Pierre Conner, Executive Director, Tulane Energy Institute & Professor of Practice, Tulane University Freeman School of Business
Daniel F. Shantz, Entergy Chair in Clean Energy Engineering & Associate Dean for Research and PhD Programs, Tulane University School of Science and Engineering
Eric Smith, Associate Director, Tulane Energy Institute & Professor of Practice, Tulane University Freeman School of Business
Frédéric Gilles Sourgens, James McCulloch Chair in Energy Law & Faculty Director, Tulane Energy Law & Policy Center
Randel R. Young, Executive Director & Distinguished Research Fellow, Tulane Energy Law & Policy Center
Decarbonization of the global energy system – and global industrial systems – will have to rely on aggressive efforts to engineer ways to reduce both CO2 flows (emissions) and the stock of CO2 in the atmosphere. It is often overlooked that both efforts cannot rely on the same technology or engineering solution, and they pose significantly different challenges. Sometimes, this means that we default to choosing one approach over the other. As we will outline in this post, this may not be the most prudent approach. Rather, this blog posts advocates that we should develop ways of stacking approaches.
This post is the first in a longer series that will examine the broader techno-commercial environment facing large-scale CO2 management. In it, we will discuss carbon as a commodity and discuss the problems CO2 presents for the formation of effective carbon marketplaces. We will also discuss the efforts to use CO2 for other processes, spurring the development of a liquid market for CO2. We will then address the issues that carbon transportation poses and how carbon storage creates other complexities. With these introductory posts in place, we will then engage with the deeper problems of decarbonization via carbon removal and what might be better approaches considering lessons learned from engineering, business, law, and policy.
Our author team brings together an interdisciplinary team of energy leaders at Tulane. We come from multiple disciplines. We believe none of us alone has all the answers but that by collaborating closely we can begin to offer pathways to better solutions. We work together to bring our joint experience to bear on complex problems that require the most complex interventions each of our disciplines has undertaken. We offer this blueprint as a starting point for future conversations about how a leading research university can cross intellectual siloes to solve societal problems while at the same time supporting the economy. Finding solutions that make commercial and technological sense – that leverage innovation with markets and clear-eyed policy thinking – is what academia should really be about.
Industrial Capture
When in high concentrations, CO2 is most often removed from industrial processes by absorption into another substance. The typical ‘sorbent’ for CO2 removal is amine absorption. Here, a liquid amine solution intercepts a stream of high concentration CO2 emissions. An amine solution is a water-based solution having an ammonia-based compound. A typical amine solution uses monoethanolamine, yielded by heating 2-chloroethanol with ammonia solution – this solution ‘absorbs’ the CO2 through a chemical reaction. Then, the CO2 is removed from the amine solution and transported for storage or used as a chemical feedstock. However, the regeneration of this solvent is highly energy-intensive, leading to process inefficiencies and higher production costs when using this solution.
An alternative means of removal used in high concentration CO2 environments is adsorption. In adsorption, the CO2 molecules ‘stick’ or bind to the surface of a solid adsorbent. Such adsorption processes use a solid ‘with a high affinity for CO2 molecules’. Currently, we use activated carbon, zeolites, amine-functionalized silicas, or metal-organic frameworks. Yet, research into the most efficient adsorbent is still ongoing.
All other things being equal, these carbon capture processes can make commercial sense in certain applications based on the prevailing tax credits available to market participants in the U.S. capturing CO2 from industrial processes, which are currently set at $85 per ton of CO2 captured and permanently geologically sequestered or used for enhanced oil recovery. This is the tax credit made available by the Biden administration, and bolstered by the Trump administration, under the 45Q program. Aside from tax credit ‘carrots’ the EPA under the Biden administration had also introduced a ‘stick’ that effectively mandated that certain power generation facilities had CO2 capture processes integrated by the early 2030s. However, this prospect is currently under review by the EPA under the Trump administration.
The current incentive level is nevertheless beginning to have a significant impact on the energy industry. Based in part on these incentives, energy stakeholders are investing in carbon capture technology and infrastructure. The current investment level suggests that governmental expenditures are effectively ‘technology forcing’ carbon removal from large sources. That is, the price of technology is decreasing based on available governmental incentives. The key question, therefore, is whether these incentives are sufficient to speed up innovation to drop the price of technology to acceptable levels long-term.
