This is Dana Perkins and you're listening to Switched on the podcast where we discuss the energy transition with BENUF analysts and highlight findings from their most recent research. And today we're going to take a step away from carbon reduction and explore the world of carbon removal technologies. Many have had success over the past couple of years as recipients of growing investments and a number of projects have crossed the critical financial investment decision milestone or FID for short. But of course the picture isn't rosy across the board, and we will get into that on the show today. We talk about the most established technology at the beginning, which is carbon capture, Utilization and Storage or CCUS. We also talk about some of the newer technologies like direct air capture or DACK for short, and we save time to get into the world of the newest sources of innovation by delving in on direct ocean removal. To give us all the updates, I speak with Brenna Casey, who is an analyst from b and EF's Sustainable Materials team, and she highlights findings from the recent research. Note CCUS Market Outlook one h twenty twenty trough of disillusionment. She also draws from another research note titled Direct Air Captures Technology Battle to Heat Up in twenty thirties. BENYF clients will be able to find the full research at BNF go on the Bloomberg terminal or at BNF dot com. If you like the show, subscribe on whatever you're listening to us on now and you'll get an update when we publish a new show, and if you give us a review, other people will be able to find us more easily. But right now, let's talk to Brenna and get an update on carbon removal technology. Brenna, thank you very much for joining the show today.

This is Dana Perkins and you're listening to Switched on the podcast where we discuss the energy transition with BENUF analysts and highlight findings from their most recent research. And today we're going to take a step away from carbon reduction and explore the world of carbon removal technologies. Many have had success over the past couple of years as recipients of growing investments and a number of projects have crossed the critical financial investment decision milestone or FID for short. But of course the picture isn't rosy across the board, and we will get into that on the show today. We talk about the most established technology at the beginning, which is carbon capture, Utilization and Storage or CCUS. We also talk about some of the newer technologies like direct air capture or DACK for short, and we save time to get into the world of the newest sources of innovation by delving in on direct ocean removal. To give us all the updates, I speak with Brenna Casey, who is an analyst from b and EF's Sustainable Materials team, and she highlights findings from the recent research. Note CCUS Market Outlook one h twenty twenty trough of disillusionment. She also draws from another research note titled Direct Air Captures Technology Battle to Heat Up in twenty thirties. BENYF clients will be able to find the full research at BNF go on the Bloomberg terminal or at BNF dot com. If you like the show, subscribe on whatever you're listening to us on now and you'll get an update when we publish a new show, and if you give us a review, other people will be able to find us more easily. But right now, let's talk to Brenna and get an update on carbon removal technology. Brenna, thank you very much for joining the show today.

Yeah, thanks for having me, Dana.

Yeah, thanks for having me, Dana.

We're here to talk about carbon removal technologies, and there are a couple of different avenues we can go down. We'll come to direct air capture and actually some really interesting things happening in our oceans. But let's start with the big one, which is carbon capture, Utilization and storage, referred to as CCUS by most people. And one of the things about carbon capture technology is that when we look at a net zero future, so when we think about there being you know this, well, this net number where we are emitting and then absorbing this even amount of carbon on an annual basis. There are parts of the economy where CCUS is really the only existing solution right now and plays a very important role in a net zero future, at least with today's existing technology as we think about this forward. This is something that featured in our New Energy Outlook and definitely something that is causing us to think really seriously about this technology and the role it could play in the future. So the whole show today is going to be about where this investment is and where capacity editions are. So we'll just start with a very simple question, is is there an upward trend in investment into CCUS technology at the moment?

We're here to talk about carbon removal technologies, and there are a couple of different avenues we can go down. We'll come to direct air capture and actually some really interesting things happening in our oceans. But let's start with the big one, which is carbon capture, Utilization and storage, referred to as CCUS by most people. And one of the things about carbon capture technology is that when we look at a net zero future, so when we think about there being you know this, well, this net number where we are emitting and then absorbing this even amount of carbon on an annual basis. There are parts of the economy where CCUS is really the only existing solution right now and plays a very important role in a net zero future, at least with today's existing technology as we think about this forward. This is something that featured in our New Energy Outlook and definitely something that is causing us to think really seriously about this technology and the role it could play in the future. So the whole show today is going to be about where this investment is and where capacity editions are. So we'll just start with a very simple question, is is there an upward trend in investment into CCUS technology at the moment?

So short answer one hundred percent yes. Long answer, I think it's pretty nuanced, depending on obviously region and then sector. So over the last year we've seen a dramatic uptick, particularly in EMEA the Middle East, a lot of investment leading up to COP twenty eight, and then we've also seen a lot of investment into particularly the heavy industry sectors so cement, chemicals, steel, hydrogen in Europe, and that's really as developers corporates those sorts of kind of stakeholders brace and fear of the carbon price as well as you know other sorts of like like cban, like border adjustment mechanisms as well. So definitely an upwards trend in those areas. In the US, well, the US leads and investments in total, but that's really just bolstered by DOE funding. So we're seeing lots of investment or subsidies from them to kind of pick start a lot of our heavy industries. And that's separate from forty five Q. But apart from a lot of these subsidies, private investment is actually gone down in the US so quickly.

