Economics of Direct Air Capture of Carbon Dioxide

Abstract

This Masters Project was designed to review Direct Air Capture (DAC) technology’s current positioning in the market and to pinpoint necessary augmentations to economics and policy that must take place in order to improve that positioning. The underlying problem DAC was designed to solve was climate change, which by economists' standards is considered an externality and not a challenge that directly impacts society’s buying/selling behaviors. We recommend, with this paper, various ways the equation could hypothetically change for which the DAC solution becomes relevant. While the underpinning of our thesis is that improving environmental outcomes by capturing more CO2 emissions is advantageous for our planet’s future, the critical reason for defining market conditions that demand DAC technologies is that concerns of climate change simply aren’t enough to encourage the advancement of the space. Our approach to researching this question is to conduct literature reviews, interviews, and to analyze data sets to determine best fit solutions for stimulating demand for DAC technologies in the market. Through our research, we concluded a number of market scenarios and assumptions that would help the take-off of this technology but the most resounding impact on the space will come from policy solutions.