Commentary: Economics of Direct Air Carbon Capture and Storage

20th September 2022
Republished with the permission from the author, Dr. Julio Friedmann, Chief Scientist at Carbon Direct and Distinguished Fellow at the Global CCS Institute. This commentary builds on the paper, The Economics of Direct Air Carbon Capture and Storage, published by Eric Williams, Principal Consultant – Economics at the Global CCS Institute.


If you’ve ever wondered how the cost of CO2 removal (CDR) might affect future energy and climate outcomes, you’re not alone.

Recently, Eric Williams at the Global CCS Institute published an interesting set of economic analyses around global decarbonization. The new report attempts to answer a very simple question: how could the costs alone of direct air carbon capture and storage (DACCS) affect climate outcomes?

There’s reasons to believe this question, and hence the new analysis, is important. Recently, the Intergovernmental Panel on Climate Change (IPCC) released its 2022 report on climate mitigation. The consensus conclusion of 190 nations was clear – CO2 removal was necessary to achieve key climate goals, including any net-zero target, and that engineered pathways were essential to do so. This is matched by other 2022 analyses, including the International Energy Agency (IEA) and the Energy Transition Commission (ETC).

All three groups place special emphasis on one CDR technology – direct air capture, or DAC, which separated CO2 from ambient air for use or disposal. Specifically, all three focus on combining direct air capture with geological carbon storage (direct air carbon capture and storage, or DACCS). They do so for good reasons, spelled out by both the National Academies and Royal Philosophical Society.

  • DACCS is not limited by scale – in terms of available low-carbon energy, land use, or geological storage.
  • DACCS is not geographically limited. It can be deployed more or less anywhere there is low-carbon energy and CO2 storage – in many nations and continents.
  • DACCS acts like a “backstop” technology for climate. If other mitigation pathways are super expensive, DACCS can be deployed.

As a climate backstop, there is only one major limit to DACCS: cost. Today, commercial prices for DACCS exceed $500/ton removed, reflecting high capital and operating costs. In his analysis, Mr. Williams always uses the same climate outcome as a baseline – 1.5C in 2050. His models include all the other elements of the system (hydrogen, efficiency, renewables, CCS, nuclear) and solely vary the cost of DAC capture from run to run.

This change alone – price of DACCS – affects important outcomes: the timeline for deployment, the amount of global energy production, the total economic costs, the energy mix, and more. Like a classic partial-differential equation problem (keep all other inputs constant, vary one parameter, and see how that affects the other variables), his approach provides insights into how DAC costs affect a key climate target, and what the implications are if DACCS costs drop quickly or not.

A few findings from the report match expectations.

  • Low-cost DAC deploys sooner than high-cost DAC
  • Low-cost DAC means more overall deployment of CO2 removal.
  • Low-cost DAC can save trillions of dollars from the total climate bill compared to high-cost DAC.

A few are somewhat surprising or counter intuitive. For example:

  • Low-cost DAC decreases the amount of total energy used.
  • The cost of DAC does not substantially affect fossil energy production or consumption

It’s worth unpacking the report and a few key analyses to help explain these findings. Recommended actions require no massive changes to infrastructure, the world economic system, or national policies. The potential prizes, both monetary and environmental, are enormous.


As in any study of this kind, methodology and assumptions matter. Specifically, Mr. Williams used the Open Source Energy Modeling System (OSEMOSYS), a least-cost optimization model similar to MARKAL and TIMES, across four groupings of countries (advanced economies, the BRICS countries, the Middle East, and the rest of the world). The model finds the last cost of reaching net zero with rich detail in technology options, including energy efficiency, renewables, electrification, and alternative fuels (including biofuels, hydrogen). Modules of geological CO2 storage & DAC feature updated costs for compression and storage. Specific details to DAC include 31 different starting costs and modest learning rates (0.3%/y capex and 0.5%/y opex reductions) starting in 2035 – ultimately rather conservative assumptions. Details can be found in the original report and detailed description of the model in a related short paper.

It’s important to remember in reviewing the model results that they are constrained in time. All models must reach net-zero by 2054. This means if DACCS cannot deploy quickly enough or cheaply enough, then something else must come in to deliver abatement.

In the report, the author selects three specific cases to help illuminate the impacts on outcomes: low-cost (~$137/ton), medium cost ($223), and high-cost ($411/ton). The cases are all in costs (capture, transportation, and storage per ton CO2) and globally averaged. Again, it does not discuss the likelihood of reaching these price points, but rather the impact of achieving climate abatement at that cost.

Unsurprisingly, low-cost DACCS deploys in volume earlier than high-cost DAC and delivers more total global abatement (figure 3 from the report).

Perhaps less obvious, having low-cost DAC means less CCS on hydrogen systems, especially CCS for blue hydrogen facilities, and for some power facilities (figure 4 from the report). This is driven by the model’s cost optimization algorithms; in short, low-cost DACCS means less CCS is needed on the high-cost parts of the hard-to-abate sectors. This is like using the vacuum at some point instead of picking up all the little bits from the floor – is cheaper and easier.

