Google (NASDAQ:GOOGL) has entered an agreement with Holocene, a company specializing in Direct Air Capture (DAC) technology, to secure 100,000 tons of carbon removal credits. This deal is notable for setting a record low price of $100 per ton for DAC-based removals. This partnership is part of Google’s broader strategy to achieve net-zero emissions and contribute to global decarbonization efforts.
Earlier agreements in the carbon removal sector often featured higher costs and smaller scales of operation. The new deal with Holocene reflects advancements in DAC technology and innovative financial structures, suggesting a trend toward more affordable carbon capture solutions. Additionally, Google’s financial backing and the qualification for the U.S. government’s 45Q tax credit significantly contributed to achieving this lowered price point.
Carbon removal technologies, especially DAC, are gaining traction as critical tools in the fight against climate change. The International Energy Agency (IEA) recognizes DAC as pivotal for transitioning to a net-zero energy system. By extracting CO2 directly from the atmosphere, DAC can either repurpose CO2 as a raw material or store it permanently. The Intergovernmental Panel on Climate Change (IPCC) notes that limiting global warming to 1.5°C will necessitate scaling carbon removal methods to billions of tons annually.
Google’s Commitment to Net Zero
Randy Spock, Carbon Credits and Removals Lead at Google, emphasized the company’s dedication to decarbonizing the global economy and achieving net-zero emissions across its operations. Partnering with Holocene represents a significant step in advancing the viability of DAC technology. Spock stated, “We’re committed to doing our part to decarbonize the global economy and reach our goal of net zero emissions across our operations. Carbon removal technologies are key to that goal. Partnering with Holocene to reach this milestone price will be a meaningful step toward advancing the viability of DAC as a tool to fight climate change.”
Breaking Financial Barriers
Google attributes the low price achievement to several factors, including Holocene’s innovative approach combining liquid and solid-based systems, which hold long-term cost-reduction potential. Additionally, Google’s upfront financial support and commitment to accepting credits from Holocene’s lower-cost facilities, slated for delivery in the early 2030s, played a crucial role. The qualification for the 45Q tax credit further reduced the financial burden on Holocene, making the $100 per ton price feasible.
This agreement follows Google’s earlier commitment to contracting $35 million of carbon removal credits over the next year, an initiative supported by the U.S. Department of Energy (DOE) aimed at scaling the carbon removal sector. This indicates a broader trend where technological advancements and financial strategies are making large-scale carbon removal more practical and affordable.
Google’s collaboration with Holocene represents a significant milestone in the journey towards cost-effective carbon removal. This deal not only highlights Google’s commitment to environmental sustainability but also sets a promising precedent for future carbon capture initiatives. As DAC technology continues to evolve, the potential for more affordable and scalable carbon removal solutions appears increasingly attainable. For organizations and governments aiming to meet climate goals, such agreements offer a path forward in addressing carbon emissions effectively. The successful implementation of DAC technologies could play a crucial role in achieving global climate targets and mitigating the adverse effects of climate change.