So short answer one hundred percent yes. Long answer, I think it's pretty nuanced, depending on obviously region and then sector. So over the last year we've seen a dramatic uptick, particularly in EMEA the Middle East, a lot of investment leading up to COP twenty eight, and then we've also seen a lot of investment into particularly the heavy industry sectors so cement, chemicals, steel, hydrogen in Europe, and that's really as developers corporates those sorts of kind of stakeholders brace and fear of the carbon price as well as you know other sorts of like like cban, like border adjustment mechanisms as well. So definitely an upwards trend in those areas. In the US, well, the US leads and investments in total, but that's really just bolstered by DOE funding. So we're seeing lots of investment or subsidies from them to kind of pick start a lot of our heavy industries. And that's separate from forty five Q. But apart from a lot of these subsidies, private investment is actually gone down in the US so quickly.

So we're talking about the US. What is forty five Q.

So we're talking about the US. What is forty five Q.

Forty five Q. Yeah, So twenty twenty two, the government signed into law the Inflation Reduction Act and baked into that is forty five Q, which gives it's an investment tax credit, So it's eighty five dollars per ton awarded if you are storing the CO two kind of sequestered from a point source plant, so a cement plant, petrichemical steel, and then you're going to get sixty dollars per ton if you're taking that CO two that you've captured and utilizing it as a feedstock.

Forty five Q. Yeah, So twenty twenty two, the government signed into law the Inflation Reduction Act and baked into that is forty five Q, which gives it's an investment tax credit, So it's eighty five dollars per ton awarded if you are storing the CO two kind of sequestered from a point source plant, so a cement plant, petrichemical steel, and then you're going to get sixty dollars per ton if you're taking that CO two that you've captured and utilizing it as a feedstock.

So it makes sense that we start kind of on the around the world tour of what's actually happening in investment for CCUS with the US which is the leader at the moment. So if we're looking at just twenty twenty three, kind of what was the level of investment.

So it makes sense that we start kind of on the around the world tour of what's actually happening in investment for CCUS with the US which is the leader at the moment. So if we're looking at just twenty twenty three, kind of what was the level of investment.

Yeah, so twenty twenty three was around two point eight billion dollars and that's primarily due to subsidies from the US Department of Energy or the DOE. And we've also seen a couple of projects reaching FID in twenty twenty three. However, we've actually, I've seen momentum in the US drop off pretty substantially, and that's due to a multitude of factors, one primarily being the IRS has yet to kind of.

Yeah, so twenty twenty three was around two point eight billion dollars and that's primarily due to subsidies from the US Department of Energy or the DOE. And we've also seen a couple of projects reaching FID in twenty twenty three. However, we've actually, I've seen momentum in the US drop off pretty substantially, and that's due to a multitude of factors, one primarily being the IRS has yet to kind of.

The IRS, the Internal Revenue Service, the same people that are collecting my.

The IRS, the Internal Revenue Service, the same people that are collecting my.

Taxes exactly exactly. They've yet to kind of set these regulations or clarifications as to what qualifies as a project that can receive a forty five Q subsidy. So investors are a little bit wary, and therefore we haven't seen continuous investment in twenty twenty four so far.

Taxes exactly exactly. They've yet to kind of set these regulations or clarifications as to what qualifies as a project that can receive a forty five Q subsidy. So investors are a little bit wary, and therefore we haven't seen continuous investment in twenty twenty four so far.

But presumably this seems like a barrier that once we get through the mechanics of the way that government works, that there could be you know, some pent up demand and there could be more investment and more projects on the way. Or is that just wishful thinking for me working my way backwards. Since we started the conversation talking about net zero goals.

But presumably this seems like a barrier that once we get through the mechanics of the way that government works, that there could be you know, some pent up demand and there could be more investment and more projects on the way. Or is that just wishful thinking for me working my way backwards. Since we started the conversation talking about net zero goals.

When we look at the capacity that we have so out until twenty thirty, it's around four hundred and twenty four million metric tons of ccus opacity due to come online. In reality, conservatively, I guess optimistically instead around thirty percent of those projects are set to be canceled. When we talk to a lot of developers in the industry, some people like to say, maybe, hey, seventy percent of these projects are going to get canceled. Over the last or since forty five Q was ratified in twenty twenty two, we've seen two consecutive years of double digit growth. When we're looking at millions of tons of capacity announced to come online, but four hundred and twenty four million metric tons by twenty thirty, that number has remained unchanged since I think last year in October when we released our previous market outlook, and so I think really right now, what we're seeing is a lack of additions and maybe potential cancelations. Over the last couple of years, we've seen lots of those, especially in Canada. It's mostly these power projects, coal power projects, where the economics aren't extremely favorable and so tying it back to forty five Q. Even with forty five Q this is it's still prohibitively expensive. Forty five Q alone is not enough to make the business case for ccs, and these credits also only last twelve years, so when you're thinking about building a new project with a lifetime of thirty years, you kind of have to see where you're going to make your money back on that in forty five Q in a lot of cases isn't enough for a lot of these developers to continue to announce projects. However, once the IRS has figured out, okay, what actually does qualify for a project, we're likely to see industries like iron steel, blue hydrogen cement, We're likely to see those first movers kind of potentially continue to add in capacity. If you're looking at cement or coal power where there's lots of impurities in the gas, you have to scrub the gas, have a sorbin or a solvent that isn't volatile, doesn't degrade in the presence of those impurities. And due to the low concentration of CO two in those flue gases, you also need high amounts of energy to kind of sequester or strip that CO two from the gas, and so it gets more and more expensive the lower CO two concentration is in that gas. There really isn't any alternative. That's the problem with CCS is that CO two is effectively a waste product. It's not a commodity. We're trying to make it a commodity.

