Direct Air Capture Cost Compared to Cost of Inaction on Climate Change

By: Ray Naughton, Founder & MD of NEG8 Carbon

By extracting carbon dioxide directly from the atmosphere, Direct Air Capture (DAC) stands to play an important role in addressing global warming.

The question we must face is, does the price of inaction against climate change far outweigh the cost of carbon removal?

As of now, using DAC technologies to capture and mineralise one tonne of CO₂ ranges from $300 to $500, and this is continually coming down as the technology develops.

The Social, Economic and Environmental Costs of Not Removing Excess Carbon from the Atmosphere

While industries and governments need to consider the cost of DAC, the societal and environmental impact of not addressing CO₂ emissions is far greater.

Maximilian Kotze of the Potsdam Institute led a study that found climate damage costs by 2050 will be six times larger than the cost of reducing carbon emissions in accordance with with the 2015 Paris Agreement targets over the same period. (Nature, April 2024)

In 2018, William Nordhaus, Nobel Prize winner for his work on the economics of climate change, put the social cost of carbon by 2050 at an estimated $105-$249 per tonne of CO₂ emitted. Meanwhile, Kotze’s team put it at a much higher $1000 per tonne.

The ‘social cost of carbon’ is a concept that represents the economic cost caused by an additional tonne of carbon equivalent emissions. In an optimised climate policy, the social cost of carbon will equal the carbon price or the carbon tax. (Nobel Prize Lecture: William Nordhaus)

Kotze and his team also estimated that climate-related damages could reduce global GDP by 10–20% by 2050 if significant action is not taken.

Climate change already incurs billions in damages annually due to extreme weather events. Hurricanes, floods, wildfires, and heatwaves are becoming more frequent and intense, resulting in unprecedented destruction.

According to research done by Christian Aid, in 2024, the world’s 10 most costly climate disasters caused $229 billion worth of damage and killed 2000 people. This study was done by analysing insurance payouts, so the real costs are notably higher and spread far beyond these 10 events.

Social Costs

1. Health Impacts
   • Poor air quality, heat stress, and the spread of diseases cost health systems billions while reducing productivity.
2. Displacement and Migration
   • Rising sea levels will inundate low-lying areas, forcing millions to migrate.
   • Droughts and desertification will lead to “climate refugees”, creating social tension in host regions.
3. Social Inequality
   • Marginalised communities, particularly in developing nations, will bear the brunt of climate impacts due to limited resources for adaptation.

Economic Costs

1. Damage to Infrastructure
   • Extreme weather events will damage roads, buildings, and public utilities. The World Bank estimates trillions of dollars in damage if warming exceeds 1.5°C.
2. Loss of Productivity and Food Security
   • Rising temperatures will reduce agricultural yields, particularly in regions already prone to droughts, affecting food security and raising costs.
   • Labour productivity will drop due to unsafe working conditions in heat-stressed areas, particularly in outdoor industries.
3. Insurance and Financial Instability
   • Insurance premiums will skyrocket, or coverage may become unavailable in high-risk areas.
   • Economic losses will strain public budgets, requiring governments to divert funds from development to disaster relief.
4. Market Volatility
   • Disruptions in global supply chains caused by extreme weather will destabilise markets and increase costs for businesses and consumers.

Environmental Costs

Climate change endangers biodiversity, depletes natural resources, and damages ecosystems that provide essential services.

1. Biodiversity Loss
   • Exceeding 1.5°C will push many ecosystems beyond their tolerance limits. Coral reefs, for instance, are expected to decline by 70–90% even at 1.5°C, with near-total collapse at 2°C.
   • Species extinction will increase due to habitat destruction and altered climatic conditions. In 2024, the World Wildlife Fund reported a 73% decline in the average size of monitored wildlife populations in the last 50 years.
2. Ecosystem Collapse
   • Wetlands, forests, and polar ecosystems are at risk. The Amazon rainforest, often referred to as a carbon sink, could become a net carbon source. Alarmingly, this may already be happening: ‘Trees and land absorbed almost no CO2 last year. Is nature’s carbon sink failing?’ (The Guardian, 14 Oct 2024)
3. Irreversible Climate Damage
   • Melting permafrost could release large quantities of methane, a potent greenhouse gas, accelerating warming.
   • Loss of Arctic ice will reduce the planet’s albedo (reflectivity), further increasing global temperatures.
4. Oceanic Changes
   • Rising temperatures and CO₂ levels will lead to ocean acidification, damaging marine life and fisheries.
   • Sea-level rise will disrupt coastal and marine ecosystems, threatening livelihoods that depend on these environments.

Broader Impacts

1. Conflict and Instability
   • Competition over scarce resources like water and arable land could lead to conflicts within and between nations.
2. Generational Consequences:
   • Future generations will inherit a world with fewer natural resources, damaged ecosystems, and more severe economic and social challenges.

How to Reduce DAC Costs

There are several pathways to make Direct Air Capture viable and more affordable:

• Advancements in technology
• Scaling up production
• Integration with renewable energy
• Government support and incentives
• Carbon utilization
• Long-term contracts

Why Acting on Carbon Removal Now Matters

Every year of inaction increases the amount of CO₂ to be removed, raising the expense and complexity of mitigation efforts and delaying action magnifies these costs.

Considering the social carbon cost (SCC), any DAC technology coming in under or near the SCC makes sense at all levels.

Yes, carbon removal comes at a price, but it is a price we must be willing to pay. The choice is clear: prioritise innovation and investment now to avert far greater costs down the line

For more:

• How Does Direct Air Capture Work?
• The Advantages of Direct Air Capture
• With Direct Air Capture, We Can Avoid €20bn in Emissions Fines
• NEG8 Carbon Nominated for Prestigious Earthshot Prize 2025

 

Interested in NEG8 Carbon’s CO₂ capture technology?

Contact the NEG8 Carbon Team