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Especially with carbon capture tax incentives on the verge of disappearing, perhaps At One Ventures founder Tom Chi is onto something.
Technology to suck carbon dioxide out of the air — a.k.a. direct air capture — has always had boosters who say it’s necessary to reach net zero, and detractors who view it as an expensive fig leaf for the fossil fuel industry. But when the typical venture capitalist looks at the tech, all they see is dollar signs. Because while the carbon removal market is still in its early stages, if you look decades down the line, a technology that can permanently remove residual emissions in a highly measurable fashion has got to be worth a whole lot, right? Right?
Not so, says Tom Chi, founder of At One Ventures and co-founder of Google’s technological “moonshot factory,” X. Bucking the dominant attitude, he’s long vowed to stay away from DAC altogether. “If you’re trying to collect carbon dioxide in the air, it’s like trying to suck all the carbon dioxide through a tiny soda straw,” Chi told me. Given that the concentration of CO2 in the atmosphere sits at about 0.04%, “2,499 molecules out of 2,500 are not the one you’re trying to get,” Chi said. “These are deep, physical disadvantages to the approach.”
He’s obviously not the first to realize this. DAC companies and their scientists are well aware of the challenges they face. But investors are generally comfortable taking on risk across a host of different technologies and industries on the premise that at least a few of their portfolio companies will hit it big. As such, a nascent market and challenging physics are not inherent reasons to steer clear. DAC’s potential to secure cash-rich oil and gas industry buyers is pure upside.
Most prominent climate tech venture capital firms — including Lowercarbon Capital, Breakthrough Energy Ventures, Prelude Ventures, and Khosla Ventures — have at least one DAC company in their portfolios. At One Ventures itself has backed everything from producing oxygen on the moon (while also decarbonizing steel) to indoor solar cells and thorium-powered nuclear reactors, a hobbyhorse of techno-optimist nuclear bros and former presidential candidate Andrew Yang. So the fact that Chi won’t touch DAC is no small deal.
His hesitation stems from a matter of scale. To capture that 0.04% of atmospheric carbon, many DAC companies use giant fans to pull in large volumes of air from the atmosphere, which then pass through either a solid filter or a liquid solution that chemically captures the carbon dioxide. Although some companies are pursuing alternate approaches that rely on passive air contact rather than energy-intensive fans, either way, the amount of air that reaches any DAC machine’s so-called “collection aperture” is minuscule “relative to the scale of planet Earth,” Chi told me.
He views this as the core pitfall of the technology. “Half of the [operating expense] of the system is just trying to go after a technical disadvantage that you took on from day one,” Chi said. “By comparison, nature based restorations have enormous apertures,” Chi told me. “Think about the aperture of all the forests on the planet. Think about the aperture of all the soils on the planet, all the wetlands on the planet, the ocean.” His preferred methods of carbon removal are all nature-based. “In addition, their sequestration tends to be photosynthesis-powered, which means we’re not burning natural gas or using grid electricity in order to go make that thing work.”
Nature-based solutions often raise eyebrows in the carbon removal and reduction space, though, bringing to mind highly questionable carbon offsets such as those earned via “avoided deforestation.” The inherent counterfactual — would these trees really have been cut down if we didn’t buy these credits? — is difficult to measure with any certainty, and a 2023 investigation by The Guardian found that the majority of these types of credits are essentially bogus.
This same essential question around measurability plagues everything from afforestation and reforestation to soil carbon sequestration, biochar application, and wetland restoration. It’s extremely difficult to measure how much carbon is stored — and for how long — within complex, open ecosystems. On the other hand, engineered solutions such as direct air capture or bioenergy with carbon capture and storage are simple to quantify and promise permanent storage, making them attractive to large corporate buyers and easy to incentivize via mechanisms such as the federal carbon sequestration tax credit.
When I put all this to Chi, his response was simple. “It’s not an advantage to be able to measure something that can’t solve the problem,” he told me. For a moment, it seemed as if we had hit an intellectual dead end. For now, carbon removals and reductions are mainly driven by the voluntary carbon market, where prices are based on the exact tonnage of carbon removed. Reputable buyers don’t want to be burned again by investing in difficult to quantify offsets, and the current administration certainly doesn’t seem likely to step in with nature-based removal mandates or purchasing commitments anytime soon.