When we look at the capacity that we have so out until twenty thirty, it's around four hundred and twenty four million metric tons of ccus opacity due to come online. In reality, conservatively, I guess optimistically instead around thirty percent of those projects are set to be canceled. When we talk to a lot of developers in the industry, some people like to say, maybe, hey, seventy percent of these projects are going to get canceled. Over the last or since forty five Q was ratified in twenty twenty two, we've seen two consecutive years of double digit growth. When we're looking at millions of tons of capacity announced to come online, but four hundred and twenty four million metric tons by twenty thirty, that number has remained unchanged since I think last year in October when we released our previous market outlook, and so I think really right now, what we're seeing is a lack of additions and maybe potential cancelations. Over the last couple of years, we've seen lots of those, especially in Canada. It's mostly these power projects, coal power projects, where the economics aren't extremely favorable and so tying it back to forty five Q. Even with forty five Q this is it's still prohibitively expensive. Forty five Q alone is not enough to make the business case for ccs, and these credits also only last twelve years, so when you're thinking about building a new project with a lifetime of thirty years, you kind of have to see where you're going to make your money back on that in forty five Q in a lot of cases isn't enough for a lot of these developers to continue to announce projects. However, once the IRS has figured out, okay, what actually does qualify for a project, we're likely to see industries like iron steel, blue hydrogen cement, We're likely to see those first movers kind of potentially continue to add in capacity. If you're looking at cement or coal power where there's lots of impurities in the gas, you have to scrub the gas, have a sorbin or a solvent that isn't volatile, doesn't degrade in the presence of those impurities. And due to the low concentration of CO two in those flue gases, you also need high amounts of energy to kind of sequester or strip that CO two from the gas, and so it gets more and more expensive the lower CO two concentration is in that gas. There really isn't any alternative. That's the problem with CCS is that CO two is effectively a waste product. It's not a commodity. We're trying to make it a commodity.

I mean, we're already at the end of the line here, we're looking at CCUS because there hasn't been a readily available, economically viable alternative. It's jumped in. Is that a right typification of how one should view the application of this technology. Not in all cases, but let's say, you know, in the majority of.

I mean, we're already at the end of the line here, we're looking at CCUS because there hasn't been a readily available, economically viable alternative. It's jumped in. Is that a right typification of how one should view the application of this technology. Not in all cases, but let's say, you know, in the majority of.

Cases, Yeah, definitely. I mean there is the argument of electrify everything that we've heard, right, and so that has a play and the power sector for example, but obviously we need peaking power, which really can only be done with you know, say nuclear hydrogen or natural gas with ccs if we're looking at a net zero world, if we're thinking about I think the best two examples are for cement and petric chemicals. So you can sure electrify half of these processes, but cement, for example, is well, I guess both c and petric chemicals they a significant amount of process emissions, meaning that electrifying only abates like ah or yeah maybe yeah, forty percent of total industrial emissions. And so you actually need ccs to to carbonize these heavy industries. And so you can kind of use ccs in these higher concentration sources, so natural gas, processing, ammonia, ethanol where it's cheaper and you can kind of build the supply chains, build the confidence in the technology, scale it that way, and then where it's more expensive and a larger barrier to entry for you know, cement and petrochemicals later on down the line, that can then kind of use that technology to help abate those emissions.

Cases, Yeah, definitely. I mean there is the argument of electrify everything that we've heard, right, and so that has a play and the power sector for example, but obviously we need peaking power, which really can only be done with you know, say nuclear hydrogen or natural gas with ccs if we're looking at a net zero world, if we're thinking about I think the best two examples are for cement and petric chemicals. So you can sure electrify half of these processes, but cement, for example, is well, I guess both c and petric chemicals they a significant amount of process emissions, meaning that electrifying only abates like ah or yeah maybe yeah, forty percent of total industrial emissions. And so you actually need ccs to to carbonize these heavy industries. And so you can kind of use ccs in these higher concentration sources, so natural gas, processing, ammonia, ethanol where it's cheaper and you can kind of build the supply chains, build the confidence in the technology, scale it that way, and then where it's more expensive and a larger barrier to entry for you know, cement and petrochemicals later on down the line, that can then kind of use that technology to help abate those emissions.

So you've established that some projects, what did you say, close to a third of projects might end up not moving forward. And then additionally, the current investment is slowing down, and there may be reasons to believe that in the future this could speedback up again, but for the time being, this is the state of play, and I want to understand kind of whose money is at stake. So is it large corporates, is it oil and gas firms, is it venture capital or is it private equity fund you know, whose money is essentially tied up in the projects that might be canceled and the investment strategy for the future.

So you've established that some projects, what did you say, close to a third of projects might end up not moving forward. And then additionally, the current investment is slowing down, and there may be reasons to believe that in the future this could speedback up again, but for the time being, this is the state of play, and I want to understand kind of whose money is at stake. So is it large corporates, is it oil and gas firms, is it venture capital or is it private equity fund you know, whose money is essentially tied up in the projects that might be canceled and the investment strategy for the future.

