We estimate that DAC costs are unlikely to drop below $300 to $400 per ton if the status quo continues. According to our model, getting costs to $200 and below would need incentives such as far more favorable capital costs, supportive infrastructure to lower operational expenses, actions that accelerate learning, and upfront deployment at scale well before 2050. (See Exhibit 2.)

For starters, current production volumes are far below the capacity needed to make the technology truly viable. DAC plants would also have to be far larger than they are now. On the plus side, all this construction activity would deliver significant economies of scale both within individual sites and across the industry as a whole.

Due to experience curve effects and shared learning, capex costs typically decline as more capacity is deployed. In the case of gas turbines, capex costs have fallen by 15% for every doubling in production capacity. We estimate that if DAC achieves similar improvements, about one gigaton of annual capacity—requiring additional capex and opex investment of about $200 billion—will be needed to move the technology sufficiently down the learning curve to make costs attractive. With lower learning rates, the investment bill will be much higher (two to three times greater with a learning rate of 13%, for example), underlining the requirement to maximize shared learning wherever possible.

A Call to Action

Turning DAC into a viable solution for tackling the climate crisis will require action in several areas. Four near-term levers can reduce costs so that the technology is attractive, but players will need to pull hard on each one.

Accelerate shared learning to move faster down the cost curve. As governments and corporate buyers provide greater support for DAC development, they could also impose tougher requirements. For starters, they could encourage players to share their learning across the supply chain in less competitive areas such as fans, balance of plant designs, and regeneration. Furthermore, we believe that as solutions mature, investors will need to select two or three potential winners. They should focus their support on those approaches in order to accelerate development as quickly as possible while still aiming to make a return on their investment.

When it comes to capital requirements, treat DAC like a public utility. Governments often use financial and commercial guarantees and other mechanisms to help municipal waste plants raise low-cost debt because these facilities provide an essential public service. Removing carbon from the air is analogous to cleaning up municipal solid waste, so governments could take a similar approach by aiming to reduce the weighted average cost of capital (WACC) for projects from more than 10% to 7% to 8% in the near term and 5% to 7% in the medium term as DAC solutions scale up. As with municipal waste, governments could introduce legislation that stipulates that companies must comply with certain removal obligations.

The most feasible pathway for giving DAC the status of a waste removal service would be to include it in compliance carbon markets and to expand their scope. Unfortunately, the only viable markets for doing this to date are the European Union‘s Emissions Trading System and a few others. A second but less satisfactory option would be to include it in industry-led initiatives, such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Substantially increase investment by changing carbon accounting rules. Each year, NASA spends more than $20 billion on space research. We may not need that amount of pure R&D money to make DAC viable—although some solutions will require more funding than others to accelerate to the demonstration phase. However, we’ll need to invest much more heavily in facilities and plants than we are doing today.

One way to unlock sources of capital could be to change the rules on how permanent CO₂ removals are accounted for. As we’ve mentioned, current carbon accounting rules limit companies’ ability to count removals towards their emissions targets. However, by revising their rules on permanent removals, at least for companies’ scope 3 emissions, carbon accounting organizations would encourage investment in these technologies. For example, investments to permanently remove a ton of CO₂ from the atmosphere using permanent CDR technologies such as DAC could, with the appropriate guardrails, be considered equivalent to a company reducing its scope 3 emissions by a ton of CO₂. This is an area of ongoing work.

Focus on optimal locations. For DAC to succeed, it will be critical to find geographical locations that have substantial storage potential, are able to provide abundant, cheap renewable energy or have good but stranded renewable energy resources, and meet the specific climatic requirements of different solutions. For example, local temperature, humidity, and elevation can have different effects on the performance of individual DAC technologies. To provide a sense of scale, sequestering one gigaton of CO₂ each year as a supercritical fluid—the form in which it would typically be stored—would require storage capacity equivalent to 1,600 Empire State Buildings. Fortunately, this amount of storage is available today. Government and regulatory agencies and private players can help rapidly establish a robust DAC infrastructure in advantaged locations through effective permitting rules, incentives, and multilateral offtake agreements. Many of these locations can provide new sources of low-carbon energy while also enabling a just transition.

Low-cost DAC is challenging, but no more so than any other revolutionary technology. No one can say definitively what the limits on DAC improvements will be. One thing is certain, however: the stakes are incredibly high. Getting to one gigaton of DAC capacity won’t be cheap. But given the depth of the climate crisis, we can’t afford not to scale this groundbreaking technology using all means available. We must grasp the challenge and go for it.

The authors wish to thank Nako Thompson for their contributions to this article.