Swiss Carbon Capture Giant Climeworks Lays Off Staff Amidst Funding Cuts and Operational Challenges

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Climeworks, a leading direct air capture company, is laying off 20% of its workforce despite its technology’s promise to combat climate change. The move comes amidst economic uncertainties, shifting climate policy priorities, and mounting criticism regarding the operational capacity of its plants and its own carbon footprint.

Headwinds for Carbon Capture

Climeworks, known for its Orca and Mammoth plants in Iceland that extract carbon from the air, faces significant challenges. The company attributes the layoffs to economic uncertainties and changing climate policy, particularly in the US where a planned Louisiana plant’s future is uncertain due to potential funding cuts under the Trump administration.

Operational Shortfalls and Criticisms

Despite its high profile, Climeworks has faced criticism for its plants operating significantly below maximum capacity. For instance:

Orca Plant: Has a maximum capacity of 4,000 tons of carbon per year but has never captured more than 1,700 tons annually since opening in 2021.
Mammoth Plant: With a maximum capacity of 36,000 tons per year, it has only removed a total of 805 tons since opening last year. This figure drops to 121 tons when accounting for carbon produced during construction and operation.

Critics also point out that Climeworks’ corporate emissions, from activities like office space and travel, currently outweigh the carbon removed by its plants. The company maintains that these are “teething pains” of a new industry and that corporate emissions will become “irrelevant” as plant sizes scale up.

The Direct Air Capture Dilemma

Direct air capture (DAC) technology, while promising for removing existing atmospheric carbon, is energy-intensive and expensive. The concentration of carbon dioxide in the atmosphere is very low (around 0.04%), making its extraction a complex and costly process. Howard Herzog, a senior research engineer at the MIT Energy Initiative, likens it to finding 10 red marbles in a jar of 25,000 marbles where 24,990 are blue.

Policy Instability and Future Outlook

The success of DAC also hinges on the willingness of companies to purchase carbon credits and stable policy environments. The potential slashing of climate funding in the US creates significant policy instability, which could hinder the development and scaling of various climate technologies, not just DAC. While the technology is feasible, its widespread success depends on technological improvements, market creation for carbon removals, and consistent policy support.