Yeah, I think it's a mix of kind of all of it, and also depends on the application. If we're looking specifically at the US right now, it's the tax payers, I guess you could say so. Last year again, primarily it was a lot of DOE funding, which has kind of helped kickstarting the industry, which makes sense again because CO two is this waste product and funding for CCUS or direct air capture can be viewed as it's a public good right to remove the COO two from the atmosphere or to abate it from going into the atmosphere. What we're seeing right now, the biggest announcement to stay on, you know, recent recent trends, so the industrial demonstrations projects or the IDP that's been made available to lots of heavy industry, so cement, iron and steel, Patrick chemicals, and blue hydrogen the key industries that are taking home a lot of money for CCUS, though that funding hasn't been awarded to individual projects yet. There's still no negotiations. Things have to be signed, so the funding is at risk of I guess revocation until those agreements are signed. And that's obviously contingent one on the new party in November, whoever gets selected. That that might be an issue for a lot of this funding. But again it really is taxpayer. It's a lot of governments in the US right now because private investors or even corporates are standing back and are a little bit wary until these forty five Q guidelines are set in stone.

Yeah, I think it's a mix of kind of all of it, and also depends on the application. If we're looking specifically at the US right now, it's the tax payers, I guess you could say so. Last year again, primarily it was a lot of DOE funding, which has kind of helped kickstarting the industry, which makes sense again because CO two is this waste product and funding for CCUS or direct air capture can be viewed as it's a public good right to remove the COO two from the atmosphere or to abate it from going into the atmosphere. What we're seeing right now, the biggest announcement to stay on, you know, recent recent trends, so the industrial demonstrations projects or the IDP that's been made available to lots of heavy industry, so cement, iron and steel, Patrick chemicals, and blue hydrogen the key industries that are taking home a lot of money for CCUS, though that funding hasn't been awarded to individual projects yet. There's still no negotiations. Things have to be signed, so the funding is at risk of I guess revocation until those agreements are signed. And that's obviously contingent one on the new party in November, whoever gets selected. That that might be an issue for a lot of this funding. But again it really is taxpayer. It's a lot of governments in the US right now because private investors or even corporates are standing back and are a little bit wary until these forty five Q guidelines are set in stone.

So we've established that things have cooled a bit in the US. But let's continue around the world and just do a quick state of play on various other parts. So do you want to go with the rotation of the earth or against the rotation of the earth. Oh, let's go with We'll go with. Okay, moving then next to where I am, So where in Europe?

So we've established that things have cooled a bit in the US. But let's continue around the world and just do a quick state of play on various other parts. So do you want to go with the rotation of the earth or against the rotation of the earth. Oh, let's go with We'll go with. Okay, moving then next to where I am, So where in Europe?

Now?

Now?

What is happening in Europe when it comes to CCUS, Because before there was the Inflation Reduction Act. The European Union certainly had ambitious net zero targets. So where are we seeing projects here and is the investment dampening also on this side of the pond?

What is happening in Europe when it comes to CCUS, Because before there was the Inflation Reduction Act. The European Union certainly had ambitious net zero targets. So where are we seeing projects here and is the investment dampening also on this side of the pond?

Yeah, yeah, euro is a little bit of a different story right now. We're kind of seeing Europe, particularly Germany, as the test bed for industrial decarbonization. So many of the projects we're seeing for I guess cement, chemicals, hydrogen are all taking place in that area, which makes sense because of the EUETS. So as that carbon price starts to loom over the heads of a lot of these players, they are taking initiative to start developing their decarbonization strategies and so a lot of the money we're seeing there is going towards those projects. Twenty twenty three in Europe right now, we're really seeing a lot of projects just move towards FID and so that was the Porthos project, which was one of the biggest projects take FID last year, and that's part of a hub. So the EU business model is and we are seeing like sprinkles of this in the US as well, but the EU centric business model really is CCUS hub formation and that's just it's kind of a natural business model because lots of industry has just naturally conglomerated around port cities in the EU, and so it makes sense to just create this co located area to capture transport and store CEO two. And so we're seeing lots of investment into those sorts of hubs, and these are the sorts of projects that are beginning to take FID. Granted, the Porthos projects, it took from announcement to FID around ten years, so there's a pretty large gestation period, you could say, but we are beginning to see a lot of these projects take off. For a few of these projects take off, but.

Yeah, yeah, euro is a little bit of a different story right now. We're kind of seeing Europe, particularly Germany, as the test bed for industrial decarbonization. So many of the projects we're seeing for I guess cement, chemicals, hydrogen are all taking place in that area, which makes sense because of the EUETS. So as that carbon price starts to loom over the heads of a lot of these players, they are taking initiative to start developing their decarbonization strategies and so a lot of the money we're seeing there is going towards those projects. Twenty twenty three in Europe right now, we're really seeing a lot of projects just move towards FID and so that was the Porthos project, which was one of the biggest projects take FID last year, and that's part of a hub. So the EU business model is and we are seeing like sprinkles of this in the US as well, but the EU centric business model really is CCUS hub formation and that's just it's kind of a natural business model because lots of industry has just naturally conglomerated around port cities in the EU, and so it makes sense to just create this co located area to capture transport and store CEO two. And so we're seeing lots of investment into those sorts of hubs, and these are the sorts of projects that are beginning to take FID. Granted, the Porthos projects, it took from announcement to FID around ten years, so there's a pretty large gestation period, you could say, but we are beginning to see a lot of these projects take off. For a few of these projects take off, but.

The EUETS, so the European Union's emissions trading system is proving to be a important catalyst at least for CCUS adoption and certainly across Europe in keeping emissions to a level that that's actually been defined. And there are a number of different ways of doing this, and I think that's another podcast. But as we continue around the world, so you had mentioned in the run up to COP twenty eight, which took place in Dubai, there were also a number of installations that were getting underwe in the middle East, And you know, to some extent that doesn't surprise me given that at those discussions at the COP there was a discussion around the role that transition fuels will play in the energy transition of the future, and CCUS certainly helps facilitate some of these transition fuels, as you pointed out natural gas being one of them. Well, I guess my first question before we get into what's actually happening in the Middle East. Do you think that being a COP host country in the UAE, that that was a part of the reason why so many eyes were on CCUS as we headed into November last year.

