Aug 19 (Reuters) – A unit of U.S. oil and gas producer Occidental Petroleum Corp said on Wednesday that it will finance development of the largest ever facility to pull carbon dioxide out of the atmosphere through a process known as direct air capture.
Oxy Low Carbon Ventures LLC said it has formed a development company with sustainability-focused private equity firm Rusheen Capital Management LLC to license the direct air capture (DACE)technology developed by Canadian firm Carbon Engineering.
Interest in DAC has grown in recent years from companies seeking to offset their climate impacts to public officials worried about the slow pace of international agreements to cut emissions.
The facility will be located on 100 acres in Texas’ Permian Basin and will capture up to 1 million metric tons of carbon dioxide from the atmosphere a year, the companies said in a joint statement. Construction will begin in 2022, allowing time to improve plant design and reduce costs.
Carbon dioxide captured at the Texas facility will be stored underground and used to increase pressure in the oil field and speed up production.
The United Nations has said carbon removal technology will be necessary to remove up to 1 trillion tons of CO2 by the end of the century to limit the increase in planetary warming to no more than 1.5 degrees Celsius – the goal of the 2015 Paris Climate Agreement.
The cost of carbon-removal technologies like DAC, however, is high and they have yet to be deployed on a mass scale. Environmentalists have also argued that they reflect a lack of resolve to end the use of fossil fuels.
Oxy and Rusheen said the facility, which will be built by their DAC development company, 1PointFive, will benefit from a federal tax credit designed to spur investment in carbon capture and sequestration projects. (Reporting by Nichola Groom and Valerie Volcovici; Editing by Steve Orlofsky)