Carbon Removal Market Overivew

• 90% of CDRs are bought by Microsoft today. However, we’re seeing other tech companies starting to play in the space, as well as a few of the luxury goods companies
  • United is decently large, British Airways just bought their first credits
  • Equinor just stepped into the market, first of the O&G, who took all the offset credits from Orsted’s waste energy plants
• There’s a spectrum of credits in terms of quality and price
  • DAC: ~$800/tons. See some folks saying the price should come down, but only one company (Climeworks) has a working process
    • 36k tons/year
    • Next one to come is the Carbon Engineering project, but that has been delayed
      • 500k tons/year
    • A lot of demand is pre-sold. Most of these are startups in DAC, so pre-selling
  • BECCS
  • Waste energy
  • Nature-based solution
    • Struggling with permanence component. 46k acres of offsets in carbon in CA burned

Carbon capture value chain

• Technology startup — Climeworks, Carbon Engineering, etc.
• Solvent provider — sometimes this is the technology startup, and other times it’s a specialist. For Climeworks, it’s Savante. This could be a really techy R&D player
  • Solvent provider probably gets 10-15% of topline revenue of the overall project
• Transport and storage player
• Power provider
• Buyer
• CDR provider will have set up the full supply chain and take on everything as the operator
  • Heat and power are the biggest cost aspect; getting power at the right price is crucial
  • Solvent is also a key component — key point is the number of times you can use it again. Longevity is the most important component rather than the initial cost of the material
  • Primary cost reduction levers
    • Modularity
    • Manufacturing scale
    • Learnings about the absorption process

Demand side

• Don’t think a multi-hundred million deal is a huge deal for MSFT at the moment, they are buying 80-90% of existing CDRs, so you can look at average deal size
  • MSFT hasn’t been able to get enough deal quality, which is why they’re taking the pre-purchase route
  • A lot of big data centers will need to do it to meet their green credentials
  • MSFT or Google are talking about restarting an abandoned nuclear power plant
• The expectation is that more CDR will come in the near term. BECCS, Waste energy are just starting up, they will be at a different scale (million ton scale), and also still a lot more certain

Point capture

• Industrial player
• travel and storage partner
• Might sell it to a 3rd party (get a tariff component) or you can use it yourself for raw input