Occidental (Oxy), a prominent player in the energy sector, has revealed its acquisition of Carbon Engineering, a Canadian company renowned for its pioneering Direct Air Capture (DAC) technology. This technology is designed to extract CO2 from the atmosphere, repurposing it for the creation of clean fuels. The acquisition deal carries a valuation of $1.1 billion.
This acquisition agreement follows an announcement from last week that the sizeable DAC project under Oxy’s carbon capture platform, 1PointFive, which is being developed in partnership with Carbon Engineering, has been selected as one of two projects to receive grants of up to $1.2 billion from the U.S. Department of Energy (DOE).
DAC technology, identified by the International Energy Agency (IEA) as a critical avenue for carbon removal during the transition to a net-zero energy system, involves directly extracting CO2 from the atmosphere. This extracted carbon dioxide can either be utilized as a raw material or stored permanently when combined with storage solutions. The influential Intergovernmental Panel on Climate Change (IPCC) study on climate change mitigation, released last year, highlighted that scenarios aiming to limit warming to 1.5°C necessitate the scaling of carbon dioxide removal methods to billions of tons annually over the forthcoming decades. In this context, DAC has the potential to contribute substantially to this removal target.
Carbon Engineering, established in 2009 and based in British Columbia, specializes in DAC technology that pulls atmospheric air, conducts a series of chemical reactions to extract carbon dioxide, and then refines, purifies, and compresses it for permanent storage or use. The company also offers “AIR TO FUELS” technology, which combines its DAC solution with hydrogen generation and fuel synthesis to produce ultra-low carbon transportation fuels, including sustainable aviation fuel (SAF).
The collaborative effort between Carbon Engineering and Oxy’s 1PointFive aims to facilitate wide-scale and substantial deployment of DAC. Stratos, a project currently under development by 1PointFive in partnership with Carbon Engineering, is capable of removing over 250 times the amount of carbon dioxide compared to the world’s largest operating DAC facility. According to Oxy, integrating Carbon Engineering into its operations will lead to improved cost and capital efficiency, the creation of new revenue streams through technology licensing and royalties, the advancement of DAC technology, and the expedited deployment of Direct Air Capture as an efficient and expansive solution for global carbon removal.
The transaction is anticipated to be finalized by the close of 2023, resulting in Carbon Engineering becoming a wholly owned subsidiary of Oxy Low Carbon Ventures.