A Los Angeles-based company kicked off on Thursday what it said will be the first large-scale direct air capture (DAC) project to capture and store 5 million tons of carbon dioxide per year by 2030, benefiting from new U.S. government incentives.

CarbonCapture, founded by technology entrepreneur Bill Gross, announced the start of Project Bison in Wyoming with Frontier Carbon Solutions, marking a milestone as government and private investment pours into the nascent DAC climate technology.

The company described it as the first major scalable deployment of DAC technology and the first to inject and permanently store CO2 underground in federally approved wells.

The passage in August of new law by Congress accelerated the launch of Project Bison by a couple months, giving CarbonCapture and the DAC industry the financial support and long-term certainty needed to scale up the technology, CarbonCapture CEO Adrian Corless told Reuters.

"With the passage of the Inflation Reduction Act (IRA), the proliferation of companies seeking high quality carbon removal credits, and a disruptive low-cost technology, we now have the ingredients needed to scale DAC to megaton levels by the end of this decade," said Corless.

DAC aims to pull CO2 from the ambient air through small, modular units. It differs from carbon capture and storage technology, which captures carbon emissions from the smokestacks of large facilities like power plants.

The U.N.'s Intergovernmental Panel on Climate Change has said large-scale carbon removal technologies like DAC will be needed in the coming decades to limit global warming to 1.5C and avoid increasingly severe climate impacts.

Corless, who previously ran rival direct air capture firm Carbon Engineering, said Project Bison would be operational by the end of 2023.

That target is a full year ahead of Carbon Engineering's first large-scale project in Texas with oil producer Occidental that aims to capture 1 million tons per year.

It would also remove significantly more carbon than rival DAC startup Climeworks, which announced in June a large-scale plant in Iceland that will suck 36,000 tons of CO2 from the air annually within two years.

GAME-CHANGER

Industry experts say the passage of the IRA is a game-changer for the nascent DAC industry.

The law has raised the so-called 45Q federal tax credit for U.S. DAC projects to $180/ton from $50/ton, making projects more financially viable. It also offers direct revenue to project developers rather than a more complicated process of raising tax equity and makes smaller-scale projects eligible for credits.

"You're starting to see an alignment of incentives and policies," said Julio Friedmann, a DAC industry expert and fellow at Columbia University's Center on Global Energy Policy.

Project Bison is the latest climate technology project to be built in Wyoming, a long-time oil, gas and coal producing state that is eyeing new climate technologies like small-scale nuclear power and carbon storage to transition its fossil fuel economy.

Wyoming Governor Mark Gordon told Reuters he wants his state to be home to the first commercial-scale direct air capture project and be able to manufacture all the technology's components.

"We're really trying to get ourselves positioned to be the place of first choice for industry as they emerge with new climate technologies," he said.

Some climate justice groups have opposed the Biden administration's support of what they say is unproven carbon removal technology, arguing that investment is better spent on proven renewable technologies.

Columbia's Friedmann, however, said despite the skepticism, the world cannot meet its climate targets with just renewable energy.

He likened the current state of the DAC industry to the stagnant solar energy industry in 2006. The introduction of tax credits in the United States and subsidies in Germany boosted that technology, he said.

CarbonCapture raised $35 million last year in its first major round of venture capital financing, which included investment from Salesforce Co-CEO Marc Benioff's Time Ventures fund.

Benioff told Reuters DAC will become the next "huge industry."

"We've got hundreds of gigatons of carbon in the atmosphere that have to be removed," he said. "I'm very optimistic that they (Project Bison) will be able to deliver a very exciting and practical way to remove carbon from the environment."