The EUETS, so the European Union's emissions trading system is proving to be a important catalyst at least for CCUS adoption and certainly across Europe in keeping emissions to a level that that's actually been defined. And there are a number of different ways of doing this, and I think that's another podcast. But as we continue around the world, so you had mentioned in the run up to COP twenty eight, which took place in Dubai, there were also a number of installations that were getting underwe in the middle East, And you know, to some extent that doesn't surprise me given that at those discussions at the COP there was a discussion around the role that transition fuels will play in the energy transition of the future, and CCUS certainly helps facilitate some of these transition fuels, as you pointed out natural gas being one of them. Well, I guess my first question before we get into what's actually happening in the Middle East. Do you think that being a COP host country in the UAE, that that was a part of the reason why so many eyes were on CCUS as we headed into November last year.

Yeah, so one hundred percent. It was actually kind of surprising to see the movement into the Middle East. I think it was around one point three billion dollars of investment in twenty twenty three that we saw in that region, particularly ADNOCK, so the Abu Dhabi National Oil Company was definitely a key catalyst and a lot of that funding. Obviously, like natural gas, oil is their core competency there. It's actually quite interesting a new trend we're starting to see is actually direct air capture in that region too. There's lots of pre existing oil and gas expertise obviously, lots of depleted oil wells, and so we've actually heard word of ADNOC partnering with Carbon Engineering to kind of start a couple new pilots over there for one storage, but also to cootwo utilization for fuels of some sort. But I think COPP was probably a key catalyst of that.

Yeah, so one hundred percent. It was actually kind of surprising to see the movement into the Middle East. I think it was around one point three billion dollars of investment in twenty twenty three that we saw in that region, particularly ADNOCK, so the Abu Dhabi National Oil Company was definitely a key catalyst and a lot of that funding. Obviously, like natural gas, oil is their core competency there. It's actually quite interesting a new trend we're starting to see is actually direct air capture in that region too. There's lots of pre existing oil and gas expertise obviously, lots of depleted oil wells, and so we've actually heard word of ADNOC partnering with Carbon Engineering to kind of start a couple new pilots over there for one storage, but also to cootwo utilization for fuels of some sort. But I think COPP was probably a key catalyst of that.

Now, before we move on to Asia Pacific as a region, is there anything happening in Africa?

Now, before we move on to Asia Pacific as a region, is there anything happening in Africa?

Not really for ccs for dak though we are actually seeing not in terms really of investments yet, but we are seeing projects announced in Kenya in the Kenyan Rift Valley actually where you can take advantage of really great CO two storage geologic storage. You can mineralize the COO two because there's lots of basalt rocks in that area, and then there's great renewable energy, so lots of hydro So we're seeing lots of companies kind of move into that space down there. But in terms of CCS, we haven't seen really any capacity editions now.

Not really for ccs for dak though we are actually seeing not in terms really of investments yet, but we are seeing projects announced in Kenya in the Kenyan Rift Valley actually where you can take advantage of really great CO two storage geologic storage. You can mineralize the COO two because there's lots of basalt rocks in that area, and then there's great renewable energy, so lots of hydro So we're seeing lots of companies kind of move into that space down there. But in terms of CCS, we haven't seen really any capacity editions now.

So I'm not ready for direct air capture fully yet. We'll come back to that conversation, So hold that thought. Now, moving to APAC and you know on this show we do talk about adaption of technology in China a fair amount, but in variably there are other parts of the region that are also looking at this technology, and including Australia, where are we seeing CCUS taking off in that continent.

So I'm not ready for direct air capture fully yet. We'll come back to that conversation, So hold that thought. Now, moving to APAC and you know on this show we do talk about adaption of technology in China a fair amount, but in variably there are other parts of the region that are also looking at this technology, and including Australia, where are we seeing CCUS taking off in that continent.

Over the last couple of years. In Australia, we've actually seen CCS funding revoked just because of this soured public sentiment that a lot of Australians have towards CCS. There's one big project in Australia that hasn't met it's previously announced capacity targets, meaning that it's running at a lower utilization rate and therefore it's actually costing millions and millions of dollars more than initially expected. What we're seeing right now in Australia is that people a kind of moved away from CCS and are looking more towards as the key technology that will help them in the energy transition. China's a little bit of a different story what we're seeing. We've actually seen a couple of pipelines actually become operational. I think it was a one million ten per year pipeline in China. Again, there's not any incentives geared towards accelerating the industry like the US has with forty five Q and so it's really a lot of these companies over there have to rely on enhanced oil recovery to create this supplemental revenue stream to help get a lot of these projects over the line or make the business cases for these projects. China did implement a carbon price recently, not all industries are covered under that, and realistically it's going to take to twenty thirty twenty thirty five for that really to have any influence on CCUS editions, especially when we're talking about or if we think about free allocations and how many allowances a lot of industrials over there are going to be given. But yeah, it's things are moving slow in APAC, you could say.

