The Business Case for Direct Air Capture
Critics would argue that it is difficult to make a business case for Direct Air Capture (DAC).
DAC is still in its early stages. It’s a technology that works well even at this early stage of development, and very much like solar and wind power in their infancy, it would be unreasonable to expect DAC to reach maturity without allowing time for investment in continuous innovation.
With the right mix of policy support, tech development and commercial interest, the case for DAC is compelling, especially considering the scale of the climate crisis and the limits to what emissions reduction alone can achieve.
DAC Costs are Falling
As DAC technology is advancing, costs are tumbling to around €300 to €600 per tonne CO₂ captured, down from over €1,000 per tonne in early iterations. That’s no small drop.
More promising still, some emerging systems are showing potential to come in under €150 per tonne.
These cost reductions stem largely from improvements in sorbent technology and better heat and energy integration. With each new pilot or demonstration plant, engineers gain insights that lead to cost efficiencies and technical refinement.
It’s worth remembering that this pattern of progress mirrors what we’ve seen before in clean technology. The cost of solar panels, for example, has dropped more than 90% in the past two decades. That wasn’t due to any single breakthrough, but rather an accumulation of incremental gains: more efficient manufacturing, economies of scale, and consistent policy backing.
Driving Down the Cost of DAC Technology
Advantages of DAC for Carbon Removal
DAC systems can be located anywhere and use off-grid, renewable energy sources. This location flexibility also makes it a candidate to deal with hard-to-abate emitters like the aviation industry. (For more, see: Advantages of Direct Air Capture)
What Measures will Drive Down the Cost of DAC?
Cost Reductions Through Scale
As more units are deployed, costs come down. Estimates from the IEA suggest that with proper scaling, DAC costs can fall to $100–$300 per tonne within the next decade.
Modular Design
DAC can be deployed rapidly. Unlike many large infrastructure projects, DAC plants can scale from small to very large depending on location and usage. This allows for rapid iteration and mass production, further pushing down costs.
Long-Term Offtake Agreements
Corporations like Microsoft, Stripe and Google are signing multi-year deals to purchase CO₂ removals and permanent storage from DAC developers. These contracts create predictable revenue streams, helping secure finance and encouraging further development.
Access to Cheap Renewable Energy
Whether it’s geothermal in Iceland or solar in desert regions, low-cost clean power is essential. Co-locating DAC plants with abundant energy sources is one way to keep operating costs manageable.
CO₂ Infrastructure Buildout
Captured carbon has to go somewhere. It can be sequestered in deep saline aquifers or depleted oil/gas wells, used in materials like concrete, or piped to central storage locations using a network of pipelines. The sooner this infrastructure is built, the faster DAC can scale.
Additionality and Co-Benefits in the Business Case for DAC
What really strengthens the business case for DAC, however, is its potential for additional value streams.
Instead of just storing carbon, DAC can enable the creation of new products and services, some of which already have viable markets.
Take these examples:
CarbiCrete – Produces cement-free concrete using industrial by-products and captured CO₂.
Climeworks – At their Hinwil site, Climeworks sells captured CO₂ for use in greenhouses and sparkling beverages. Though relatively small-scale, it proved the model can work.
Heirloom – United Airlines has invested in Heirloom and secured the right to purchase 500,000 tonnes of CO₂ either for sequestration or to use in producing cleaner aviation fuel.
Skytree – This company is launching a partnership with Koppercress to use DAC captured CO₂ in greenhouses.
These cases illustrate how DAC can serve as a feedstock supplier, not just a sink. In the near term, before large-scale sequestration networks are fully operational, this kind of CO₂ utilization could make the difference between a viable DAC plant and one that never gets built.
The Outlook for Direct Air Capture Over the Next 5-10 Years
Looking ahead, the next decade will be important for DAC. First-generation firms may struggle with scale as early technical limitations hinder progress. However, second- and third-generation companies, those with more efficient systems, better cost structures, and stronger investor backing, will likely come to the fore.
We can expect to see:
More Demonstration Plants
Facilities capturing from 1,000 tonnes per year and more will begin operation, proving feasibility and drawing further investment.
Mergers and Acquisitions
Larger firms may acquire DAC innovators to secure IP or manufacturing capabilities.
Standardisation and Certification
Improved monitoring and verification frameworks will help build trust in DAC credits, allowing them to be traded more widely.
Geographic Hubs
DAC facilities will cluster near renewable energy and geological storage sites.
Blended Finance Models
Public-private initiatives will become more common, helping de-risk early projects.
Market Differentiation
As carbon markets mature, removals using DAC will command higher prices than nature-based offsets, due to their durability and measurability.
The IEA believes that by 2030, DAC needs to be removing 85 million tonnes of CO₂ per year and 980 million tonnes per year by 2050. That’s still only a portion of what’s needed overall in total carbon removal which is over 10 billion tonnes per year.
Carbon Credit/Offset Markets Growth
The carbon markets are said to be heading for a steep growth period with the combined value of carbon credits and voluntary offsets reaching into the trillions of dollars by 2050 (report by Wood Mackenzie, 23 June 2025). This is due to tighter regulations, stricter rules on offset quality, and carbon capture tech development.
The Role of Policy and Regulation
Market forces alone won’t drive DAC deployment at the scale required. Companies are unlikely to purchase large volumes of carbon credits unless required to do so, or unless those credits hold strong economic or reputational value. This is where regulation plays an important role.
Fortunately, we’re starting to see movement. For example, the European Union’s Emissions Trading System (ETS) is evolving to include high-durability carbon removals. And Japan’s GX (Green Transformation) Emissions Trading System (GX-ETS) is a core policy in the country’s plan to achieve carbon neutrality by 2050. Initially launched in April 2023 as a voluntary, baseline-and-credit system, it will transition to a mandatory system from 2026.
While in the United States, the Inflation Reduction Act provides a generous $180 per tonne tax credit for DAC under the 45Q programme. Such incentives change the maths for investors, reducing risk and making early-stage projects more bankable, although there is a political tug-of-war around these incentives at the moment.
Governments have a broader role to play, too. The upfront capital expenditure required for DAC is significant. Without state support or public-private finance mechanisms, many promising DAC ventures will struggle to scale. But the cost of inaction measured in extreme weather, crop loss, health impacts and infrastructure damage is likely to be far higher. Investing in DAC now could save billions down the line. (See: Direct Air Capture Cost Compared to Cost of Inaction on Climate Change)
Final Thoughts: Why DAC Matters
The truth is, even if we stopped all fossil fuel emissions today, we’d still have the problem of the excess CO₂ already in the atmosphere which is an estimated 1 trillion tonnes. To try to bring the CO₂ level back to the ~350 ppm of 1990 we would need to remove 500 billion tonnes at least.
Reducing emissions alone can’t fix that. We need removal strategies, and DAC is one of the only approaches that offers scale, permanence, and verifiability.
Looking 25 years into the future, one can imagine a world where DAC is no longer seen as a novel technology, but as a normal part of how we maintain climate stability. To get there, though, we must act now. The window to scale DAC in time is narrow, but the opportunity is enormous.
In the end, with the right blend of policy, innovation and support, DAC can emerge from a niche experiment into one of our most powerful tools for repairing the climate.
For more:
- What is the Value of a Carbon Credit?
- Cost of Carbon Capture – How NEG8 Carbon is Making DAC Economically Viable