Tech-based Carbon Removal: Sustaera’s Direct Air Capture Flashcards
Shantanu Agarwal, Co-Founder and Director of Sustaera, a startup company developing a Direct Air Capture technology to remove carbon from the atmosphere, shares his perspective on the landscape in the race to develop scalable and affordable carbon removal technologies–from engineering to financing to deployment–and how Sustaera’s specific technology fits in.
I was working away in a private equity firm in energy technologies and obviously aware of the climate change problem. That’s when I met a group of scientists in the North Carolina RTP area and we banded together to start Susteon as a R&D incubator of sorts. That’s where we’ve been playing around with a lot of technologies in carbon capture and carbon utilization, starting in 2017. My Co-founder, Raghubir Gupta, is the prime technology driver for that. Then in collaboration with Columbia University, found a technology which was quite intriguing in terms of the chemical properties, and allowed us to build a quite differentiated value proposition for direct air capture of CO2. That’s how Sustaera happened and we spun it out into its own company and raised money.
Nov 2022
10/03/24
The original business model with which I and my co-founder started Susteon was around us having a deep desire to make a dent in the climate change problem. We were filtering through a lot of these interesting science concepts, talking to collaborators, innovators, researchers, professors, all across the US and even in Canada and UK. As we evaluated those technologies, we would come up with certain ones which had potential, in our views. So we would then collaborate with those innovators to joint research to further the TRL level, or technology readiness level, of that technology.
We were agnostic in that as long as the technology had potential in the whole climate impact domain. a lot of the stuff which we were working on was in the carbon capture domain, because of that point source and direct air capture. And similarly, we also worked on carbon conversion and hydrogen. So over the period of time we actually evaluated and worked on more than 35-40 different technologies. And at this early stage, there’s a high failure rate as well. So more than 50-60% of those failed. The direct capture technology in Sustaera being one of the very good successes.
The point source is any source which is actually has a concentrated stream of CO2, and a concentrated stream of CO2 could be as low as a 2% concentrate, because even that is a 100x or 1000x more than what the environment is sitting at. The environment is at 0.04%, or 400 ppm.
Essentially, you’re creating a garbage and converting that garbage into putting it down deep into the earth. And that’s fine, but if you can actually produce some useful product out of it, then that’s more of an economic and a value-creative step. And that’s what we call carbon utilization, when you take CO2 and you convert it to something. There’s a lot of different projects working on that, where people are trying to take CO2 and make methanol or ethanol or one of the starting building block chemicals like ethylene, which will allow for a lot of plastics to be made. Or even sustainable aviation fuel, where you can make jet fuel out of CO2. So all those things are in the carbon utilization domain.
In terms of the technology-based solutions for carbon capture, there is a point source capture, and there is the air-based capture, or direct air capture. In the point source capture, there are established technologies which are all around mostly amine-based solvent systems, which are used for capturing CO2 from industrial source or a power plant source. And these have been used for quite a while in the existing industrial setup, but they need to be scaled and new plants have to be built with these point source capture systems in place, and a lot of the existing plants have to be retrofitted. So there is a huge industry to be created in this point source capture technology piece, which is mostly installation of an existing established technology play.
The air-based systems are new. This is a whole new domain which has opened up because people started investing in carbon removal. The concentration of CO2 in air is 419 ppm, which is equivalent to 1 ton of CO2 per 3000 tons of air. So you have to sift through 3000 tons of air to be able to capture one ton of CO2.
Because it is such a low concentration of CO2, historically, nobody wanted to touch air as a system for taking CO2 out, so we have been dumping CO2 into the ecosystem. For us to create negative emissions, we have to figure out a pathway to taking CO2 out of this low concentration form. In the last 3-4 years, there’s been a lot of momentum around this whole domain, where now technologies have emerged.
There is a bio-energy based pathway, where essentially the biome or the biosphere is used to take CO2 out of the air and convert it to some sort of biomaterial, and that biomaterial is then used to isolate the CO2. You take a biomass material, burn it, generate electricity, and take the result in CO2 and put it down into the earth, so you’re capturing CO2, and at the same time you’re generating energy.
Then there are other flavors of it, where you’re taking bioenergy and pyrolyzing it to make biochar which can then be either put down on the earth or spread on agricultural fields making that char like material capture CO2, which cannot be changed back very easily to leak into the atmosphere. Or there are companies which are actually making biomass and then converting it into bio oil, and then putting that oil down into the earth. That’s one segment of companies, which are taking a biomass-based pathway to convert CO2 from air into some sort of biomaterial, and then using it to sequester CO2.
Pyrolyzing essentially means heating biomaterial or any kind of plant material, to a very high temperature without the presence of oxygen. So it essentially chars it and converts it into a black slushy material which dries up eventually so it becomes like a char, think charcoal. Charcoal is made by pyrolyzing coal, biochar is made by pyrolyzing biomaterial.
This is the bio-energy leg of approaches to take CO2 out of the air, and then there’s another set of technologies that are based on chemistry and mechanical properties, which are largely known as direct air capture.
