Carbon Engineering sold to US oil and gas company Occidental for $1.1 billion

Carbon Engineering
Squamish cleantech startup latest to be attracted by US green tax credits, incentives.

Squamish, BC-based cleantech startup Carbon Engineering has entered into a definitive agreement to be acquired by oil -and-gas company Occidental Petroleum for $1.1 billion USD ($1.48 billion CAD)..

Founded in 2009, Carbon Engineering develops technology that captures industrial-scale quantities of CO2 directly from the atmosphere, also referred to as “direct air capture (DAC).”

Occidental has been regarded as one of the big players in carbon capture, utilization, and sequestration. According to Occidental, acquiring Carbon Engineering would support its advancement of DAC technology and accelerate its deployment, through its subsidiary 1PointFive.

Occidental will invest in Carbon Engineering’s tech to accelerate deployment in the US and beyond.

The deal is expected to close before the end of this year, said Occidental, and is subject to Canadian court reviews, Canadian and United States regulatory approvals, as well as other closing conditions. The oil and gas company trades on the New York Stock Exchange as ‘OXY.’

The transaction will be made through three “approximately equivalent” annual payments, with the first delivered at closing. Upon closing, Carbon Engineering would become a wholly-owned subsidiary of Occidental’s Oxy Low Carbon Ventures.

This acquisition is the culmination of a four-year partnership between the two companies. Occidental has been using Carbon Engineering’s DAC deployment since 2019. With this deal, Occidental subsidiary 1PointFive will use Carbon Engineering’s technology at a Texas DAC plant that is expected to remove one million tonnes of CO2 per year.

Prior to this acquisition, 1PointFive has been working directly with Carbon Engineering as its global deployment partner.

Carbon Engineering CEO Daniel Friedmann told The Globe and Mail that Occidental has committed to investing in its technology in Canada to accelerate deployment in the United States and beyond.

Carbon Engineering has previously received backing from a number of government agencies, such as Natural Resources Canada, Sustainable Development Technology Canada, the BC Innovative Clean Energy Fund, Emissions Reduction Alberta, and the National Research Council of Canada’s Industrial Research Assistance Program.

Notably, Carbon Engineering also names Bill Gates as one of its backers, alongside Canadian oil-sands financier and Calgary Flames co-owner N. Murray Edwards.

Occidental president and CEO Vicki Hollub said in a statement that the addition of Carbon Engineering will also create new revenue streams like technology licensing and royalties.

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“Importantly, the acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” Hollub added.

Carbon Engineering is one of the latest Canadian cleantech startups to be pulled towards south of the border as more companies make use of the Inflation Reduction Act (IRA) in the United States.

In an August 2022 blog post, Carbon Engineering said it expects that the support from the IRA will further accelerate the company, 1PointFive, and their other partners in their shared mission of addressing emissions at “climate-relevant scale.”

Featured image courtesy Carbon Engineering.

Charlize Alcaraz

Charlize Alcaraz

Charlize Alcaraz is a staff writer for BetaKit.

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