Energy giant Occidental (Oxy) announced today the acquisition of Carbon Engineering, a Canadian-based provider of Direct Air Capture (DAC) technology that removes CO2 from the atmosphere and utilizes it to create clean fuels, in a deal valued at $1.1 billion.

The acquisition agreement follows the announcement last week that a large scale DAC project by Oxy’s carbon capture platform 1PointFive, being developed in partnership with Carbon Engineering has been selected as one of two projects to receive up to $1.2 billion in grants by the U.S. Department of Energy (DOE).

DAC technology, listed by the IEA as a key carbon removal option in the transition to a net-zero energy system, extracts CO2 directly from the atmosphere for use as a raw material or permanently removed when combined with storage. According to the landmark Intergovernmental Panel on Climate Change (IPCC) climate change mitigation study released last year, scenarios that limit warming to 1.5°C include carbon dioxide removal methods scaling to billions of tons of removal annually over the coming decades, with DAC positioned to potentially account for a significant portion of the total.

Founded in 2009, British Columbia-based Carbon Engineering is a provider of DAC technology that pulls in atmospheric air and extracts the carbon dioxide through a series of chemical reactions, which is then concentrated, purified and compressed for permanent storage or utilization. The company also provides “AIR TO FUELS” technology, which combines its DAC solution with hydrogen generation and fuel sythensis to produce ultra-low carbon transportation fuels, such as sustainable aviation fuel (SAF).

The company has partnered with Oxy’s 1PointFive for widespread, large-scale DAC deployment. 1PointFive, in partnership with Carbon Engineering, is currently building Stratos, capable of removing more than 250 times more carbon dioxide than the world’s largest DAC facility currently operating.

Carbon Engineering CEO Daniel Friedmann, said:

“We have always believed that global partnerships and cross-industry collaboration would be required to deploy DAC infrastructure at the scale required to make a climate-relevant impact. Carbon Engineering and Occidental have been working increasingly close together for the past five years to address the CO2 problem, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey.”

According to Oxy, the integration of Carbon Engineering will help improve cost and capital efficiencies, add new revenue streams including technology licensing and royalties, provide the opportunity to advance DAC technology, and accelerate the deployment of Direct Air Capture “as a large-scale, cost effective, global carbon removal solution.”

Occidental President and CEO Vicki Hollub said:

“Together, Occidental and Carbon Engineering can accelerate plans to globally deploy DAC technology at a climate-relevant scale and make DAC the preferred solution for businesses seeking to remove their hard-to-abate emissions.”

The transaction is expected to close before the end of 2023, with Carbon Engineering becoming a wholly owned subsidiary of Oxy Low Carbon Ventures.