Over the last couple of years. In Australia, we've actually seen CCS funding revoked just because of this soured public sentiment that a lot of Australians have towards CCS. There's one big project in Australia that hasn't met it's previously announced capacity targets, meaning that it's running at a lower utilization rate and therefore it's actually costing millions and millions of dollars more than initially expected. What we're seeing right now in Australia is that people a kind of moved away from CCS and are looking more towards as the key technology that will help them in the energy transition. China's a little bit of a different story what we're seeing. We've actually seen a couple of pipelines actually become operational. I think it was a one million ten per year pipeline in China. Again, there's not any incentives geared towards accelerating the industry like the US has with forty five Q and so it's really a lot of these companies over there have to rely on enhanced oil recovery to create this supplemental revenue stream to help get a lot of these projects over the line or make the business cases for these projects. China did implement a carbon price recently, not all industries are covered under that, and realistically it's going to take to twenty thirty twenty thirty five for that really to have any influence on CCUS editions, especially when we're talking about or if we think about free allocations and how many allowances a lot of industrials over there are going to be given. But yeah, it's things are moving slow in APAC, you could say.

So really simply put in what I'm hearing from you is things are moving slow pretty much everywhere. And so there's this important part of reaching climate goals that is underfunded at the moment for a number of reasons, due to economics that were expected to be more competitive by this point, and by tax incentives and schemes that maybe aren't really following through on what they were initially designed to do. So there are some obstacles that need to be removed for traditional ccus. Is that fair to say, Yeah, we're going to pivot now to some of the technology end of things. So you had reference direct air capture, and that is where we are with machines sucking carbon out of the air. So one might call them mechanical trees, although I think that's a bit generous, but is definitely a place where we are seeing technology and innovation. So what's happening in that space? We have done a show on direct air capture in the past, but are things heating up with investment on those sorts of technologies and are there interesting things that are happening.

So really simply put in what I'm hearing from you is things are moving slow pretty much everywhere. And so there's this important part of reaching climate goals that is underfunded at the moment for a number of reasons, due to economics that were expected to be more competitive by this point, and by tax incentives and schemes that maybe aren't really following through on what they were initially designed to do. So there are some obstacles that need to be removed for traditional ccus. Is that fair to say, Yeah, we're going to pivot now to some of the technology end of things. So you had reference direct air capture, and that is where we are with machines sucking carbon out of the air. So one might call them mechanical trees, although I think that's a bit generous, but is definitely a place where we are seeing technology and innovation. So what's happening in that space? We have done a show on direct air capture in the past, but are things heating up with investment on those sorts of technologies and are there interesting things that are happening.

Yeah, So I think DAK is the outlier here because while traditionals is tapering off, for interest in traditional ccs is tapering off seemingly right now, we have seen a continuous interest in direct air capture. Apart from DOE funding, there's been an uptick and VCPE funding as well. So I think it was two Q twenty twenty two was the last largest quarter for direct air capture and that was primarily this climb Works deal. I think they raised over six hundred million dollars in funding, and then twenty twenty three, we saw investment or interest taper off a little bit, but still remain relatively consistent, and then Q one of twenty twenty four was the largest quarter we've seen since that big climb Works investment, and that's primarily you know, carbon capture. I think they had a eighty million dollar deal in Series A, and then we've also seen avnos take home some money as well. So it's kind of this next generation of not technology particularly, but this next generation of startups that are seeing more movement into the market.

Yeah, So I think DAK is the outlier here because while traditionals is tapering off, for interest in traditional ccs is tapering off seemingly right now, we have seen a continuous interest in direct air capture. Apart from DOE funding, there's been an uptick and VCPE funding as well. So I think it was two Q twenty twenty two was the last largest quarter for direct air capture and that was primarily this climb Works deal. I think they raised over six hundred million dollars in funding, and then twenty twenty three, we saw investment or interest taper off a little bit, but still remain relatively consistent, and then Q one of twenty twenty four was the largest quarter we've seen since that big climb Works investment, and that's primarily you know, carbon capture. I think they had a eighty million dollar deal in Series A, and then we've also seen avnos take home some money as well. So it's kind of this next generation of not technology particularly, but this next generation of startups that are seeing more movement into the market.

So on the techie side of things, can you get me excited about direct air capture and what's actually happening there.

So on the techie side of things, can you get me excited about direct air capture and what's actually happening there.

Yeah, So you can kind of think of it as DAK one point zero, DAK two point zero, and then maybe DAK three point zero, So the traditional forms of direct air capture, and we can talk about companies here. It's climb Works Global Thermostat Carbon Engineering. They're using this thermal driver as a catch and release. You catch CO two. You kind of use this temperature swing to release the CO two from the capture medium. And unfortunately, due to the low concentration of CO two in the atmosphere, you need a very high thermal requirement to strip that CO two from the medium and capture the COO two as well. So these technologies right now are pretty expensive. And what we're seeing is a divergence away from the traditional thermal swing. So we're seeing vacuum swing, but more innovative, we're seeing this electrochemical swing. And so how can you either manipulate the pH or manipulate the voltage to catch and release COO two invite utilizing an avenue like electrochemical capture, you can see dramatic declines and energy requirements. And so we're seeing this DAK two point zero or DAK three point zero, the new innovations of startups and technologies utilizing that lever rather than temperature for example.

