Four Innovations to Watch in Direct Air Capture for 2025

A broad slowdown in climate tech was a defining theme of 2024. We saw some energy companies weakening net-zero commitments, while others cut back on startup investments or otherwise put announced projects on hold. This marked a return to “normal” of sorts, as the lofty startup valuations and promises were never really that sustainable. Did we really think Nikola Motors had cracked the hydrogen transportation nut or that Quantumscape’s solid-state battery concept made it worth more than that from General Motors?

This general characterization doesn’t hold true for all technologies, and one notable standout is direct air capture (DAC). While there were some lofty valuations, DAC’s story in 2024 was one more of tangible progress, with Climework’s Mammoth project a notable highlight. Our tracking of startup investments shows that unlike many of their climate tech peers, venture capital investments in DAC reached record levels in 2024, more than double their previous record in 2022. Despite this, it’s also clear DAC isn’t ready for prime time; its costs remain too high to pursue as an offset strategy for most emissions, and utilization pathways for the CO₂ captured remain too expensive at over USD 1,000/tonne to create tangible demand today for offsets. Innovations that can push down costs are needed before the technology can scale, and in DAC, we are following four key innovations in 2025 that could move the needle on costs.

1. Electrified capture processes. The most obvious and commonly pursued of the innovation opportunities, new processes aim to primarily reduce energy demand that drives up costs. Electrified approaches eliminate the need for heat in the desorption cycle, reducing the amount of energy needed to capture 1 tonne of CO₂. Within this, hybrid electroswing — which leverages a conventional capture step paired with an electrified desorption step — is the most promising, as it uses more proven capture solutions and only deploys a novel electrified process to address energy consumption during desorption.
2. Continuous capture and utilization. This process, also known as reactive carbon capture, aims to convert captured CO₂ directly into new products, eliminating the need for a separate desorption step. We estimate that roughly 40% of overall process energy savings can be expected, compared to transportation and sequestration pathways, and also reduces system complexity as it eliminates the need for CO₂ storage and transport. This could enable small-scale capture and utilization opportunities for facilities without access to CO₂ infrastructure. Ultimately, work here is mostly early stage, at least compared with the other two opportunities noted here. Startups active in this space include Carbonade, ICODOS, Sora Fuel, and CERT Systems, though given its early stage, research organizations are worth monitoring as well. 
3. Low-carbon electricity. While solar and wind produce the cheapest electrons, their intermittency clashes with the goals of DAC project developers looking to maximize uptime at high capital cost facilities. Similar to data center operators which have been aggressively signing power purchase agreements and partnerships for low-carbon power, DAC developers will need a continuous, low-cost supply of electricity. While we expect to see a slowdown in project development in 2025, clients should avoid focusing on shiny objects like novel nuclear and geothermal, which will take the better part of a decade to bring online, and instead consider novel storage solutions that are technologically derisked but haven’t yet found an economic use-case for grid-tied projects.
4. Low-carbon heat. If not considering one of the more novel electrified capture processes, heat production of the desorption cycle remains a significant source of energy consumption. For amine sorbents, a common DAC subtechnology, 7.2 GJ of heat are required per metric ton of CO₂. Interest in producing, reusing, and storing heat has grown rapidly in the last few years, in part catalyzed by the potential low storage costs and high natural gas prices in some regions like Europe. A strong crop of startups are emerging that focus on both low-carbon heat generation and storage. Within generation, most emphasis is on improving efficiency and increasing the temperature of heat delivered, while storing energy as heat offers lower costs than storing energy in electrochemical batteries. 

At Lux, we’re constantly hearing from our clients about the near-term pressure innovation teams face. In today’s economic and tumultuous political environment, few leaders have an appetite for risk that justifies major investments in relatively unproven and early stage technologies, no matter the potential impact. That doesn’t mean shelving innovation projects though. Some of the technologies required above have impacts outside DAC; thermal energy storage and low-carbon heat are main focuses of industry today, and new demand for capture in data centers is emerging.

There’s no silver bullet to making DAC competitive; a combination of process innovations that improve efficiency and lower-cost energy supplied to projects is needed. A stalling of projects arising from a slowdown in government support — for example, we’re very unlikely to see U.S. DAC hub projects secure the funding they were once promised — will impact pathways for technologies to derisk and scale. DAC’s ability to provide quantifiable CO₂ capture and sequestration and potential for cost reductions suggest a full retreat for DAC would be a mistake; instead, clients should use these four innovation areas to guide lean investments into addressing DAC’s core cost challenges.

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