Cost Assessment of Direct Air Capture: Based on Learning Curve and Net Present Value

Abstract

Direct air capture (DAC) is a technological solution for climate change mitigation which removes CO2 directly from the atmosphere. Although there have been some policies and financial support, the current expensive cost makes the large-scale deployment of DAC full of uncertainty and challenges. This work assesses DAC’s cost reduction potential under Net Zero Emissions by 2050 Scenario by building an experience-based learning-by-doing model. Moreover, the profitability of the DAC is analyzed through the calculation of the net present value (NPV) with the carbon price taken as the revenue. In the base scenario, the cost of DAC units can decrease to a range of $120/tCO2 to $300/tCO2 by 2030 and around $90/tCO2 by 2050. Solid adsorbent DACs combined with cheap renewable energy can achieve a breakeven around 2030 and be beneficial afterwards. Energy price, deployment speed, learning rate, lifetime of DAC units, and carbon price are the most important influencing factors for cost variation and overall profitability. By subdividing the cost into five parts, the model retains flexibility for changes in corresponding parameters, which can be modified according to practical results in future applications. DAC currently requires an expensive initial investment, but optimistically, it can have a long-term benefit.

Keywords: Direct air capture, Solid sorbent, Learning curve, Net present value