Carbon Capture Is Getting Cheap. Here Is What That Means

Cost curves in direct air capture are finally moving. The implications for industrial emitters — and for investors — are significant.

Three years ago, every serious conversation about direct air capture started with the same caveat: the technology works, but at $600 to $1,000 per ton of CO2 removed, it is not economically rational at scale. That number has not hit the floor yet. But it is moving faster than most market participants expected, and the mechanisms driving the decline are structural rather than one-time.

We have done significant diligence in this space, including our investment in CaptureWorks. What we found is that the cost reduction story in DAC is not primarily about breakthrough chemistry. It is about manufacturing maturity, project development experience, and — importantly — colocation strategies that fundamentally change the energy cost component of the equation.

The Energy Problem Is Solvable Differently Than People Think

Energy is the largest operating cost for most DAC approaches, typically representing 40 to 60 percent of the total cost per ton. The early systems were sited without much regard for proximity to low-cost or surplus power. As developers have gotten smarter, they are building adjacent to renewable generation — particularly solar and wind farms with high curtailment rates — where power can be contracted at $15 to $25 per megawatt-hour rather than the grid average of $40 to $60.

Some of the most interesting project designs we have reviewed run DAC systems as interruptible loads: capturing carbon when power is cheap and abundant, throttling back when it is not. This is a fundamentally different operational model than running a chemical plant at continuous capacity, and it requires different engineering. But the economics work considerably better. The energy cost per ton drops by 30 to 40 percent when you optimize for curtailed power, even accounting for lower capacity utilization.

The first-mover advantage in DAC is not about patent position. It is about learning curves. Every project that gets built teaches the next team something the textbooks do not contain.

What the Cost Trajectory Actually Looks Like

The most credible public projections put large-scale DAC at $150 to $200 per ton by the early 2030s, based on current deployment trajectories and historical learning rates from comparable process industries. Our internal modeling, based on detailed cost breakdowns from active projects, suggests that $120 per ton is achievable by 2032 for well-sited systems with direct power purchase agreements. That is not the $50 per ton target that makes DAC competitive with conventional carbon offsets. But it is the range where compliance buyers — regulated utilities, airlines under the EU emissions trading scheme, certain industrial sectors — start making real purchasing decisions.

Year	Estimated DAC Cost Range ($/ton CO2)	Key Driver
2023	$600 – $1,000	Early commercial pilots
2025	$350 – $500	First full-scale plants, improved contactors
2028 (projected)	$200 – $300	Manufacturing scale, low-cost power contracts
2032 (projected)	$120 – $180	Learning curve effects, modular standardization

The 45Q Credit Changes the Investment Math

Section 45Q of the US tax code provides a $180 per ton credit for CO2 permanently sequestered via direct air capture, and $130 per ton for industrial point-source capture. At current cost levels, that credit does not make DAC projects profitable on its own. But it closes the gap significantly for well-structured projects. Combined with voluntary carbon market revenues and corporate offtake agreements — which we are seeing at $200 to $300 per ton for high-quality permanent removal credits — the economics of DAC projects built today are materially better than they were 18 months ago.

What matters for investors is not whether DAC is cheap today. It is whether the cost curve is moving in a predictable direction, whether the policy support is durable enough to anchor project financing, and whether the first-mover developers are building the operational expertise that will differentiate them at scale. Our answer to all three questions is yes — with appropriate risk management on policy continuity.

The Permanence Argument Is Getting Stronger

One thing we hear from sophisticated carbon buyers is that they are increasingly skeptical of offsets that depend on ongoing land management — forests that can burn, soils that can be tilled, ecosystems that can be disrupted by climate change itself. DAC-based removal, stored in geological formations or mineralized in concrete, offers permanence measured in millennia rather than decades. That is a different kind of credit, and buyers who understand the distinction are willing to pay for it.

We expect the voluntary carbon market to bifurcate more visibly over the next three years: a high-price market for permanent, verified removal credits, and a lower-price market for avoidance and nature-based credits with shorter duration guarantees. DAC sits firmly in the first category. As corporate net-zero commitments face more rigorous scrutiny, the demand for permanent removal is going up regardless of what happens to the overall voluntary market.

The numbers are moving. The policy framework is in place. The buyers are real. What DAC still needs is more projects — and the operational learning that comes from building them.