Yeah, So you can kind of think of it as DAK one point zero, DAK two point zero, and then maybe DAK three point zero, So the traditional forms of direct air capture, and we can talk about companies here. It's climb Works Global Thermostat Carbon Engineering. They're using this thermal driver as a catch and release. You catch CO two. You kind of use this temperature swing to release the CO two from the capture medium. And unfortunately, due to the low concentration of CO two in the atmosphere, you need a very high thermal requirement to strip that CO two from the medium and capture the COO two as well. So these technologies right now are pretty expensive. And what we're seeing is a divergence away from the traditional thermal swing. So we're seeing vacuum swing, but more innovative, we're seeing this electrochemical swing. And so how can you either manipulate the pH or manipulate the voltage to catch and release COO two invite utilizing an avenue like electrochemical capture, you can see dramatic declines and energy requirements. And so we're seeing this DAK two point zero or DAK three point zero, the new innovations of startups and technologies utilizing that lever rather than temperature for example.

So, keeping within theme of carbon removal technology in a broad sense, what are some of the other technologies that are out there? I mean, recently I heard the term direct ocean removal, and I'm going to be perfectly honest, I'm not entirely sure if we're removing carbon from the ocean or using the ocean to capture carbon, because it's a carbon sinc.

So, keeping within theme of carbon removal technology in a broad sense, what are some of the other technologies that are out there? I mean, recently I heard the term direct ocean removal, and I'm going to be perfectly honest, I'm not entirely sure if we're removing carbon from the ocean or using the ocean to capture carbon, because it's a carbon sinc.

I mean, it's both. You can see direct ocean removal as a lever to just enhance the ocean's natural carbon cycle. There's a bunch of different methods of how the ocean or different technologies that are trying to manipulate the ocean to capture CO two. You know, there's enhanced weathering, there's ocean alkalinity enhancement. Some startups are using macroalgae so growing kelp to sequester CO two, and then they're trying to sync that to the bottom of the ocean. A lot of these startups aren't working. A lot of the science is a little finicky.

I mean, it's both. You can see direct ocean removal as a lever to just enhance the ocean's natural carbon cycle. There's a bunch of different methods of how the ocean or different technologies that are trying to manipulate the ocean to capture CO two. You know, there's enhanced weathering, there's ocean alkalinity enhancement. Some startups are using macroalgae so growing kelp to sequester CO two, and then they're trying to sync that to the bottom of the ocean. A lot of these startups aren't working. A lot of the science is a little finicky.

This reminds me of an article I saw on April Fool's Day that was pointing out that whales themselves, because we're all made of carbon, if the world just had more whales and then they sunk to the bottom of the ocean, we could sequester carbon that way. You know, am I wrong in thinking that some of this is sounding like it might be on the fringes of scalable technology?

This reminds me of an article I saw on April Fool's Day that was pointing out that whales themselves, because we're all made of carbon, if the world just had more whales and then they sunk to the bottom of the ocean, we could sequester carbon that way. You know, am I wrong in thinking that some of this is sounding like it might be on the fringes of scalable technology?

And those are actually called whale falls. There's a funny little scientific term for it. When, yeah, a whale dies and I sink to the bottom of the ocean. And we've actually tried to do a study on how much carbon those do sequester and I think there's a number out there, but I just don't have it on the top of my head.

And those are actually called whale falls. There's a funny little scientific term for it. When, yeah, a whale dies and I sink to the bottom of the ocean. And we've actually tried to do a study on how much carbon those do sequester and I think there's a number out there, but I just don't have it on the top of my head.

So not just for April first whale falls.

So not just for April first whale falls.

Whale falls is real. Yes, it's a real thing. Yeah, you can say a lot of the like macrolgyl sequestration, which is basically that just using kelp. It's just really hard to monitor report verify how many tons of CO two are actually being sequestered if you're just sinking something to the bottom of the ocean, especially when you look at the natural ocean cycle, that seaweed realistically could just be washed back up in the tide and back onto shore. So it's pretty tricky to measure things like that. If you're looking at kind of the technology that is receiving some better attention, I think Captura is one of the leaders here they're using. It's kind of an electrochemical process. It's basically you can manipulate the pH of water, either dropping it making it more acidic, or you can increase the vicicity of the water and therefore create a carbonate and either you take a high pH solution or a low pH solution, and then you can simply remove the CO two from that solution using either a membrane or electrolysis, and so.

Whale falls is real. Yes, it's a real thing. Yeah, you can say a lot of the like macrolgyl sequestration, which is basically that just using kelp. It's just really hard to monitor report verify how many tons of CO two are actually being sequestered if you're just sinking something to the bottom of the ocean, especially when you look at the natural ocean cycle, that seaweed realistically could just be washed back up in the tide and back onto shore. So it's pretty tricky to measure things like that. If you're looking at kind of the technology that is receiving some better attention, I think Captura is one of the leaders here they're using. It's kind of an electrochemical process. It's basically you can manipulate the pH of water, either dropping it making it more acidic, or you can increase the vicicity of the water and therefore create a carbonate and either you take a high pH solution or a low pH solution, and then you can simply remove the CO two from that solution using either a membrane or electrolysis, and so.

Sorts of changes. How do they impact the biodiversity in the oceans.

Sorts of changes. How do they impact the biodiversity in the oceans.

Yeah, so, and this is speaking broadly to direct otion removal. We don't really know. And I think that's the biggest environmental factor here with direct ocean removal. And so if we're comparing director capture to direct ocean removal, if you're looking at technologies that have similar costs, similar energy requirements, but one of them has a much higher potential environmental impact, you kind of have to look at the opportunity costs of spending millions of dollars in one area or millions of dollars in the other area. And so that's why we're actually right now seeing a greater interest in DAK versus store direct otion removal. And we're actually seeing some of the more traditional or the first direct otion remobile companies start to rebrand and position themselves more as direct air capture companies because that's where a lot of you know, this immediate investor interest is it's easier to prove to you know, a VCPE, your direct air capture system works versus your direct otion remobile systems due to these environmental you know, issues we're seeing.