Invariably, this whole domain of engineering-based CO2 capture from air depends on some sort of sorbent material, which is cycled into an adsorption (adhesion to a surface) cycle where it’s adsorbing CO2 from air, and then a desorption cycle (release from a surface into the surrounding vacuum or fluid) where it’s desorping that CO2 which has adsorbed during the adsorption phase, and desorbes it into a concentrated CO2 stream, and then is recycled back to adsorb again. So it basically goes through an adsorption, desorption, adsorption, desorption cycle. This is what increases the concentration of CO2.
What I’m trying to get at is that there is a variety of different processes which people are trying to figure out a pathway which can be the lowest cost and most scalable to allow for engineering-based director capture to happen at scale because the objective is to lower the cost of this direct air capture system to be somewhere around $100 dollars a ton over the long-term, and be able to do it on industrial scale in the middle of nowhere so that you can essentially create a gigaton type of solution and be able to industrialize carbon removal.
The costs today in the direct air capture space are in the ballpark of $500 a ton, if not even more, and they’re all working towards figuring out an engineering path. A lot of them are actually building their first pilot plant right now, so saying that their cost is $500 or $700 is really meaningless because they haven’t got a working commercial unit which is operating. It’s all on paper at this point. So all of these companies have to build their first units, demonstrate their technology and showcase that it actually has a engineering and a clear scientific pathway to reduce the cost down to $100 dollars a ton.
Why we believe in this, is because there’s a very good precedent of us being able to reduce cost in these scale up mechanisms which we have done in the case of solar industry, in the wind industry and the lithium battery industry, so the same pathway and the cost reduction cycle can very much be applied to what carbon removal is put towards. All you need is really viable chemistry and a mechanical pathway.
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And who’s funding these various ventures? It’s a mixed bag. A lot of investment companies actually have taken interest, which were traditionally not really investors in these kind of domains at all. A lot of tech funds have created their own clean tech funds. Breakthrough Energy Ventures probably was one of the leading funds which started investing in this domain, but there are a lot of other foundations and other groups which have also seeded up the money for the early stage funding for Climeworks (ETH-based DAC company), for example. There’s a lot of Swiss funding and a lot of philanthropic funding which came through to allow them to build their technology into a place, where now they have investors which are more professional investors and more traditional investors who are equity return incentivized rather than the traditional philanthropic type of money which came in early.
The massive demand is here. Right now, we are still emitting 40 gigaton per annum. Within 6-7 years, we would have crossed 1.5 degrees at the current rate, and in 10-15 years after that, we would be at 2 degrees. So, we need a massive mitigation plan to reduce our rate, at which we are emitting gigatons of CO2 into the air. We need at least 5 gigaton, if not 10 gigaton by 2050 of negative emissions. In more digestible numbers, from 2025 onwards, we need to scale 5,000x to be at the most conservative amount of CO2 removal, which we need to do as mankind. Assuming we’re going to meet a 2 degrees warming scenario based on the current forecast.
You’re pointing out the societal need for these technologies to actually meet that 2 degrees target. It’s not at all clear to me that in fact, society will agree to make those investments. So far, we’re talking about this sort of latent demand if we agree to meet those targets. But there needs to be a transition from latent demand to actual demand, and that I imagine is going to come either through government action, which creates incentives to have to procure carbon removal or avoidance credits or from private sector actors. Do you see both of these channels leading to material actual demand as opposed to latent demand?
In terms of the signals which are coming into the market, first of all, there is a fairly significant voluntary carbon market, which is now taking form. Secondly, there’s quite a significant demand for permanent carbon removal, rather than just temporary, more nature-based type of removal, which has been more of the flavor of the world. And that shift is happening quite significantly and quite strategically by most of these buyers who are committed to net zero and want to show it in their balance sheet and show it to the shareholders that they’re actually taking action.
There are large funds which have started leading the charge on that, for example, the Frontier Fund, which has been formed with the help of Stripe and McKinsey and a bunch of other companies in the tech domain to come together to put the $1 billion to work for making carbon removal purchases in advance to help generate some momentum around these companies.
On top of that, the Inflation Reduction Act recently put into place a $180 price marker from the US Treasury, which essentially gives a 10 year leeway here from today to about 2033 for any of the carbon removal companies to go out there and build and sell the removed carbon credits to the Treasury for $180 per ton if it has been taken away from the air and then sequestered down into the earth. There is similar sort of incentives and programs being put in place in other countries, specifically Europe and Canada.
How Sustaera is differentiating itself from other DAC companies is the way that we have got multiple aspects of that technology set up, which allow us to be a low cost, highly scalable, almost modular system, which we can deploy on the fly. One of the biggest differentiators is a sorbent material, our sorbent is based on a abundantly available material, which is quite established in terms of the existing supply chain. And it is cheap, so that it allows us to first of all have a lower cost as compared to some of the other competitors. So, we have a more reliable, highly active, kinetically superior system, almost like Lego block type of architecture, which allows us to sort of differentiate against the existing amine-based competitors. And it allows the system to be built at scale and deployable such that we can actually get multiples of these in the field and get that to a million ton scale quicker than any of the other competitors. We are going to produce these standard units in a giga factory-type of setup, so that we can have a cost reduction, almost like a car where you’re producing lots of them, so the individual cost of a single car goes down.
