Oxy Executive Says Direct Air Capture Model Isn’t Bankable Now

(Bloomberg) -- Startups developing direct air projects will need to look beyond traditional financing models to scale the technology, according to the president of Occidental Petroleum Corp.’s carbon removal unit.  

“It’s a bit of a myth out there that direct air capture is going to be bankable,” 1PointFive President and General Manager Anthony Cottone, said at BloombergNEF’s Barrel of Tomorrow in the Age of AI Summit in Houston Thursday. 

Lenders want to see long-term revenue, while customers in the voluntary carbon market are not always willing to commit to longer contracts, Cottone said. Capturing and removing carbon from the air successfully also involves sequestration, and carbon storage companies hold more risk with less economic reward, he said. That “asymmetric risk” makes it so that direct air capture startups “are having a very difficult time scaling that up.” 

A more realistic model of growing the carbon removal market would be to have “one aligned party” own the entire fleet from capture to storage, he said, adding that transitioning from a voluntary carbon market to a global regulatory market with mandates would also help.

Occidental’s 1PointFive has been working to commission its direct air capture plant in Texas, which when complete at the end of this year is expected to capture 500,000 tons of carbon dioxide annually. That would make it the world’s largest direct air capture plant. The oil and gas company has invested heavily in the speculative carbon capture technology because it can help generate a higher growth rate for the company’s “core business,” Cottone said. 

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