Swiss Re Signed a $10 Million Carbon Capture Deal
(Bloomberg) -- Reinsurance giant Swiss Re announced Wednesday that it had signed the world’s first long-term agreement to take carbon directly out of the air. The contract with Climeworks AG, one of the world’s leading direct air-capture startups, will net the climate technology company $10 million over 10 years.
Mischa Repmann, a senior environmental management specialist with Swiss Re, said the deal would not only help his company reach its goal of becoming carbon neutral by 2030, it could inspire other business considering the use of carbon capture technology. “It’s a call for action, and we’re hoping that others will follow,” he said.
The news comes just weeks after the United Nations Intergovernmental Panel on Climate Change released its latest climate science report, which found the future of a livable planet relies on our removing anywhere from 100 billion to a trillion tons of carbon already in our atmosphere by the end of century, depending on how much more we keep putting into it.
Swiss Re’s own bottom line has been hit hard by increases in extreme weather attributed to climate change. Earlier this month, the company said insured losses it covered in the first half of this year were the second highest on record.
Technology to capture carbon directly from the air is still in its infancy. Julio Friedmann is a senior research scholar at Columbia University’s Center on Global Energy Policy, part of the School of International and Public Affairs, and a leading expert on the topic. He estimates that the world currently has the capability to remove about 5,000 tons of carbon per year through direct air capture, or 0.0004% of the minimum average level required.
Climeworks, a Switzerland-based company, is set to open a plant in Iceland in September that will filter CO₂ from ambient air using geothermal energy. The captured CO₂ will then be dissolved in water and pumped deep underground for permanent storage in nearby rock layers. While underground, the gas reacts naturally with its surroundings to form rock, preventing the carbon from reentering the atmosphere. The company says the facility will have the capacity to capture and store 4,000 tons of CO₂ per year.
Climeworks is one of several startups aspiring to lead the nascent carbon capture industry. Its most notable competitor, Canada’s Carbon Engineering, is working on a project it says can potentially suck 1 million tons of carbon from the air annually.
Swiss Re and Climeworks didn’t specify how much carbon would be removed in fulfillment of their contract and were vague about the cost, saying only it would be several hundred dollars per ton. Climeworks says the average price will decline as its operations grow, and may be as low as $200 a ton by 2030.
The two called the project the world’s “first, long-term” carbon capture partner purchase agreement. Those words are chosen carefully. Microsoft Corp. also has an agreement with Climeworks to remove 1,400 metric tons of carbon from the air in fiscal year 2021, and is providing direct investment through its Climate Innovation Fund. Swiss Re, however, has structured its deal as a regular client payment over a decade as a way to encourage banks to invest and other clients to sign up, it said. The company’s chief executive officer, Christian Mumenthaler, is also co-chair of the World Economic Forum’s Alliance of CEO Climate Leaders. “Clearly we are trying to send a market signal,” Repmann said.
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