Heirloom Carbon Technologies has opened the first commercial carbon capture plant in the U.S.  This key moment presages the start of what is widely expected to be an important new industry whose entire purpose is preventing the carbon emissions released by burning fossil fuels from destroying life on our planet.

Brad Plumer, writing in the New York Times, provides the details of this very small demonstration plant built in Tracy, California. It's an open air structure, with 40-foot racks holding hundreds of trays, each sprinkled with calcium oxide powder that turns into limestone when it binds with airborne carbon dioxide. This is a natural process that Heirloom is working to speed up.

Once the carbon dioxide is "captured" through the creation of the limestone, the company expects to heat up the limestone in a kiln at 1,650 degrees Fahrenheit, which then releases the carbon dioxide, where it  then gets pumpted in a storage tank, leaving the calcium oxide to be returned and reused on another set of trays.

The carbon dioxide (called CO2) is expected to be transferred again to be permanently stored. For now, Heirloom is looking at the large concrete marketplace and working with CarbonCure, a company that was launched to mix CO2 into concrete to make concrete stronger by having it turn into limestone again where it will be permanently stored and reduce the carbon footprint of concrete (which ordinarily releases a lot of carbon emissions through its normal creation and use throughout the building industry).

Providing CO2 to CarbonCure has a value for sure but for now, that value is far below the costs of capturing the carbon.  Let's look at what these economics are now.  The Tracy facility will be able to absorb 1,000 tons of CO2 per year. At the estimated $50/tonne "social cost" of carbon, the Heirloom facility would earn $50,000 per year. Although Heirloom hasn't released info on its specific costs, those funding breakthrough carbon capture activity, such as Frontier (which includes Stripe, Alphabet, Shopify, Meta and McKinsey Sustainability), are typically paying between $500 and $2,500 per ton to accelerate innovation and market development. These high prices are intended to generate sufficient revenue for these early-stage ventures to actually cover their costs.  At $1000/ton, Heirloom could earn $1,000,000 per year.  However, Plumer estimates that Heirloom's actually costs may be in the range of $600 per ton or higher.

Fortunately for Heirloom and other ventures working in this space, there are a lot of large corporations willing to spend millions to pay for "carbon removal credits" in what has been a voluntary carbon market to effectively be able to claim that they are reducing their carbon footprints. These corporations see reputational benefits from those outlays, even if they do not result in even meaningful actual carbon reductions at this stage. The Biden Administration is also getting into the act and awarded $1.2 billion to help Heirloom

Many people still don't know much about carbon capture and storage, or what has been called "Carbon Capture, Utilization and Sequestration" (CCUS).  There are a multitude of approaches being taken to capture carbon and, as a result, a plethora of acronyms have emerged. The approach used by Heirloom is now called Direct Air Capture (DAC) and specifically involve capturing CO2 out of the air but other approaches are simply called Carbon Dioxide Removal (CDR) and utilize a range of methods to bind that CO2 in a semi-permanent or permanent way, such as through marine-based CDR or natural processes such increasing the CO2 content in soils or accelerating the use of CO2 by plants, such as by growing crops or trees with the intention of having them capture the CO2.

Utilization of CO2 involves finding valuable ways to use that CO2 or just the carbon (C) from captured CO2. Ventures working on the utilization part of this process pose the prospects of having profitable business models. Nucleation Capital, as a climate-focused venture fund, recognizes that CCUS is a growth industry that is anticipated to become a large consumer of energy. We are following the activity in this nascent space and we are investing in some of the most promising approaches, especially where that approach has strong profit and growth prospects or where it intersects with the need for abundant clean energy.  While knowing all the acronyms isn't critical, there are a few key things to know about CCUS in general.

Key Facts to Know about CO2 and Carbon Capture, Utilization & Sequestration

1. While CO2 itself is natural and not toxic (except in high doses), the enormous amount that we have polluted our atmosphere with by burning fossil fuels for energy is causing our climate to warm up at a very fast rate. We need CCUS in order to lessen and possibly reverse the rate of warming, so we can restore a healthy climate.
2. All technological approaches to capturing carbon back out of the air or water are expensive and early stage. So are the approaches to carbon utilization and sequestration (i.e. methods to utilize and/or store the carbon so it doesn't get released back into the atmosphere).
3. To stop making our climate crisis worse, we have to stop burning fossil fuels, as our highest priority mitigation effort. While some might think that capturing the carbon emitted from burning fossil fuels right at the point source may warrant continuing to burn fossil fuels, that will not enable us to use carbon capture to restore the damage already done, which is the primary rationale for CCUS.
4. Even if we stopped burning fossil fuels today, the amount of damage the long-lived CO2 pollution is causing the world will continue to heat the planet for decades or centuries. The only way to prevent that is by removing this excess CO2 pollution.
5. Today, there are only a handful of dedicated carbon capture plants in existence globally but, to prevent serious damage to earth ecosystems, we will need to scale up these plants in record time to be able to reverse most of the emissions produced by the fossil fuel industry in its entire history. We will also need to scale utilization and sequestration capabilities.
6. The cost of cleaning up all of the emissions caused by our past use of fossil fuels will be enormous and we haven't come to any agreement as to who bears that burden. Some of that cost can be mitigated with valuable commercial utilization technologies.
7. Powering CCUS plants will require massive amounts of low-carbon clean energy because it makes no sense to emit carbon in the process of capturing carbon. The best and least-cost approach will likely involve using the coming generation of small modular reactors to generate 24x7 power in remote areas.
8. The cost of clean energy used to capture and sequester carbon will be a significant factor in the total cost of that activity but powering CCUS can help SMRs scale up, which will help reduce the manufacturing costs.
9. There is no scenario in which the cost of burning fossil fuels and capturing all the CO2 from that activity and permanently storing it will cost less than replacing the fossil fuels with renewables or nuclear and avoiding the release of new emissions in the first place.
10. Fossil fuel companies are already lobbying to earn carbon credits by pairing carbon capture with the extraction and burning of fossil fuels. This is why some environmentalists, like Al Gore, oppose providing funding for CCUS to oil and gas companies, even though the most cost-effective CO2 capture is done at or close to the fossil fuel smokestack source point.

Read more in the New York Times, "In a U.S. First, a Commercial Plant Starts Pulling Carbon From the Air," by Brad Plumer, November 9, 2023.

Learn more about Frontier a consortium that is providing advance market commitments (AMC) that aim to accelerate the development of carbon removal technologies, without picking winning technologies at the start of the innovation cycle. The goal is to send a strong demand signal to researchers, entrepreneurs, and investors that there is a growing market for these technologies.

The 2021 Bipartisan Infrastructure Law included $3.5 billion to fund the construction of four commercial-scale direct air capture plants. In August, the Biden Adminstration announced $1.2 billion in awards for the first two, one to be built by Battelle in Louisiana and the other to be built by Occidental Petroleum, in Texas, through a 50-50 cost share.