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One of the biggest names in direct air capture is now selling other companies’ credits.
Climeworks made a name for itself as the first company to launch a commercial-scale facility that sucks carbon out of the air and buries it deep underground. The Swiss startup is widely recognized as a global leader in direct air capture technology.
But on Wednesday, Climeworks made a surprising move away from hard tech and into carbon trading with the launch of an offshoot called Climeworks Solutions. Under the new banner, it will purchase carbon removal credits from other providers, package them into portfolios that include its own direct air capture credits, and sell the bundles to buyers looking for “high quality” carbon removal.
The credits will have “the stamp of Climeworks quality,” Adrian Siegrist, the company’s vice president of climate solutions, told reporters this week. “It is a very, very selective vetting process.”
Corporate demand for carbon removal is growing. In the past, companies primarily bought a different kind of carbon credit to support their sustainability strategies. These credits came from projects that prevented emissions by protecting forests or distributing cleaner cookstoves, and they were cheap. But they came under fire after countless investigations into the projects turned up flimsy methodologies and inflated claims.
Meanwhile, there’s been a growing consensus in the world of corporate sustainability that even if these credits were based on real emission reductions, they shouldn’t be part of a net-zero strategy. For example, the Science Based Targets Initiative, the leading arbiter of corporate net-zero plans, only allows companies to apply carbon removal credits — and not conventional carbon avoidance credits — toward their goals. The only way to zero-out the climate impact of putting carbon in the atmosphere, SBTI says, is to take out an equal amount.
These two factors, along with a view that supporting the nascent carbon removal industry is the “right thing to do,” have fueled a carbon removal credit market that grew from at least 105,000 tons sold to 50 buyers in 2021 to more than 4 million tons sold to nearly 200 buyers last year.
Siegrist said Climeworks Solutions is responding to a gap in the market. Companies face barriers to purchasing carbon removal, he said. They don’t want to put their reputations at risk and buy dubious credits, but they lack the time and expertise to do careful sourcing. They also want to sign simple one-and-done contracts, but they don’t want to purchase credits from a single supplier — especially not just from Climeworks, which sells top-shelf credits for upwards of $600 per ton.
“Companies asked us, in your opinion, can you tell us what is the best in X and the best in Y?” he said. “That made us realize there's a real need for clarity and for guidance.”
But Climeworks is entering a crowded field. There are already more than half a dozen companies — Patch, Supercritical, Ceezer, Carbon Direct, Watershed, Cur8, Lune — promising to source only the highest quality carbon removal credits for buyers. Each one has a slightly different model, with some acting more as an open marketplace, others more as a brokerage.
Climeworks is relying on its name as a trusted brand to set itself apart. But part of the reason it is a trusted brand is that it has focused on direct air capture — the form of carbon removal that is the most permanent and easy to measure and verify. Now the company will be venturing into the thornier science of other approaches like tree planting schemes and bioenergy with carbon capture. It also plans to source credits from biochar projects, which involve turning plants into a carbon-rich, durable, form of charcoal, and enhanced rock weathering, which speeds up the natural ability of rocks to absorb carbon from the environment.
“If you're saying that companies can come to you and use that trusted brand, what are the standards?” Erin Burns, the executive director of the carbon removal advocacy group Carbon 180, told me she wanted to know. “High quality doesn't mean anything. How transparent are they going to be about what those standards are?”
I asked Siegrist about how Climeworks defines high quality, especially when it comes to nature-based solutions like reforestation, and he said there were “various elements” that signaled quality, such as the use of remote sensing technologies that can more accurately track forest growth. He said they would publish their standards at some point in the future.
But he did share some general principles the company would use to tailor its portfolios for buyers: Fossil fuel emissions should be neutralized with carbon removed and stored for thousands of years, on par with how long carbon stays in the atmosphere. Meanwhile, a company’s emissions from land use could be offset using nature-based approaches that are still effective but inherently less enduring.
Climeworks Solutions’ first customer is Breitling, the Swiss luxury watchmaker, which signed a 12-year contract. It is purchasing a mix of direct air capture credits, to offset emissions from fossil fuel combustion in its factories, and enhanced rock weathering credits, to address emissions in its mineral supply chains. Breitling’s global director of sustainability Aurelia Figueroa said that focusing on high-cost direct air capture credits to compensate for direct emissions created an incentive to prioritize reducing emissions, summing up the strategy as “we do our best and remove the rest.”
Siegrist said Climeworks was already in talks with more than 50 other companies interested in working with them. But it’s unclear where all of this carbon removal is going to come from. The company’s direct air capture credits are already sold out through 2027.
“There's not a lot of high quality CDR happening, and in general, people are buying carbon removal years out,” said Burns. “Depending on how many tons they're being asked to put together for other companies to purchase, they're gonna run up against limits pretty quickly if they've got really high standards.”
Siegrist declined to name any companies or projects that Climeworks was sourcing carbon credits from. But in terms of supply, he said it was a chicken and egg scenario — that the only way to increase supply was to bring in more demand, and that the bigger constraint was limited buyer bandwidth.
I reached out to a carbon removal company called Charm Industrial to ask how developers feel about the rise of all of these brokerage services. Like Climeworks, Charm is another startup that scrupulous corporate buyers with big science teams, like Microsoft and Shopify, have deemed “high quality.” Charm’s head of sales, Harris Cohn, said the fees these services charge matter and vary widely. “There's a risk these services make the market worse if they make transactions harder or feel more expensive to buyers,” he said. But he noted that they have, indeed, already accelerated demand.
Peter Reinhardt, the CEO of Charm, agreed that there was no downside to having more players in the game. “We’ll break the supply constraint fairly soon :)” he added in an email.