Our process requires us to have an access to a renewable electricity, so we can either pull it off a existing renewable power plant, which is there nearby, which can actually supply that electricity to us, or we can co-site and co-build a renewable power plant on the site where we are building these units.
The beauty of our system is that it doesn’t need a lot more apart from electricity and a place to put the CO2, so we could be in the middle of nowhere in someplace Wyoming or not Dakota, and we could have a large track to land where we are putting windmills and our solar farm and batteries to really generate electricity and then use that electricity to capture CO2 from there, because CO2 is everywhere. And we can essentially capture it out there in the middle of nowhere and put it down into the earth.
The vision is that there’s a large solar farm and besides it, there is a large carbon removal farm. Think of it like a small cooling tower, which has essentially got a fan at the top, which is sucking air from the top and air is being sucked in from the sides of this cooling tower. Let’s say it’s a small cooling tower, about 10-15 meters high. Air is sucked into it and the sides have this sorbent material, which is absorbing the CO2 out of the air. As the air comes into that tower, it leaves from the top, and the air which is coming out of the top doesn’t have CO2 anymore, because the CO2 has been absorbed into the sorbent material. And then that CO2 is concentrated and taken out from that sorbent material, then pipelined into a pipe network which is set up on that site, and then that CO2 gets pumped into the earth.
Unlike many siting decisions about proximity to supply chain or proximity to customer base, the issues that you face are quite different. They’re proximity to low-cost electricity; renewable electricity production, windy or sunny areas; access by rail or truck to get the equipment there and perhaps service it periodically; and then the ability to actually drill into the earth to sequester, if you’re sequestering it right there on site. So are those the main characteristics that you’re thinking about when you think about siting decisions?
Today, as it stands, sequestration sites is the biggest problem, because right now we don’t have as many sequestration sites in the continental US. So right now, we are all restricted by that because EPA has a backlog of Class VI wells, which it’s trying to slowly certify. So that defines today’s decisions. Class VI wells are the wells which allow you to put CO2 safely and properly and with permanence, down under the earth.
The location of the siting of this particular industry will depend on like any other industry, on economics. The IRA is incentivizing the companies to put those factories up in the US, because that’s where the Inflation Reduction Act credits will be paid for. And that’s rightly so, because the US taxpayer should be paying for the industry to be created in the US, and this is a new trillion-dollar industry, which the US should take a big chunk of.
But at the same time, there will be geographically and naturally favorable locations in the world where electricity is very cheap. For example, Iceland has very cheap electricity. That’s the reason a bunch of the aluminum industry moved to Iceland, because of cheap energy. There is a lot of geothermal energy in Iceland. It’s cold and there’s a lot of heat from the earth exposed at a very shallow depth. So you can actually make geothermal energy very cheaply. Those kind of sites lend themselves to provide cheap energy to do these kind of things at large scale.
I think in the short term, in the next 5-10 years, most of these will be sited in the Western hemisphere, US, North America and Europe, and then they will eventually go into the rest of the world, at least in Asia.
So you had an entrepreneurial background with an engineering degree and then an MBA from Harvard Business School, and you mentioned you were an investor and then you wanted to pursue some entrepreneurial ventures. Of the whole world of entrepreneurialism, what led you into direct air capture as an area? You could have gone anywhere.
I’m a chemical engineer, and I was working and deploying capital in the energy technology world. I thought this would be the best use of my time and energies. My journey is more accidental than planned, I would say, but the intention was always to try to do something in the climate-change domain, which has really led me to where I am.
Some of our listeners are considering dedicating their careers at the intersection of business and climate change. Now, some of them will have a technical background, as you did, but many of them, of course, do not. What do you see as the biggest opportunities, and what advice do you have for them?
I’ll caveat and tell everyone that I do not think that you need a technical background to make an impact on the climate-change problem. The whole climate-change problem is the problem for a generation, and we need as many intelligent, driven, business-oriented people who are coming into this domain to really help create these business models, help create these new ideas, and germinate them into businesses, which can actually help make a dent in this problem.
All these industries today which exist in their traditional form will have to figure out how to adapt to the climate-change problem. That means they have to figure out how to reduce their emissions, how to start accounting for their carbon, how to start figuring out not only Scope I, Scope II, but also Scope III emissions.
So we are just at the start of this whole climate-change awareness and the permutation of the current industry, the way it operates to be a climate-conscious industry, and that spins out a bunch of different opportunities. Straightaway there are opportunities which the IRA has put together where there is a price already on carbon for point source; there’s price already on direct air capture or air-based removal. Then you can actually join a bunch of these startups, early-stage technology companies, which are trying to create businesses out of them. There are industry bodies now getting created, like DAC Coalition, where you can go and check out some of these early-stage companies which are trying to play a role in direct air capture.
There are so many different technologies out there today who have been either funded by DOE or have got an early-stage idea or technology which is proven. People are estimating that $150 billion per annum is what is going towards climate tech in US, starting now.
