Once hailed as the future of carbon removal, Direct Air Capture now faces political headwinds, shuttered startups, and stalled projects. Can DAC survive this moment?
I’m a materials scientist working to remove CO2 from the atmosphere.REYKJAVIK, ICELAND - MAY 24: A bank of fans draws air through specialized filters at Climeworks' Mammoth carbon removal plant on May 24, 2024 in Reykjavik, Iceland.
Considered the largest direct-air capture plant in the world, Swiss start-up Climeworks and Icelandic partner Carbfix have collaborated on the Mammoth project, utilizing Climeworks' Direct Air Capture technology to extract CO2 directly from the air using fans and special filters. Powered by clean geothermal energy, the CO2 is then pumped deep into Iceland's bedrock, locking it away permanently. Mammoth's annual capture of 36,000 tons of CO2 is seen as a significant step in fighting climate change. Just a few years ago, Direct Air Capture — the moonshot technology that promised to suck carbon dioxide straight out of the atmosphere — was the darling of climate tech. Venture capital was flowing. Governments were bullish. Companies like Climeworks, Carbon Engineering, and Heirloom became symbols of a new, tangible optimism: that we could not just stop emitting carbon, but actually reverse it. The narrative was seductive — a story of big machines cleaning the sky, of human ingenuity literally fixing the air. But now, the mood has changed. Since Donald Trump returned to office, there’s been a seismic shift in Washington’s energy priorities. The , pulling funding from several of the largest DAC hubs that were meant to anchor the industry’s early growth. Projects that once symbolized American climate ambition, like the DOE-backed hubs in Texas and Louisiana, are now on life support.The first wave of startups that defined the DAC boom is now entering a painful phase of consolidation. Earlier this year, Noya, a San Francisco DAC startup, announced it was ceasing operations. Its co-founder, Josh Santos,that he and his co-founder had made the difficult decision to shut down, a quiet end to one of the early hopeful. They’re not alone. Delays have piled up across the board. Frontier, the $1 billion advanced market commitment led by Stripe, Alphabet, McKinsey, and others, was meant to turbocharge demand for carbon removal. Two years in, it has contracted more than through DAC pathways. But as Frontier’s own public tracker shows, zero tonnes have actually been delivered. So far, the future of DAC has remained perpetually that — the future.Every DAC company promises cost declines. Today’s costs, anywhere from $600 to $1,200 per tonne of CO₂, are projected to drop to $100 with scale. But this is where the optimism starts to hurt. The first movers — companies, philanthropies, and governments willing to pay those sky-high early prices — have already made their catalytic purchases. The next wave of buyers is asking, rationally, “Why pay $800 a tonne today if everyone tells me it’ll be $200 tomorrow?”It’s a paradox of innovation: you need demand to scale and drive costs down, but you need low costs to drive demand. DAC is stuck squarely in that trap. Building these facilities isn’t cheap, either. Each commercial plant can cost hundreds of millions of dollars. To escape the so-called “valley of death,” DAC developers need project financing — the kind of structured capital that backs wind farms or liquified natural gas terminals. But for that to happen, banks need confidence: long-term offtake agreements from corporate buyers guaranteeing future revenue. And those deals, too, aren’t materializing. At a recent conference, 1PointFive President Anthony Cottone, whose company operates the world’s largest planned DAC facility under Occidental Petroleum, put it bluntly. “,” he said, citing both the uncertain policy landscape and the current political climate. Without stable incentives or guaranteed demand, the model simply doesn’t pencil out. That’s the heart of the issue. DAC doesn’t fail because the physics are impossible. It fails because the financing is.In the past few months, several American DAC startups have quietly migrated to Canada., drawn by the province’s supportive policy environment and access to geological CO₂ storage. My former employer, Deep Sky, recently began operating a pilot facility in Alberta and announced a 500,000-tonne-per-year DAC project in Manitoba. The message is clear: where the U.S. retreats, others advance. Canada’s approach isn’t perfect, but it’s consistent. Carbon pricing remains intact. Federal and provincial governments are aligned on industrial decarbonization. There’s a growing recognition that if DAC is ever going to be a real industry — not just a research project — it needs to be treated like one: with infrastructure planning, permitting reform, and credit certainty. The irony is that this is precisely what the U.S. was beginning to do before this political whiplash. The Inflation Reduction Act and DOE DAC hub programs had turned the country into a magnet for carbon removal startups. Billions of dollars were on the table. For a brief moment, DAC looked like it might follow the same trajectory as solar: expensive, overhyped, and eventually — transformative.Technologies like DAC don’t scale on ideology. They scale on patience, capital, and policy consistency — three things in short supply right now. The sector doesn’t need another press release. It needs steel in the ground. It needs its first few commercial plants to operate, to fail, to iterate, and to learn. That’s what makes this moment so precarious. If the government pullback persists, if investors lose their nerve, and if early plants never get built, DAC could end up as another cautionary tale of climate tech — a brilliant idea that never crossed the valley. The atmosphere doesn’t care about politics. But the survival of Direct Air Capture might depend on it.
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