Market Perspective on DAC

• We spoke to 30 different players, but didn’t invest. We are a little skeptical of the current technology
• Very Capex heavy, hard to scale and differentiate. Underlying chemistry is electrochemistry or heating, but ultimately fighting thermodynamics
• Point capture ($3bn in credits sold, but only 3% of that has been delivery)
• DAC is still growing, the biggest buyers are big companies like MSFT, Meta
  • End market is interesting in the short term with lots of VC funding going in
  • However, longer-term the market needs concrete regulations to incentivize the market
  • Every climate investor is investing in DAC. Everything right now is voluntary; MSFT is 80% of demand, then Shopify, Frontier, and others
  • There are science-based targets, which are relevant for companies who want to decarbonize. These targets say lease 10% of your emissions should be through DAC, but this hasn’t materialized in mandatory regulations
  • Over the 30 year horizon, you need an efffective carbon tax. If DAC is so cheap that it’s cheaper than tax on carbon, then it would inflect
  • The short term market is there, probably 3-5 years it’s solid, and there’s a lot of funding going in there, so if it does stagnate, it won’t happen immediately
    • IRA giving super attractive subsidies
• In most cases, the sorbent is not the IP; it’s about the process, the temperature, managing airflow, etc.