System costs

Many groups have estimated the savings associated with carbon management to achieve net zero (including the IPCC and GoldmanSachs). All agree that DACCS delivers cost optimization in achieving net-zero – in the case of GoldmanSachs, that DACCS at $300/ton would save ~$3 trillion dollars on the bill to reach key climate targets.

This study looks simply at the cost and time of DAC deployment. The conservative assumptions (described above) provide a similar answer – low-cost DAC saves money on the total climate bill on a net-present value basis (Fig. 5 from the report). Similarly, if DAC does not realize costs below $300/ton by 2035, it doesn’t save much because it won’t deploy until 2050.

The same logic drives the models to see more abatement through DAC at lower costs (figure 9 of the report). At low-to-moderate costs, DAC delivers 2-6 Gt of removal as part of a 1.5-by-2054 campaign. At higher costs, other CO2 removal approaches (e.g., BECCS) deliver more, but with limited deployment that drives high costs solutions in key sectors.

This is the key point. The time constraints of 2054 drive the trade-offs in solution space. If any CO2 reduction pathway is more expensive than a CO2 removal pathway the CDR pathway will deploy first. The reverse is also true. Similarly, if DAC is more expensive than forests or BECCS it won’t deploy until resource constraints drive the modeled costs of other pathways above DAC.

Energy needs

A striking and surprising result in how low-cost DACCS leads to system-wide lower use of energy (figure 11 of the report). Given that DAC uses a lot of energy, this appears counter-intuitive at first. However, when modeled DAC costs are high, the system uses more green hydrogen and synthetic fuels, which themselves require enormous energy to use. This is basically a Second Law of thermodynamics result – building fuels out of water and CO2 takes a lot of primary energy, in these cases delivered by extraordinary buildouts of solar and wind (a 200 Exojoule per year difference between high- and low-cost DACCS).

The same is specifically true for just the electricity sector within the global economy (figure 13 of the report). It shows the specific trade-offs, for example how high-cost DAC means less solar electricity use for DACCS and a lot more solar electricity use for hydrogen (figure 15 of the report).

It’s possible that technology innovation in green hydrogen and synthetic fuels would reduce this energy burden. Indeed, other studies suggest that an innovation agenda should target reduction of overpotential and catalyst selectivity as ways to drive down costs. As a policy position, innovation budgets should rationally support multiple pathways – DAC, synthetic fuels, and green hydrogen – as a way to limit overall risk and costs.

The punchline: It’s worth a lot to accelerate DAC cost reductions

If these findings are directionally right, then accelerating DAC cost reductions should be a global priority. The energy savings and avoided costs could prove enormous. The NPV savings could approach or exceed $3 trillion, and the risk of meeting climate targets would drop substantially because of access to a low-cost backstop.

More than anything else, this suggests an innovation agenda, similar to those proposed in 20172018 and 2020. Several nations have policies that support research, development, and demonstration of DACCS, including the US, Canada, UK, EU, and Japan. The Mission Innovation multi-national effort has created a new CO2 removal mission, led by the US, Canada, and Saudi Arabia, that specifically includes DACCS. In addition to increased funding for use-inspired science (e.g., novel sorbents) and applied science (e.g., novel reactors), specific funding should be allocated to large-pilots and demonstrations. To maximize the rate of progress and accelerate learning, policies should also support information sharing between nations as a priority, through bilateral and multilateral arrangements (like Mission Innovation).

Incentives to accelerate DACCS deployment would also provide national and global public benefit (i.e., to facilitate learning rates and cost reductions). Since Nov. 2021, the US has enacted specific DAC deployment policies, including enhanced 45Q tax credits (Inflation Reduction Act) and $3.5 billion for DAC Hubs (Infrastructure Investment and Jobs Act). Additional provisions include a government-sponsored commercial DAC Prize and CO2 storage site assessment. New provisions have been proposed including government procurement (US), additional tax credits (Canada) and incorporation into compliance markets (EU).

Governments are not alone in supporting opportunities. There’s also an important role for companies – specifically, as first movers. The World Economic Forum launched a new plank to the First Movers Coalition, including multiple facilities and commitments for DACCS and other forms of durable CO2 removal. Individual companies such as MicrosoftAirbus, and Swiss Re have purchased DACCS to help stimulate market growth and cost reductions. Even bands like Coldplay have announced the use of DACCS to remove emissions associated with their tours. Many more companies could make similar kinds of DACCS purchases as part of their net-zero strategy and commitments.

Ultimately, the specific party or mechanism is less important the investing in innovation and deployment to drive down costs. The potential prize is enormous. The new report from the Global Institute makes the case, concluding that DACCS cost reductions have reached their Nike moment: Just Do It.

After all, when it comes to climate change, it’s about time.

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