By comparison, the use of catalytic converters in automotive tailpipes is a similar exercise in technology forcing. The catalytic converter significantly reduced the presence of pollutants in tailpipe emissions. Today, the cost of a catalytic converter is comparatively insignificant compared to the price of a new car (according to AutoZone, it is $300 to $2,500). The cost of a catalytic converter therefore has simply become a price all car buyers are accepting. There is comparatively little effort to allow the sale of vehicles without converters, showing how successful technology forcing was in this context. Still, not every technology forcing story comes out this way. Sometimes, the process of reducing the technology price simply takes too long. The key question is how long we need to absorb otherwise potentially ‘inefficient’ costs to get to where we want to go in terms of reducing public health risks and regulating the public good.
Direct Air Capture
In addition to removing CO2 at high emission source points, it is also possible to remove CO2 from ‘normal’ ambient air. This removal technology is known as “direct air capture,” or DAC. The problem is that CO2 concentrations in ambient air are minute – 400 to 420 parts per million or 0.04% (as compared to post-combustion concentrations of CO2 of ~3-20%). One way of visualizing the task of removing CO2 is to imagine a ball pit with ten thousand balls. Assume 9996 of the balls are green and that four4 balls are red. Imagine having to sift through to find the red balls. It is an arduous task due to the low concentration of CO2.
DAC, like CO2 capture from industrial processes, also uses both solvent-based and sorbent-based systems. The problem in the DAC context is that the system is much less efficient as concentrations of CO2 are much lower in ambient air than industrial processes. It is not enough to place the solvent or adsorbent passively in the way of CO2 molecules to have much of an effect. One would catch very few CO2 molecules and have a negligible effect. Imagine how long it would take to ‘capture’ a ton of CO2 molecules by catching one molecule at a time in concentrations as low as 400 to 420 parts per million. Increases in efficiency rely on the development of more efficient solvents and adsorbents and/or passing as much air through the DAC mechanism as possible.
Both tasks are difficult and energy-intensive. That said, DAC is significantly more expensive than industrial capture. In 2023, the cost of DAC according to the World Economic Forum is $600-$1,000 per ton. Costs continue to hover close $1,000 per ton, with some possibility to reduce it through economies of scale to $500 per ton. To be anywhere near marketable, costs would have to be at or below $100 per ton. The marketability challenge becomes even more difficult when you consider the embedded emissions of the power used to power a DAC facility. Given the energy-intensity of the process, it is possible that power consumed directly from the grid for DAC could increase overall emissions – as the marginal unit is often a thermal generator. DAC facilities would need to obtain net carbon neutral power to ensure that net emission savings materialize. For many data centers and green hydrogen projects, the consumption of net carbon neutral power for large, high utilization industrial processes is an expensive endeavor. While the path to economic commercialization of DAC projects exists, it presents a technology forcing challenge that is close to an order of magnitude more significant than faced in industrial capture.
The current 45Q tax credit available for DAC is $180 per ton. This incentive is slightly more than double the credit available for industrial capture. It is still not within a reasonable range of currently achievable prices. That is, the tax credit alone is not enough to support DAC today.
To put it bluntly, there is no market for DAC because CO2 does not currently achieve a sufficiently high price to call for deployment of DAC. If there were such market, it is unlikely that DAC would be deployed as there is enough capacity for industrial capture to satisfy demand. Like any market, demand would be met by lower variable cost resources (i.e. CO2 yielded by industrial capture) before being served by higher variable cost resources (such as DAC). What is more, governmental incentives are just not enough. Even in an ideal case scenario, governmental incentives cover less than half the current costs of DAC. That means that if innovators and their financiers were to rely on these subsidies alone, they would lose between $320- $820 per ton of the CO2 they produce. To return to the holding-your-breath analogy, more people must be willing to hold their breath for longer in order to make DAC a potentially marketable reality.