Chi’s answer to this conundrum is “financial enclosure,” essentially a fancy way of saying we need to monetize the value of nature-based systems. In many cases, he admitted, we don’t quite yet know how to do that, at least in a way that benefits the common good. “We figured out how to financially enclose a forest, clear cut it in order to go make board feed and paper and pulp,” he explained. But we don’t know how to financially enclose the benefit of preserving said forest, nor many other ecosystems such as wetlands that serve as highly effective carbon sinks.
At One Ventures has backed companies that work with a variety of buyers — from national governments to mining companies and farmers — that have a financial stake in (or are legally required to care about) ecosystem preservation and restoration. “Sometimes people break nature hard enough that it becomes that obvious. And then they have to go fix it,” Chi told me. “We’re going to invest in the companies that make it possible to go do that at incredibly low cost structures.”
One portfolio company, Dendra Systems, uses robots, drones, and other automated methods to do large scale ecosystem restoration, such as replanting mangroves in parts of the world such as Myanmar and Abu Dhabi where they’ve been cleared for property development or industrial use. The governments of both countries are paying Dendra to do this after realizing that removing mangroves had catastrophic consequences —- destroying subsistence fishing, wrecking erosion breaks — that would cost more to ameliorate than simply replanting the trees.
Then there’s Dalan Animal Health, which is developing vaccines for honeybees as hives become more vulnerable to disease. While not directly focused on carbon removal, the company has successfully “financially enclosed” pollination, as industrial farmers whose crops depend on pollinators will pay for the vaccine. This helps restore healthy ecosystems that can ultimately draw down more carbon. Chi told me that insurance companies have also shown a willingness to pay for nature-based solutions that can help lessen the impact of disasters such as floods or hurricanes.
While the carbon benefits of these companies are simply a bonus, the firm has invested in one pure play removal company, Gigablue. This startup releases engineered particles into the ocean that attract carbon-absorbing phytoplankton. As the particles accumulate more plankton, they sink to the ocean floor, where the carbon is then stored. Using onsite sampling and other advanced techniques, Chi told me that this tech is “very measurable” while also having an “aperture [that] is as wide as the ocean area that we’ve sprinkled things onto.”
Though Chi dislikes the illogical nature of the voluntary carbon market — he would much prefer a “polluter pays” system where money is directed towards nature-based sequestration — he knows that with the markets we have, precise measurability is paramount. So At One Ventures is throwing money at this, too. Portfolio company Chloris Geospatial combines satellite data and machine learning to measure biomass from space and track changes over time, helping legitimize forest-based removals. And Miraterra is focused on novel sensing tech and advanced modeling that allows farmers to calculate the amount of carbon in their soil.
But even if the carbon stored in natural ecosystems never becomes quite as measurable as engineered carbon removals, Chi thinks investors, companies, or governments should still be going all in. “When your volume is so much larger, then you can even throw big error bars around your measurability and still be miles ahead,” he told me.
Many investors say they want it all. You’ll see them funding nature-based and engineered carbon removal companies alike in an effort to take a “portfolio approach” to carbon removal. Chi, unsurprisingly, thinks that’s hogwash. “It’s weasel words to be like, it’s an important part of this portfolio,” he told me. The United Nations Intergovernmental Panel on Climate Change also advocates for a diversified approach, without saying DAC itself is strictly necessary. DAC is “not going to do 1%, and it’s going to be massively more expensive than your other 99%,” Chi said. “At some point you’re going to be like, why is this in the portfolio?”
It’s certainly a more blunt assessment of the industry’s viability (or lack thereof) than I’ve heard any investor hazard before. But there may be more folks starting to come around to Chi’s perspective. With government support for DAC in question and the utility of carbon capture tax credits — which only benefit engineered removals — deeply threatened, venture funding for DAC is down over 60% from this time last year, Bloomberg reported.
Rajesh Swaminathan, a climate tech investor at Khosla Ventures told the publication that while many investors have taken bets on direct air capture, “Now, people are stepping back and saying, ‘Why didn’t I look at the economics there?’” Khosla itself is an investor in the DAC company Spiritus.
So what’s a longterm skeptic like Chi to do in this moment of doubt? As he told me, “I’m just going to keep on giving talks on it, and I know that physics is on my side.”
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Read our guide to making better, more informed choices in the fight against climate change here.
Here at Heatmap, we write a lot about decarbonization — that is, the process of transitioning the global economy away from fossil fuels and toward long-term sustainable technologies for generating energy. What we don’t usually write about is what those technologies actually do. Sure, solar panels convert energy from the sun into electricity — but how, exactly? Why do wind turbines have to be that tall? What’s the difference between carbon capture, carbon offsets, and carbon removal, and why does it matter?
