The Trump administration may not be enthusiastic about supporting megaprojects to suck carbon dioxide out of the air, but that’s not dampening Occidental Petroleum’s interest in the technology. Heatmap has learned that the oil and gas giant recently acquired the direct air capture startup Holocene for an undisclosed amount.
This is the second direct air capture company the fossil fuel producer has acquired in less than two years through its subsidiary, Oxy Low Carbon Ventures. It’s a sign “that the sector has legs,” Jason Hochman, the executive director of the Direct Air Capture Coalition, told me. “Why would Occidental acquire Holocene if they didn’t see a future in the sector as a whole? If they didn’t think there was money to be made?”
Like every other climate tech industry, direct air capture startups have faced a great deal of uncertainty since Trump took office. While the technology has historically had bipartisan support, the Trump administration has been excising programs and projects with seemingly any connection to climate change. It has hollowed out the Department of Energy’s carbon dioxide removal team, my colleague Katie Brigham reported in February, leaving just one employee overseeing the $3.5 billion Direct Air Capture Hubs program that was authorized by the Infrastructure Investment and Jobs Act. Additional cuts at the Office of Clean Energy Demonstrations, which also has a role in overseeing the program, or even a potential closure of that office, are expected in the coming weeks. The Direct Air Capture Hubs were also on a list of grants the administration was considering trying to cut.
Non-governmental funding for DAC is also precarious, as interest from new buyers in purchasing carbon removal has waned. A few companies have continued to announce new projects and deals, but Hochman told me he expects to see a fair amount of consolidation of the industry in the near term.
Occidental previously acquired Carbon Engineering, a pioneer in direct air capture technology, for $1.1 billion in August 2023, after working closely with the Canadian company to build its first major project in the United States. That project, a plant called Stratos in Ector County, Texas, is now nearing completion and expected to begin operating later this year. It’s designed to siphon 500,000 tons of carbon dioxide from the air per year.
Holocene “has an innovative direct air capture technology that is additive to Carbon Engineering,” William Fitzgerald, a spokesperson for Occidental told me in an email. “We believe combining these technologies will enable us to advance our R&D activities to improve the efficiency of our direct air capture process, reduce CO2 capture costs, and accelerate DAC deployment.”
Oxy’s acquisition of Carbon Engineering was controversial among climate advocates. While many see direct air capture as a promising way to clean up the excess carbon that will remain in the atmosphere even after emissions decline, skeptics worry that oil companies will use it as justification to keep producing oil — a fear that Oxy has not exactly allayed.
The company plans to take some of the carbon it captures and sequester it in dedicated carbon storage wells. It signed a deal to sequester 500,000 tons of carbon on behalf of Microsoft last year. But it will also pump carbon into aging oil wells to increase oil production, a process called enhanced oil recovery. In the past, Oxy’s CEO Vicki Hollub has framed its investments in direct air capture tech as a way to produce “net-zero oil,” and as a “license to continue to operate” as an oil producer.
More recently, Hollub has shifted her pitch to appeal to the Trump administration’s push for energy dominance. On an earnings call in February, she told investors that the industry could tap an additional 50 billion to 70 billion barrels of oil with the help of carbon captured from the atmosphere.
But direct air capture — both the technology itself, and the market for it — is still in its infancy. There are only so many deep-pocketed buyers like Microsoft willing to pay for sequestration. Unless Occidental sees more demand for carbon removal, its best business case for developing the technology is to recover oil.
“I understand the skepticism in certain quarters,” Hochman told me. “But the fact is that companies like Occidental have the exact set of expertise, of infrastructure, of the people who understand subsurface geology, and the balance sheets to do large projects and to scale this technology.” They’ll be able to build projects at scale much more quickly than a startup that spun out of a university lab, he said.
That’s not quite what Holocene is, but it’s not far off. A trio of MBA students at Stanford — two of whom were veterans of the leading direct air capture company Climeworks — started Holocene in 2023. They wanted to pursue a new approach to sucking carbon from the air that they licensed from the Oak Ridge National Laboratory, a government lab. I wrote about the startup last fall when it announced a deal to remove 100,000 tons of carbon from the atmosphere for Google at a record low price of $100 per ton.
At the time, Holocene had raised about $6 million from grants, prizes, and smaller carbon removal contracts, and built a very small pilot plant in Knoxville, Tennessee, that could scrub just 10 tons of CO2 from the air per year. When I last spoke to them, they were looking for funding to build a larger demonstration plant. They declined to comment for this story.
Holocene’s technology is similar to that of Carbon Engineering. Both companies use fans to pull air into a closed system, where it passes through a liquid with a unique chemistry that attracts CO2. In the case of Carbon Engineering, the carbon in the air binds with potassium hydroxide in water; in Holocene’s system, it binds with amino acids. Then both companies react that carbon-rich water with another chemical that further concentrates the CO2 into solids that can be filtered out. The last step is heating those solids, releasing the CO2 so that it can be sequestered underground.
Holocene’s advantage — and the reason it thinks it can achieve $100 per ton carbon removal — is that it uses a unique chemistry that requires relatively low heat to separate the CO2. Whereas Carbon Engineering uses natural gas for that final step, Holocene told me it could use renewable electricity, or even waste heat from a data center.
Hochman was hopeful that the deal would be an encouraging signal to the market. “It’s real money changing hands because of the hypothesis on the part of a large company that there’s a future in DAC. I would see that as something that would reassure investors in this sector, if not catalyze more investment.”
Courtesy of PSE Healthy Energy