Pathways for Joint Industrial Capture and DAC Development
It might be forgivable to say that, under the circumstances, one should put all financial resources into technology forcing industrial capture only. There is a potential market for industrial capture, because 45Q sets a sufficient incentive for deployment of the technology in principle. Further, current costs are looking to be within an order of magnitude of being able to be passed-on to end consumers. The average U.S. household used about 899kWh of electricity per month (though in Louisiana, this rises to a record 1,231 kWh per month). Natural gas is responsible for 0.96 pounds of CO2/ kWh. Consequently, monthly household electricity costs would increase by $38.21 (or $52.31 in Louisiana) if a ton of CO2 was priced at $85 and the cost passed on to ratepayers. This would still be about a 25% increase in residential electricity bills – something that is substantial. Yet, it is a sum that is within a single order of magnitude of what might be close to the cost of a catalytic converter. It might even now be fairly distributed in a manner that is in principle absorbable by the economy without incentives through variable ratemaking (though whether this should be done by way of price increases is questionable given the regressive nature of such an approach). As noted in the previous section, the same is certainly not the case in the DAC context. There is no ready market yet for DAC, nor are incentives currently sufficient for its profitable deployment without more.
At this point, it would be economically catastrophic to pass the costs of DAC on to the consumer. A car related thought experiment vividly demonstrates this. At a $1,000/ ton, the math is prohibitive. Burning a gallon of gasoline produces 8,887 grams of CO2 (19.59 pounds). After some arithmetic, the price of a gallon of gasoline would increase by $9.80 if one were to shift the cost of DAC to the consumer. At August 2025, prices that is about a 300% price increase. This is not one order of magnitude off the mark, but two orders of magnitude. Such a through-the-board price increase is neither politically nor economically tenable as it would confront many families and businesses with impossible and existential choices.
To bet just on industrial capture and jettison DAC nevertheless would be short-sighted. In fact, companies like Microsoft have entered into agreements with Occidental Petroleum for DAC services. To understand why we need both industrial capture and DAC, we must first understand what they do. So why bet on DAC? DAC does overlap with industrial capture. One could in principle use both to address CO2 emissions from large scale emission sources. But DAC does more than that. It can reduce existing atmospheric CO2 concentrations. Industrial capture can reduce the emission intensity of energy generation and industrial processes only. It cannot reduce the stock of greenhouse gases in the atmosphere. CO2 emissions remain in the atmosphere for 300 to 1,000 years. That means that the bulk of CO2 emissions from the 19th and 20th centuries (never mind the recent past) remain with us today and will remain with us for a long time. As DAC engineering pioneers put it, to address climate change we ‘must drain the [atmospheric] tub’ if we want to reduce the effects of climate change we are already experiencing today and will continue to experience as atmospheric greenhouse gas concentrations continue to increase. Reducing emissions won’t drain the tub - only DAC can do that.
There is thus a different need for DAC than there is for industrial capture. To put this in perspective, it is difficult to impossible to insure homes in Pacific Palisades, California or New Orleans, Louisiana on the private insurance market. Reducing insurance risk requires us to go back to the risk profile of the last decade or earlier. That means producing CO2 from ambient air. The World Economic Forum reports that “researchers found climate-change attributed costs of 185 extreme weather events from 2000 to 2019 to total $2.86 trillion, averaging $143 billion annually.” The potential to reduce these losses meaningfully is worth significant investment. These investments credibly could be used to technology-force DAC. Importantly, governments cannot achieve this alone. They need help from carbon market mechanisms to shoulder the development cost. Yet, foregoing the development cost considering the losses caused by current CO2 concentrations in the atmosphere would equally seem imprudent.
The question in the end is how we can best create a policy and market environment in which modern technologies can grow into their own to decarbonize the energy and electricity sector. We cannot settle on a single approach as a matter of principle. Rather, we must assess what approach can do what good at what cost. We need to invest prudently to get the most out of the innovation carbon technologies can offer us. This will require cross-cutting public-private partnerships. Luckily, these partnerships will also create economic opportunities and reduce economic losses as we go along. These benefits must stand in relative proportion to the costs involved as measured against other available alternatives. Given the long-term global stickiness of the hydrocarbon energy paradigm, these alternatives will be comparatively limited.
This paper represents the research and views of the author(s). It should not be construed as legal or investment advice. It does not necessarily represent the views of the Tulane Energy Institute, Tulane Energy Law & Policy Center, or Tulane University. The piece may be subject to further revision.