So today, we’re bringing you Climate 101, a primer on some of the key technologies of the energy transition. In this series, we’ll cover everything from what makes silicon a perfect material for solar panels (and computer chips), to what’s going on inside a lithium-ion battery, to the difference between advanced and enhanced geothermal.
There’s something here for everyone, whether you’re already an industry expert or merely climate curious. For instance, did you know that contemporary 17th century readers might have understood Don Quixote’s famous “tilting at windmills” to be an expression of NIMYBism? I sure didn’t! But I do now that I’ve read Jeva Lange’s 101 guide to wind energy.
That said, I’d like to extend an especial welcome to those who’ve come here feeling lost in the climate conversation and looking for a way to make sense of it. All of us at Heatmap have been there at some point or another, and we know how confusing — even scary — it can be. The constant drumbeat of news about heatwaves and floods and net-zero this and parts per million that is a lot to take in. We hope this information will help you start to see the bigger picture — because the sooner you do, the sooner you can join the transition, yourself.
Without further ado, here’s your Climate 101 syllabus:
Once you feel ready to go deeper, here are some more Heatmap stories to check out:
The basics on the world’s fastest-growing source of renewable energy.
Solar power is already the backbone of the energy transition. But while the basic technology has been around for decades, in more recent years, installations have proceeded at a record pace. In the United States, solar capacity has grown at an average annual rate of 28% over the past decade. Over a longer timeline, the growth is even more extraordinary — from an stalled capacity base of under 1 gigawatt with virtually no utility-scale solar in 2010, to over 60 gigawatts of utility-scale solar in 2020, and almost 175 gigawatts today. Solar is the fastest-growing source of renewable energy in both the U.S. and the world.
There are some drawbacks to solar, of course. The sun, famously, does not always shine, nor does it illuminate all places on Earth to an equal extent. Placing solar where it’s sunniest can sometimes mean more expense and complexity to connect to the grid. But combined with batteries — especially as energy storage systems develop beyond the four hours of storage offered by existing lithium-ion technology — solar power could be the core of a decarbonized grid.
Solar power can be thought of as a kind of cousin of the semiconductors that power all digital technology. As Princeton energy systems professor and Heatmap contributor Jesse Jenkins has explained, certain materials allow for electrons to flow more easily between molecules, carrying an electrical charge. On one end of the spectrum are your classic conductors, like copper, which are used in transmission lines; on the other end are insulators, like rubber, which limit electrical charges.
In between on that spectrum are semiconductors, which require some amount of energy to be used as a conductor. In the computing context these are used to make transistors, and in the energy context they’re used to make — you guessed it — solar panels.
In a solar panel, the semiconductor material absorbs heat and light from the sun, allowing electrons to flow. The best materials for solar panels, explained Jenkins, have just the right properties so that when they absorb light, all of that energy is used to get the electrons flowing and not turned into wasteful heat. Silicon fits the bill.
When you layer silicon with other materials, you can force the electrons to flow in a single direction consistently; add on a conductive material to siphon off those subatomic particles, and voilà, you’ve got direct current. Combine a bunch of these layers, and you’ve got a photovoltaic panel.
Globally, solar generation capacity stood at over 2,100 terawatt-hours in 2024, according to Our World in Data and the Energy Institute, growing by more than a quarter from the previous year. A huge portion of that growth has been in China, which has almost half of the world’s total installed solar capacity. Installations there have grown at around 40% per year in the past decade.
Solar is still a relatively small share of total electricity generation, however, let alone all energy usage, which includes sectors like transportation and industry. Solar is the sixth largest producer of electricity in the world, behind coal, gas, hydropower, nuclear power, and wind. It’s the fourth largest non-carbon-emitting generation source and the third largest renewable power source, after wind and hydropower.
Solar has taken off in the United States, too, where utility-scale installations make up almost 4% of all electricity generated.
While that doesn’t seem like much, overall growth in generation has been tremendous. In 2024, solar hit just over 300 terawatt-hours of generation in the U.S., compared to about 240 terawatt-hours in 2023 and just under 30 in 2014.
Looking forward, there’s even more solar installation planned. Developers plan to add some 63 gigawatts of capacity to the grid this year, following an additional 30 gigawatts in 2024, making up just over half of the total planned capacity additions, according to Energy information Administration.
Solar is cheap compared to other energy sources, and especially other renewable sources. The world has a lot of practice dealing with silicon at industrial scale, and China especially has rapidly advanced manufacturing processes for photovoltaic cells. Once the solar panel is manufactured, it’s relatively simple to install compared to a wind turbine. And compared to a gas- or coal-fired power plant, the fuel is free.
