Dive Brief:
- Morgan Stanley is partnering with direct air capture company Climeworks to contract the removal of 40,000 tons of carbon dioxide from the atmosphere, Climeworks announced Thursday.
- This is Morgan Stanley’s first foray into purchasing direct air capture credits, according to Climeworks. The deal also represents the second-largest contract for the carbon removal company and is set to run until 2037.
- The deal is part of Morgan Stanley’s strategy to achieve net-zero by 2050 and mobilize $1 trillion in sustainable finance by 2030. Climeworks currently has two operational commercial scale direct air capture and storage plants and plans to build another hub in the U.S., according to a Wednesday release announcing a separate deal.
Dive Insight:
The deal with Morgan Stanley is expected to accelerate ClimeWorks’ efforts to scale up its U.S. operations, according to the Oct. 24 release. The company’s technology is the anchor for the Department of Energy-supported DAC hub, Project Cypress, and DOE gave Climeworks $50 million in March for the hub being built in Louisiana.
Morgan Stanley has financed $820 billion of its goal to fund $1 trillion in sustainable solutions by 2030, according to its 2023 sustainability report. Jessical Alsford, the company's chief sustainability officer, said in the release that the financial institution plays an “important role in helping to direct capital toward low-carbon solutions.”
“Through our partnership with Climeworks, we are supporting the development of technology that can help drive the global economy’s transition to a more sustainable future,” Alsford said.
For Climeworks, the deal allows for further expansion of the Swiss company within the U.S. market. The company’s two operational DAC plants are in Iceland. However, through Project Cypress — a project led by technology research and development company Battelle, with Heirloom Carbon Technologies as a partner — Climeworks hopes to establish the first U.S. DAC hub with the capacity to store up to a megaton of captured carbon dioxide. The project is being funded in part with money from the Infrastructure Investment and Jobs Act.
Climeworks announced the Morgan Stanley deal a day after unveiling a partnership with CapturePoint, a carbon capture, transport, utilization and storage company. CapturePoint will be responsible for safely storing the carbon captured and removed from the air at the Project Cypress plant.
“Investing in carbon removal is more than an environmental responsibility — it's a strategic business move,” Climeworks’ co-CEO Christoph Gebald said in the Morgan Stanley announcment. “By securing access to high-quality carbon removals now, companies position themselves ahead of the curve of future regulatory changes and competitive pressures.”
In addition to increased electrification and clean energy generation, experts say carbon capture and storage is necessary if the U.S. and the world are going to reach their net-zero goals and avoid the worst potential effects of climate change. Tara Narayanan, BloombergNEF’s lead analyst for U.S. trends, said last month that carbon capture and storage is “an urgent and immediate technology that needs to be deployed right away,” to account for the fixed nature of natural gas in the power system.
