Six months ago, the prospects for the nascent carbon removal market seemed as vast as the sky.
Bill Gates and other investors were lining up to fund start-ups that promised to suck carbon dioxide out of the atmosphere, helping to curb global warming. Big-name companies like Google, Airbus and Amazon moved in to buy carbon removal credits. And McKinsey projected the market could be worth as much as $1.2 trillion by 2050. One investor called it “the single greatest opportunity I’ve seen in 20 years of doing venture capital.”
But less than six months into President Trump’s second term, in which he has moved to drastically reshape climate policy, the carbon capture industry is decidedly more subdued.
The Energy Department last month terminated 24 awards worth $3.7 billion, most of which had been earmarked for carbon removal projects. Applications for new carbon capture and sequestration permits in the United States were down 55 percent in the first three months of the year.
And last month Climeworks, the most prominent carbon removal company, which I reported on last year, cut 22 percent of its staff in anticipation of slower growth. Two other carbon capture start-ups, Heirloom and Pachama, have also announced layoffs in recent weeks.
“There is a new administration in the U.S.,” Jan Wurzbacher, the co-chief executive of Climeworks, told me. “That’s a fact, and the new administration puts certain things in question.”
Yet it’s not just the political landscape that has changed. There are also new questions about the viability of some prominent carbon capture technologies.
Climeworks’ flagship plant in Iceland, which uses so-called direct air capture to scrub carbon dioxide from the sky, removed just a sliver of the carbon dioxide it had hoped to during its first 10 months in operation, according to Heimildin, an Icelandic news organization.
“It takes time to ramp up,” Wurzbacher told me when I asked about the report. “We are just at the beginning, and it has taken longer than we thought.”
Achieving ‘energy security’
The industry is not in complete free fall.
Two major direct air capture developments that were greenlit by the Biden administration, including one in Louisiana involving Climeworks that is known as Project Cypress, were not among the projects canceled by the Energy Department.
Wurzbacher said his company’s interactions with the Trump administration have been limited, but that, for now, he expects Project Cypress to move forward, albeit with some delays.
Tax credits for carbon capture projects have so far survived Republican negotiations over their signature policy bill, unlike some other clean energy tax credits. (The ability to transfer these tax credits them may be limited, which could hurt some start-ups.)
And in April, Occidental Petroleum, a major oil and gas company that is also investing in direct air capture technology, received government approval to sequester the carbon dioxide it sucks out of the air with a giant new facility it is building in Texas.
Vicki Hollub, Occidental’s chief executive, said the project would “help the United States achieve energy security,” a rhetorical nod to Trump.
She added that the project would “help organizations address their emissions,” a nod to companies that want to permanently sequester carbon dioxide underground in a bid to blunt global warming.
At the same time, she said that direct air capture could help “produce vital resources and fuels,” a reference to the practice of using captured carbon dioxide to extract more gas from beneath the ground.
Proponents have portrayed carbon capture as necessary to hit longer-term global climate targets, but the prospect of using captured carbon to produce more fossil fuels leads some climate activists see it as little more than a ruse designed to help perpetuate the oil and gas business.
‘A major step backward’
The market for carbon removal depends on companies voluntarily buying credits from start-ups promising to remove the greenhouse gas from the atmosphere, a dynamic that leaves the industry vulnerable to the shifting priorities of the corporate world.
For now, big companies are still lining up to buy carbon removal credits from a raft of start-ups. CDR.fyi, a website that tracks the industry, reported that Bain & Company, Microsoft and JPMorgan were among the companies that had signed deals with carbon removal companies this year.
Yet even Alexander Rink, the chief executive of CDR.fyi, struck a cautionary note when asked about the future of the industry. Rink expects sales of carbon credits tied to direct air capture to continue growing, but he also predicts that more companies in the industry will go out of business.
The Carbon Capture Coalition, an industry group, called the Energy Department’s decision to cancel the 24 grants “a major step backward in the nationwide deployment of carbon management technologies.”
And Wurzbacher said that while Climeworks was still expecting to build its first U.S. plant in Louisiana, the company was retrenching. Instead of trying to rapidly scale up and build new plants, the company will now focus on improving the efficiency of its technology in an effort to bring costs down.
“Looking at the world around us, we’ve decided that we that we need a little bit of consolidation,” he said.
Climate policy
In Georgia, Republicans vote to kill green jobs but face little fallout
Outside the husk of a shuttered yarn factory, thousands of old solar panels lie stacked on gravel.
In Cedartown, Ga., a company, Solarcycle, has spent about $50 million of $500 million it plans to invest to turn the facility into a solar panel recycling operation and build an adjacent glass manufacturing plant. Once operational, Solarcycle would be the area’s largest employer.
And yet President Trump’s “big, beautiful bill” has stopped the Solarcycle factory in its tracks. The legislation, which passed the House and is now being debated in the Senate, would essentially eliminate the tax breaks from the 2022 Inflation Reduction Act that companies have been counting on to build new wind and solar projects, electric vehicle battery factories and more.
But in Cedartown, many people interviewed said they had never heard of the Inflation Reduction Act and did not connect it to the Solarcycle factory. Some of those who had heard about the law described it as wasteful spending. — Lisa Freidman
By the numbers
To 2.8 billion from 27.3 billion
In 2012, driven by a marine heat wave in the Gulf of Maine, the Northern shrimp population fell to an estimated 2.8 billion in 2022 from 27.3 billion two years before, according to modeling by the Atlantic States Marine Fisheries Commission.
“This disappearance of the shrimp was just shocking,” said Anne Richards, a retired research fisheries biologist who worked at National Oceanic and Atmospheric Administration’s Northeast Fisheries Science Center at the time.
It’s part of the larger impact on marine ecosystems from unusual heat waves that have occurred in all the major ocean basins around the planet in recent years. Some of these events have become so intense that scientists have coined a new term: super marine heat waves. — Delger Erdenesanaa
More climate news from around the web:
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Because of the energy needs of data centers and artificial intelligence, emissions from Amazon, Microsoft, Alphabet and Meta rose an average of 150 percent from 2020 to 2023, according to a report flagged by Energy Monitor.
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Amazon will invest $20 billion in two data centers in Pennsylvania, including one next to a nuclear plant, The Associated Press reports.
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The Washington Post highlights a new study that finds homeless people are 27 times more likely to visit a hospital for heat-related illnesses than other people in the United States.
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Southern California Edison’s internal wildfire forecasts underestimated the potential size of the January Eaton Canyon fire in Los Angeles by a factor of 10, according to documents reviewed by Reuters.
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David Gelles reports on climate change and leads The Times’s Climate Forward newsletter and events series.
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