Carbon-dioxide-reduction technology is a nascent but growing industry that captures and removes carbon from the Earth’s atmosphere.
It’s hard to believe, but just a few years ago, technology that could remove carbon directly from our atmosphere sounded more like science fiction rather than a sustainable way to reduce greenhouse gas emissions. Luckily, considerable technological advancements have recently made carbon reduction an increasingly promising investment opportunity that also better serves our environment.
What is carbon-reduction technology Anyway?
Carbon reduction technology is the process of capturing C02 after it has been released into the earth’s atmosphere. There are two primary carbon capture methods: source air carbon capture and direct air carbon capture.
Source air carbon capture is the process of capturing C02 as it leaves a power plant or other fixed source, such as a manufacturing plant. The second method is direct air carbon capture, which pulls C02 from small moving sources like cars and trucks.
Rising demand for climate solutions
Carbon reduction is becoming an increasingly pressing topic for all individuals and companies within the U.S. and abroad.
Recently, the Biden-Harris administration announced that it’s providing $1.2 billion to develop two commercially viable direct air capture facilities in Texas and Louisiana. The two projects are expected to create roughly 4,900 well-paid jobs, highlighting the economic advantages of investing in carbon removal technology.
In addition to the current administration’s announcement, the U.S. government is increasing its support for green technology through grants, subsidies and tax credits. For example, the Department of Energy recently awarded $100 million in Carbon Utilization Grants to further stimulate green investments.
Even globally, support is continuing to bubble up. At a recent United Nations meeting, 190 countries agreed, for the first time, that the world needs to transition away from fossil fuels.
So what does this all mean?
The background for a greener world is rapidly developing: the U.S. government is initiating economic support, companies are racing to meet their climate goals and countries worldwide are coalescing around the view that things need to change. These developments provide a solid “green thesis,” supporting the idea that individuals may want to take a closer look at potential carbon investment opportunities.
Carbon capture investment opportunities
Many pure-play carbon reduction technologies are founded by private companies, making them inaccessible to most individual investors. Luckily, there are a handful of publicly traded companies that focus on or invest in carbon-reduction technology.
If you’re interested in investing in carbon capture technology, below are some companies you might want to research further to understand if they are the right stocks for your investment portfolio.
1. Pure carbon capture play: Aker Carbon Capture ASA
Aker Carbon Capture ASA
AKCCF
is a Norwegian company specializing in carbon capture, utilization and storage technologies. It’s one of the few publicly traded companies focused solely on this technology.
The company aims to reduce CO2 emissions from various industries — including energy, cement and steel — by capturing CO2 at the source and either storing it underground or utilizing it for other purposes.
Aker employs advanced proprietary technology to capture CO2 from gasses emitted by industrial plants. The technology is designed to be efficient and cost-effective, which has been a substantial roadblock for carbon-reduction technologies.
2. Occidental Petroleum Corp.
While not a pure carbon capture play, oil giant Occidental Petroleum
OXY
is making moves to become a leader in capture. Occidental is building its first direct air-capture plant with help from a $500 million investment from BlackRock, the world’s largest asset manager.
The endeavor is Occidental’s first large-scale direct air capture project and a true test of the company’s ability to make the economics of DAC work. In fact, Occidental estimates that DAC could be a multitrillion dollar market by 2050 as scale brings efficiency to cost expenditures.
Once Occidental’s plant is commercially operational in mid-2025, the plant is expected to remove 500,000 metric tons of emissions annually, equivalent to the annual emissions of more than 100,000 gas-powered cars.
3. Equinor ASA ADR
Equinor ASA
EQNR
is a Norwegian-based oil and gas company that engages in the exploration, production, transportation and refining of energy across Norway and internationally.
The company is also positioning itself as a leader in carbon-capture technology. Last year, it purchased a 25% stake in Bayou Bend CCS LLC, one of the largest carbon capture storage projects in the United States.
4. Air Products and Chemicals, Inc.
Air Products and Chemicals, Inc.
APD
is a global leader in the industrial gases and chemicals sector. It is heavily involved in various hydrogen and carbon-capture projects, which contribute significantly to reducing greenhouse gas emissions.
Air Products operates one of the world’s largest carbon capture and storage projects at its hydrogen production facility in Port Arthur, Texas. This project captures approximately one million tons of CO2 annually.
The bottom line
Air capture carbon technology represents a promising area for investment due to its potential to address climate change, scalability, technological advancements, supportive policies and market growth.
Investing in direct air capture technology not only supports sustainable development but also holds the potential for solid investment returns. This dual benefit makes it an attractive proposition for potential investors.
Read more: Harnessing technology for renewable energy solutions