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That makes two direct air capture acquisitions for the oil and gas major.
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.”
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A war of attrition is now turning in opponents’ favor.
A solar developer’s defeat in Massachusetts last week reveals just how much stronger project opponents are on the battlefield after the de facto repeal of the Inflation Reduction Act.
Last week, solar developer PureSky pulled five projects under development around the western Massachusetts town of Shutesbury. PureSky’s facilities had been in the works for years and would together represent what the developer has claimed would be one of the state’s largest solar projects thus far. In a statement, the company laid blame on “broader policy and regulatory headwinds,” including the state’s existing renewables incentives not keeping pace with rising costs and “federal policy updates,” which PureSky said were “making it harder to finance projects like those proposed near Shutesbury.”
But tucked in its press release was an admission from the company’s vice president of development Derek Moretz: this was also about the town, which had enacted a bylaw significantly restricting solar development that the company was until recently fighting vigorously in court.
“There are very few areas in the Commonwealth that are feasible to reach its clean energy goals,” Moretz stated. “We respect the Town’s conservation go als, but it is clear that systemic reforms are needed for Massachusetts to source its own energy.”
This stems from a story that probably sounds familiar: after proposing the projects, PureSky began reckoning with a burgeoning opposition campaign centered around nature conservation. Led by a fresh opposition group, Smart Solar Shutesbury, activists successfully pushed the town to drastically curtail development in 2023, pointing to the amount of forest acreage that would potentially be cleared in order to construct the projects. The town had previously not permitted facilities larger than 15 acres, but the fresh change went further, essentially banning battery storage and solar projects in most areas.
When this first happened, the state Attorney General’s office actually had PureSky’s back, challenging the legality of the bylaw that would block construction. And PureSky filed a lawsuit that was, until recently, ongoing with no signs of stopping. But last week, shortly after the Treasury Department unveiled its rules for implementing Trump’s new tax and spending law, which basically repealed the Inflation Reduction Act, PureSky settled with the town and dropped the lawsuit – and the projects went away along with the court fight.
What does this tell us? Well, things out in the country must be getting quite bleak for solar developers in areas with strident and locked-in opposition that could be costly to fight. Where before project developers might have been able to stomach the struggle, money talks – and the dollars are starting to tell executives to lay down their arms.
The picture gets worse on the macro level: On Monday, the Solar Energy Industries Association released a report declaring that federal policy changes brought about by phasing out federal tax incentives would put the U.S. at risk of losing upwards of 55 gigawatts of solar project development by 2030, representing a loss of more than 20 percent of the project pipeline.
But the trade group said most of that total – 44 gigawatts – was linked specifically to the Trump administration’s decision to halt federal permitting for renewable energy facilities, a decision that may impact generation out west but has little-to-know bearing on most large solar projects because those are almost always on private land.
Heatmap Pro can tell us how much is at stake here. To give you a sense of perspective, across the U.S., over 81 gigawatts worth of renewable energy projects are being contested right now, with non-Western states – the Northeast, South and Midwest – making up almost 60% of that potential capacity.
If historical trends hold, you’d expect a staggering 49% of those projects to be canceled. That would be on top of the totals SEIA suggests could be at risk from new Trump permitting policies.
I suspect the rate of cancellations in the face of project opposition will increase. And if this policy landscape is helping activists kill projects in blue states in desperate need of power, like Massachusetts, then the future may be more difficult to swallow than we can imagine at the moment.
And more on the week’s most important conflicts around renewables.
1. Wells County, Indiana – One of the nation’s most at-risk solar projects may now be prompting a full on moratorium.
2. Clark County, Ohio – Another Ohio county has significantly restricted renewable energy development, this time with big political implications.
3. Daviess County, Kentucky – NextEra’s having some problems getting past this county’s setbacks.
4. Columbia County, Georgia – Sometimes the wealthy will just say no to a solar farm.
5. Ottawa County, Michigan – A proposed battery storage facility in the Mitten State looks like it is about to test the state’s new permitting primacy law.
A conversation with Jeff Seidman, a professor at Vassar College.
This week’s conversation is with Jeff Seidman, a professor at Vassar College and an avid Heatmap News reader. Last week Seidman claimed a personal victory: he successfully led an effort to overturn a moratorium on battery storage development in the town of Poughkeepsie in Hudson Valley, New York. After reading a thread about the effort he posted to BlueSky, I reached out to chat about what my readers might learn from his endeavors – and how they could replicate them, should they want to.
The following conversation was lightly edited for clarity.
So how did you decide to fight against a battery storage ban? What was your process here?
First of all, I’m not a professional in this area, but I’ve been learning about climate stuff for a long time. I date my education back to when Vox started and I read my first David Roberts column there. But I just happened to hear from someone I know that in the town of Poughkeepsie where I live that a developer made a proposal and local residents who live nearby were up in arms about it. And I heard the town was about to impose a moratorium – this was back in March 2024.
I actually personally know some of the town board members, and we have a Democratic majority who absolutely care about climate change but didn’t particularly know that battery power was important to the energy transition and decarbonizing the grid. So I organized five or six people to go to the town board meeting, wrote a letter, and in that initial board meeting we characterized the reason we were there as being about climate.
There were a lot more people on the other side. They were very angry. So we said do a short moratorium because every day we’re delaying this, peaker plants nearby are spewing SOx and NOx into the air. The status quo has a cost.
But then the other side, they were clearly triggered by the climate stuff and said renewables make the grid more expensive. We’d clearly pressed a button in the culture wars. And then we realized the mistake, because we lost that one.
When you were approaching getting this overturned, what considerations did you make?
After that initial meeting and seeing how those mentions of climate or even renewables had triggered a portion of the board, and the audience, I really course-corrected. I realized we had to make this all about local benefits. So that’s what I tried to do going forward.
Even for people who were climate concerned, it was really clear that what they perceived as a present risk in their neighborhood was way more salient than an abstract thing like contributing to the fight against climate change globally. So even for people potentially on your side, you have to make it about local benefits.
The other thing we did was we called a two-hour forum for the county supervisors and mayor’s association because we realized talking to them in a polarized environment was not a way to have a conversation. I spoke and so did Paul Rogers, a former New York Fire Department lieutenant who is now in fire safety consulting – he sounds like a firefighter and can speak with a credibility that I could never match in front of, for example, local fire chiefs. Winning them over was important. And we took more than an hour of questions.
Stage one was to convince them of why batteries were important. Stage two was to show that a large number of constituents were angry about the moratorium, but that Republicans were putting on a unified front against this – an issue to win votes. So there was a period where Democrats on the Poughkeepsie board were convinced but it was politically difficult for them.
But stage three became helping them do the right thing, even with the risk of there being a political cost.
What would you say to those in other parts of the country who want to do what you did?
If possible, get a zoning law in place before there is any developer with a specific proposal because all of the opposition to this project came from people directly next to the proposed project. Get in there before there’s a specific project site.
Even if you’re in a very blue city, don’t make it primarily about climate. Abstract climate loses to non-abstract perceived risk every time. Make it about local benefits.
To the extent you can, read and educate yourself about what good batteries provide to the grid. There’s a lot of local economic benefits there.
I am trying to put together some of the resources I used into a packet, a tool kit, so that people elsewhere can learn from it and draw from those resources.
Also, the more you know, the better. All those years of reading David Roberts and Heatmap gave me enough knowledge to actually answer questions here. It works especially when you have board members who may be sympathetic but need to be reassured.