Yeah, so, and this is speaking broadly to direct otion removal. We don't really know. And I think that's the biggest environmental factor here with direct ocean removal. And so if we're comparing director capture to direct ocean removal, if you're looking at technologies that have similar costs, similar energy requirements, but one of them has a much higher potential environmental impact, you kind of have to look at the opportunity costs of spending millions of dollars in one area or millions of dollars in the other area. And so that's why we're actually right now seeing a greater interest in DAK versus store direct otion removal. And we're actually seeing some of the more traditional or the first direct otion remobile companies start to rebrand and position themselves more as direct air capture companies because that's where a lot of you know, this immediate investor interest is it's easier to prove to you know, a VCPE, your direct air capture system works versus your direct otion remobile systems due to these environmental you know, issues we're seeing.

So I can understand though, why companies have looked to the ocean as a potential place to store additional carbon, because you know, when we think about the amount of carbon that's sequestered in the geosphere, one of the things that actually was written in one of your reports shows that, you know, the atmosphere has eight hundred and thirty gigatons of carbon, land has three thousand gigatons of carbon, and the ocean has a whopping thirty eight thousand gigatons of carbon in it. So you know, we are the blue planet and the ocean has this incredible capacity to absorb carbon. We'll see how that technology develops. You've gone through a number of kind of new and exciting technologies that are coming out. We'll see where those actually develop and which ones of those are actually able to get their price per ton of CO two down to something that is competitive, maybe not necessarily with the euts, but with other parts of the voluntary market. So what I want to know is, as you're thinking about carbon removal technology and this lull, one might say in the CC side of things, what are you watching most closely.

So I can understand though, why companies have looked to the ocean as a potential place to store additional carbon, because you know, when we think about the amount of carbon that's sequestered in the geosphere, one of the things that actually was written in one of your reports shows that, you know, the atmosphere has eight hundred and thirty gigatons of carbon, land has three thousand gigatons of carbon, and the ocean has a whopping thirty eight thousand gigatons of carbon in it. So you know, we are the blue planet and the ocean has this incredible capacity to absorb carbon. We'll see how that technology develops. You've gone through a number of kind of new and exciting technologies that are coming out. We'll see where those actually develop and which ones of those are actually able to get their price per ton of CO two down to something that is competitive, maybe not necessarily with the euts, but with other parts of the voluntary market. So what I want to know is, as you're thinking about carbon removal technology and this lull, one might say in the CC side of things, what are you watching most closely.

In terms of point source, we're really waiting for policy developments. That's going to be the litmus test really as to if CCS is going to see this resurgence in one capacity editions. But I guess almost more importantly investment into the projects that we've already seen announced. On the direct air capture side, it's really just continuing to incentivize really supply because corporate demand outstrips supply significantly, and so it's how can we continue to help develop or hone in these technologies, maybe pick a couple of winners, because what we're seeing right now is there's nearly maybe a thousand direct air capture startups, and naturally a lot of those are going to be siphoned off. In realistically, what we need to see is maybe two three of these technologies prevail so that we can coalesce around those particular technologies, build the supply chains, and then help the DAK industry to scale so we can meet that corporate demand. But again, that's just going to continue to take lots of funding and more policy from the government because kind of as I mentioned before, it is this public good removing CO two from the atmosphere, because carbon is a waste product, and so realistically, we're going to need mandates from the governments to tell corporates to procure DAK purchases continue to help subsidize the build out of a lot of these plants and things like that. So I think the industry right now is really not at a standstill, but I think we are waiting idly by to see what a lot of these governments are going to do.

In terms of point source, we're really waiting for policy developments. That's going to be the litmus test really as to if CCS is going to see this resurgence in one capacity editions. But I guess almost more importantly investment into the projects that we've already seen announced. On the direct air capture side, it's really just continuing to incentivize really supply because corporate demand outstrips supply significantly, and so it's how can we continue to help develop or hone in these technologies, maybe pick a couple of winners, because what we're seeing right now is there's nearly maybe a thousand direct air capture startups, and naturally a lot of those are going to be siphoned off. In realistically, what we need to see is maybe two three of these technologies prevail so that we can coalesce around those particular technologies, build the supply chains, and then help the DAK industry to scale so we can meet that corporate demand. But again, that's just going to continue to take lots of funding and more policy from the government because kind of as I mentioned before, it is this public good removing CO two from the atmosphere, because carbon is a waste product, and so realistically, we're going to need mandates from the governments to tell corporates to procure DAK purchases continue to help subsidize the build out of a lot of these plants and things like that. So I think the industry right now is really not at a standstill, but I think we are waiting idly by to see what a lot of these governments are going to do.

Brenna, thank you so much for coming on the show today and for giving us an update on what's happening in this space as the world looks to try and figure out how we reach in at zero.

Brenna, thank you so much for coming on the show today and for giving us an update on what's happening in this space as the world looks to try and figure out how we reach in at zero.

Yeah, thank you.

Yeah, thank you.

Today's episode of Switched On was produced by Cam Gray with production assistance from Kamalas Shelling. Bloomberg NAF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed, as investment a vice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg ANIF should not be considered as information sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed

Today's episode of Switched On was produced by Cam Gray with production assistance from Kamalas Shelling. Bloomberg NAF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed, as investment a vice, investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg ANIF should not be considered as information sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed