrill

It’s becoming increasingly apparent that the world is going to need carbon removal technologies to meet ambitious global warming targets.

Companies from Occidental Petroleum Corp. to Microsoft Corp. along with firms like BlackRock Inc. and Bill Gates’ Breakthrough Energy Ventures are among the investors throwing billions at startups aiming to do this. The US government has been a significant patron, with the Energy Department committing more than $1 billion to get carbon removal off the ground.

But funding and buyers of carbon removal services have so far targeted a narrow subset of techniques to clean the atmosphere. And federal support is now up in the air as the Trump administration pursues funding cuts to all manner of climate programs. 

Source: CRD.fyi data through Nov. 14, 2024

There are at least eight broad categories for removing carbon to clean up the atmosphere, with more than 900 startups trying different approaches. The money that’s been rushing into the carbon chase has overwhelmingly backed a technique known as direct air capture, or DAC, which involves using machines to suck up carbon. Firms are placing major bets on it even though the technology remains unproven at scale, inordinately expensive and energy intensive. Far less investor money is flowing to competing methods such as sequestering CO2 in the ocean and using crushed rocks, a process known as enhanced weathering.

Between 2020 to 2024, firms have bet $3.3 billion on DAC compared to $3.4 billion for all other novel approaches, according to publicly available data compiled by carbon removal clearinghouse CDR.fyi. The technology receives a disproportionate amount of private investment because it’s backed by US federal tax credits and grants, according to Danny Cullenward, a senior fellow with the University of Pennsylvania Kleinman Center for Energy Policy.

That support isn’t because the government decided DAC is the best way to remove carbon, he said, but “because the political economy of the oil and gas industry is much more powerful than these other emerging industries.”

Carbon removal buyers looking to meet their climate targets have also not diversified their portfolios. Almost 60% of all purchases tracked by CDR.fyi between 2019 and 2024 are for bioenergy with carbon capture and storage (BECCS). It involves burning wood to run power plants, then capturing and sequestering the resulting emissions underground. Hence, the CO2 the trees and plants pull from the atmosphere during their lifetimes stays put. Despite the interest, research has found that cutting down and transporting feedstock can emit more carbon than it sequesters, making carbon accounting a big challenge.

Source: CDR.fyi data through 2024

BECCS and DAC approaches have yet to live up to their promise. Through 2024, DAC delivered around 1,200 tons of CO2 removal — less than 0.2% of all carbon removed over that timeframe — and BECCS has delivered 10,000 tons — less than 1.7% of the total — per CDR.fyi. 

While BECCS and DAC are attracting the most purchases and investment respectively, they’re crowding out other promising carbon removal technologies. Some startups use clever engineering to accelerate natural processes, like increasing the ocean’s alkalinity. Others are electrolyzing seawater and spreading crushed basalt rock over farmland. These methods promise greater durability, verifiability and effectiveness of storing CO2 than simply planting trees.

Another method has provided the majority of all carbon removal delivered: biochar. It’s done so without the support of US tax credits, large purchases from brand-name buyers or billions in investments.

But like all carbon removal techniques, there are downsides, the biggest being uncertainty about how much CO2 stays sequestered when it’s added to different soils. That’s an area of active investigation for researchers.

“It’s got so much potential, but it’s inconclusive,” said Ben Kolosz, an assistant professor in renewable energy and carbon removal at the University of Hull in the UK.

What else is giving investors and would-be buyers pause about carbon removal technologies? Read the full story on Bloomberg.com.  

Action needed

Finding deep pockets

More from Green

Climate change and increasingly extreme weather are taking a toll on global supplies of blood, endangering the lives of people with life-threatening injuries and conditions, a new study has found.

Extreme weather events and natural disasters such as bushfires and floods, fueled by rising global temperatures, are disrupting medical professionals in their efforts to collect, testing, transport and store blood, according to a study published in The Lancet Planetary Health this week. Such events make it harder for potential blood donors to travel to donation locations and slow down the transport of blood products which have a short shelf life and are highly sensitive to temperature variations.

Tropical Cyclone Alfred illustrates the impact of these types of weather events after it caused severe damage and widespread flooding across Queensland and New South Wales in Australia last month. More than 3,500 blood donation appointments were canceled due to the event, resulting in a steep drop in the nation’s blood stocks, according to the research team at Australian Red Cross Lifeblood and the University of the Sunshine Coast.

The study is the first globally to look at how climate change can affect each stage of the blood supply chain, based on a review of international studies. 

Tropical Cyclone Alfred led to the cancellation of thousands of blood donation appointments in Australia.  Photographer: David Dray/AFP

Offshore wind faces another obstacle in the US. The Trump administration has halted work on an offshore wind farm being built off New York, despite the project being fully permitted.

Trade wars may add to the costs of new nuclear capacity. US tariffs could increases expenses for a planned nuclear power project in Michigan and result in higher electricity prices for consumers, says the South Korean firm building the plant.

Renewable capacity is ramping up in Asia. China saw electricity generation from coal power plants drop in March, as more demand was met by record installations of renewables. Meanwhile, Vietnam’s government this week approved a revised energy policy that calls for massive increases in wind and solar capacity as it seeks to keep pace with growing power demand while ending the use of coal by 2050.

Developing countries require trillions of dollars a year to transition to clean energy and build climate-resilient infrastructure. So where will the money come from? Avinash Persaud, special adviser on climate risks to the president of the Inter-American Development Bank, joins Zero to make the case for giving more money to Multilateral Development Banks (MDBs), which already funnel hundreds of billions of dollars a year to poorer countries around the globe, much of which goes to climate projects. His pitch is now harder than ever to make as the US slashes international climate finance and European countries reduce their overseas aid budgets to support defense spending.

Listen to the full episode and learn more about Zero here. Subscribe on Apple or Spotify to stay on top of new episodes.

Avinash Persaud Photographer: Hollie Adams/Bloomberg

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