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A conversation with Mary King, a vice president handling venture strategy at Aligned Capital
Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.
The following conversation has been lightly edited and abridged for clarity.
How do you approach working in this field given all the macro uncertainties?
It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.
That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.
With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?
Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.
One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.
My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.
The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.
How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?
Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.
This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?
What gives you optimism in this moment?
I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.
The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.
And more news around renewable energy conflicts.
1. Nantucket County, Massachusetts – The SouthCoast offshore wind project will be forced to abandon its existing power purchase agreements with Massachusetts and Rhode Island if the Trump administration’s wind permitting freeze continues, according to court filings submitted last week.
2. Tippacanoe County, Indiana – This county has now passed a full solar moratorium but is looking at grandfathering one large utility-scale project: RWE and Geenex’s Rainbow Trout solar farm.
3. Columbia County, Wisconsin – An Alliant wind farm named after this county is facing its own pushback as the developer begins the state permitting process and is seeking community buy-in through public info hearings.
4. Washington County, Arkansas – It turns out even mere exploration for a wind project out in this stretch of northwest Arkansas can get you in trouble with locals.
5. Wagoner County, Oklahoma – A large NextEra solar project has been blocked by county officials despite support from some Republican politicians in the Sooner state.
6. Skagit County, Washington – If you’re looking for a ray of developer sunshine on a cloudy day, look no further than this Washington State county that’s bucking opposition to a BESS facility.
7. Orange County, California – A progressive Democratic congressman is now opposing a large battery storage project in his district and talking about battery fire risks, the latest sign of a populist revolt in California against BESS facilities.
Permitting delays and missed deadlines are bedeviling solar developers and activist groups alike. What’s going on?
It’s no longer possible to say the Trump administration is moving solar projects along as one of the nation’s largest solar farms is being quietly delayed and even observers fighting the project aren’t sure why.
Months ago, it looked like Trump was going to start greenlighting large-scale solar with an emphasis out West. Agency spokespeople told me Trump’s 60-day pause on permitting solar projects had been lifted and then the Bureau of Land Management formally approved its first utility-scale project under this administration, Leeward Renewable Energy’s Elisabeth solar project in Arizona, and BLM also unveiled other solar projects it “reasonably” expected would be developed in the area surrounding Elisabeth.
But the biggest indicator of Trump’s thinking on solar out west was Esmeralda 7, a compilation of solar project proposals in western Nevada from NextEra, Invenergy, Arevia, ConnectGen, and other developers that would, if constructed, produce at least 6 gigawatts of power. My colleague Matthew Zeitlin was first to report that BLM officials updated the timetable for fully permitting the expansive project to say it would complete its environmental review by late April and be completely finished with the federal bureaucratic process by mid-July. BLM told Matthew that the final environmental impact statement – the official study completing the environmental review – would be published “in the coming days or week or so.”
More than two months later, it’s crickets from BLM on Esmeralda 7. BLM never released the study that its website as of today still says should’ve come out in late April. I asked BLM for comment on this and a spokesperson simply told me the agency “does not have any updates to share on this project at this time.”
This state of quiet stasis is not unique to Esmeralda; for example, Leeward has yet to receive a final environmental impact statement for its 700 mega-watt Copper Rays solar project in Nevada’s Pahrump Valley that BLM records state was to be published in early May. Earlier this month, BLM updated the project timeline for another Nevada solar project – EDF’s Bonanza – to say it would come out imminently, too, but nothing’s been released.
Delays happen in the federal government and timelines aren’t always met. But on its face, it is hard for stakeholders I speak with out in Nevada to take these months-long stutters as simply good faith bureaucratic hold-ups. And it’s even making work fighting solar for activists out in the desert much more confusing.
For Shaaron Netherton, executive director of the conservation group Friends of the Nevada Wilderness, these solar project permitting delays mean an uncertain future. Friends of the Nevada Wilderness is a volunteer group of ecology protection activists that is opposing Esmeralda 7 and filed its first lawsuit against Greenlink West, a transmission project that will connect the massive solar constellation to the energy grid. Netherton told me her group may sue against the approval of Esmeralda 7… but that the next phase of their battle against the project is a hazy unknown.
“It’s just kind of a black hole,” she told me of the Esmeralda 7 permitting process. “We will litigate Esmeralda 7 if we have to, and we were hoping that with this administration there would be a little bit of a pause. There may be. That’s still up in the air.”
I’d like to note that Netherton’s organization has different reasons for opposition than I normally write about in The Fight. Instead of concerns about property values or conspiracies about battery fires, her organization and a multitude of other desert ecosystem advocates are trying to avoid a future where large industries of any type harm or damage one of the nation’s most biodiverse and undeveloped areas.
This concern for nature has historically motivated environmental activism. But it’s also precisely the sort of advocacy that Trump officials have opposed tooth-and-nail, dating back to the president’s previous term, when advocates successfully opposed his rewrite of Endangered Species Act regulations. This reason – a motivation to hippie-punch, so to speak – is a reason why I hardly expect species protection to be enough of a concern to stop solar projects in their tracks under Trump, at least for now. There’s also the whole “energy dominance” thing, though Trump has been wishy-washy on adhering to that goal.
Patrick Donnelly, great basin director at the Center for Biological Diversity, agrees that this is a period of confusion but not necessarily an end to solar permitting on BLM land.
“[Solar] is moving a lot slower than it was six months ago, when it was coming at a breakneck pace,” said Patrick Donnelly of the Center for Biological Diversity. “How much of that is ideological versus 15-20% of the agencies taking early retirement and utter chaos inside the agencies? I’m not sure. But my feeling is it’s less ideological. I really don’t think Trump’s going to just start saying no to these energy projects.”