Climate-tech firm Climeworks to sell carbon credits to BCG

By Peter Henderson

SAN FRANCISCO (Reuters) - Carbon capture startup Climeworks said it has agreed to sell 80,000 metric tons of carbon credits to Boston Consulting Group (BCG) over 15 years, its biggest and longest-duration deal.

It is an important step toward building credibility for the nascent direct air capture (DAC) industry - which uses minerals and chemicals to suck carbon dioxide out of the air - as it ramps up commitments that will help it attract new funds for expansion.

The deal comes on the heels of a new global agreement to combat climate change.

Other startups have signed similar deals: 1PointFive, a unit of oil company Occidental Petroleum, agreed to sell 250,000 tons of credits over 10 years to Amazon.com, and California-based Heirloom said in September it would sell 315,000 tons of credits to Microsoft.

Climeworks Chief Financial Officer Andreas Aepli told Reuters that purchase commitments would show project financiers a clear income stream, crucial to raising money for construction of new plants. The 15-year tenure of the project was particularly important, he added.

"The longer we can stretch these agreements, the longer we can get customers to commit, the more financeable these plants become," he said.

Climeworks and BCG declined to give the price of the credits. Earlier this year, Climeworks sold JPMorgan Chase credits for around $800 a ton. A similar price would put the new agreement at around $64 million.

Climeworks' largest working project removes about 4,000 tons of carbon dioxide from the atmosphere each year. The $800 per ton price is about eight times more expensive than what experts think is likely to spur widescale adoption, illustrating the challenges facing the technology.

Still, the world is expected to need to capture billions of tons of greenhouse gases annually to avoid disastrous climate change, U.N. scientists have said.

Climeworks and other DAC firms in August were winners of the first round of a U.S.-funded project to build hubs that could remove millions of tons of CO2.

(Reporting by Peter Henderson; editing by Sayantani Ghosh and Leslie Adler)