The speed with which Occidental and DAC has captivated the Biden administration is alarming for environmentalists and some scientists. DAC remains by far the most expensive way to capture carbon, and the technology is largely unproven outside one small plant in Iceland. There are serious questions about whether the large quantities of power the process needs will offset the climate benefits. The loudest critics insist DAC should never be used to justify fossil-fuel extraction.
Carbon dioxide has been central to Occidental’s business for decades. Before it became a big US shale player over the past 10 years, the company would buy aging domestic oil fields from larger rivals. To squeeze out the last dregs of crude, Occidental would pump CO2 into wells in a process called enhanced oil recovery, or EOR, that’s been used since the 1970s. It was a dependable business that paired well with riskier bets overseas.
Around the same time, David Keith, then a professor at the University of Calgary, was working on that exact same problem: How to turn dilute CO2 in the air to a concentrated stream for industrial processes. His startup, Carbon Engineering, used giant fans and liquid solvents to filter the gas from the atmosphere and won backing from billionaires including Bill Gates and Canadian oil sands tycoon Murray Edwards.
Occidental’s talk of zeroing-out emissions in 2020 came alongside a pledge to build the world’s largest DAC plant in the Permian Basin, using Carbon Engineering’s technology. “This not only helps us to help the world by reducing CO2 out of the atmosphere, it will help our shareholders too by lowering our costs of enhanced oil recovery,” Hollub said at the time.
The company was a big winner in both those years’ major pieces of legislation: the Bipartisan Infrastructure Law and the Inflation Reduction Act. The IRA’s tax credit for regular carbon capture — the type that gathers a concentrated stream of CO2 from a refinery smokestack, for example — increased 70% to $85 a ton. And the credit for DAC became even more generous, rising to $160 a ton.By the time the IRA passed in August 2022, Occidental’s finances had improved thanks to rising oil prices.