From 1975 to 2022, solar module costs fell from over $100 per watt to below $0.50, according to Our World In Data. From 2012 to 2022 alone, costs fell by about 90%, and have fallen by “around 20% every time the global cumulative capacity doubles,” writes OWID analyst Hannah Ritchie. Much of the decline in cost has been attributed to “Wright’s Law,” which says that unit costs fall as production increases.
While construction costs have flat-lined or slightly increased recently due to supply chain issues and overall inflation, the overall trend is one of cost declines, with solar construction costs declining from around $3,700 per kilowatt-hour in 2013, to around $1,600 in 2023.
There are solar panels at extreme latitudes — Alaska, for instance, has seen solar growth in the past few years. But there are obvious challenges with the low amount of sunlight for large stretches of the year. At higher latitudes, irradiance, a measure of how much power is transmitted from the sun to a specific area, is lower (although that also varies based on climate and elevation). Then there are also more day-to-day issues, such as the effect of snow and ice on panels, which can cause issues in turning sunlight into power (they literally block the panel from the sun). High latitudes can see wild swings in solar generation: In Tromso, in northern Norway, solar generation in summer months can be three times as high as the annual average, with a stretch of literally zero production in December and January.
While many Nordic countries have been leaders in decarbonizing their electricity grids, they tend not to rely on solar in that project. In Sweden, nuclear and hydropower are its largest non-carbon-emitting fuel sources for electricity; in Norway, electricity comes almost exclusively from hydropower.
There has been some kind of policy support for solar power since 1978, when the Energy Tax Act provided tax credits for solar power investment. Since then, the investment tax credit has been the workhorse of American solar policy. The tax credit as it was first established was worth 10% of the system’s upfront cost “for business energy property and equipment using energy resources other than oil or natural gas,” according to the Congressional Research Service.
But above that baseline consistency has been a fair amount of higher-level turmoil, especially recently. The Energy Policy Act of 2005 kicked up the value of that credit to 30% through 2007; Congress kept extending that timeline, with the ITC eventually scheduled to come down to 10% for utility-scale and zero for residential projects by 2024.
Then came the 2022 Inflation Reduction Act, which re-instituted the 30% investment tax credit, with bonuses for domestic manufacturing and installing solar in designated “energy communities,” which were supposed to be areas traditionally economically dependent on fossil fuels. The tax then transitioned into a “technology neutral” investment tax credit that applied across non-carbon-emitting energy sources, including solar, beginning in 2024.
This year, Congress overhauled the tax incentives for solar (and wind) yet again. Under the One Big Beautiful Bill Act, signed in July, solar projects have to start construction by July 2026, or complete construction by the end of 2027 to qualify for the tax credit. The Internal Revenue Service later tightened up its definition of what it means for a project to start construction, emphasizing continuing actual physical construction activities as opposed to upfront expenditures, which could imperil future solar development.
At the same time, the Trump administration is applying a vise to renewables projects on public lands and for which the federal government plays a role in permitting. Renewable industry trade groups have said that the highest levels of the Department of Interior are obstructing permitting for solar projects on public lands, which are now subject to a much closer level of review than non-renewable energy projects.
Massachusetts Institute of Technology Researchers attributed the falling cost of solar this century to “scale economies.” Much of this scale has been achieved in China, which dominates the market for solar panel production, especially for export, even though much of the technology was developed in the United States.
At this point, however, the cost of an actual solar system is increasingly made up of “soft costs” like labor and permitting, at least in the United States. According to data from the National Renewables Energy Laboratory, a utility-scale system costs $1.20 per watt, of which soft costs make up a third, $0.40. Ten years ago, a utility-scale system cost $2.90 per watt, of which soft costs was $1.20, or less than half.
Beyond working to make existing technology even cheaper, there are other materials-based advances that promise higher efficiency for solar panels.
The most prominent is “perovskite,” the name for a group of compounds with similar structures that absorb certain frequencies of light particularly well and, when stacked with silicon, can enable more output for a given amount of solar radiation. Perovskite cells have seen measured efficiencies upwards of 34% when combined with silicon, whereas typical solar cells top out around 20%.
The issue with perovskite is that it’s not particularly durable, partially due to weaker chemical bonds within the layers of the cell. It’s also more expensive than existing solar, although much of that comes down inefficient manufacturing processes. If those problems can be solved, perovskite could promise more output for the same level of soft costs as silicon-based solar panels.