Occidental said it has made a purchase agreement to acquire outstanding equity of Carbon Engineering for $1.1 billion.
Occidental and Carbon Engineering have been working together on direct air capture (DAC) deployment since 2019. The acquisition should allow Occidental to rapidly advance DAC technology, accelerating its deployment at a large scale.
“We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions,” said Vicki Hollub, president and CEO of Occidental. “We look forward to continuing our collaboration with the Carbon Engineering team, which has been a leader in pioneering and advancing DAC technology. Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”
Recent Push for Widespread Direct Air Capture
DAC technology has seen increased support as it has become clear that cutting back on carbon emissions alone is not enough to reverse the effects of climate change. Further, carbon capture can provide a solution for hard-to-abate sectors, such as cement, steel, or chemicals.
The DOE recently invested a record-breaking $1.2 billion towards carbon capture projects in Texas and Louisiana, which are to remove more than 2 million tons of carbon annually. Occidental and its subsidiary, 1PointFive, are leading the Texas project at their South Texas DAC Hub.
Of the 18 DAC facilities currently in operation, only .01 tons of carbon are captured each year. 1PointFive’s facility is expected to remove around 500,000 tons of carbon per year and should be commercially operational by 2025.
Carbon capture currently faces cost obstacles and requires considerable innovation to make the technology more widespread. Some initiatives have been put in place in order to achieve this. With this acquisition, Occidental claims the goal of making carbon capture more cost-effective, bringing it to the scale it would need to make a global, climate-relevant impact.
The transaction is expected to close by the end of 2023, and Carbon Engineering will become a wholly-owned subsidiary of Oxy Low Carbon Ventures upon closing. The Carbon Engineering personnel will continue to work with the Occidental and 1PointFive teams, and the company’s Innovation Center will remain in Squamish, British Columbia.