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A British Columbia startup funded by Bill Gates says it can capture carbon dioxide from the atmosphere for less than US$100 a tonne and produce a low-carbon transportation fuel that can replace traditional gasoline at a competitive cost.

In a peer-reviewed paper published on Thursday, Harvard University physicist David Keith described breakthroughs in “direct air capture” (DAC) technology achieved by Squamish-based Carbon Engineering Ltd., which he co-founded in 2009.

The company has been running a pilot plant since 2015 and has raised $30-million from private and government investors. It is now in the market to raise an additional $60-million as it prepares to build its first commercial-scale operation. Its two largest investors are Mr. Gates and Murray Edwards, executive chairman of Calgary-based Canadian Natural Resources Ltd.; its top executives are former leaders at MacDonald Dettwiler and Associates Ltd.

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Previous research suggested it would cost US$600 a tonne to remove CO2 from the atmosphere using DAC technology, making it too expensive to be a feasible solution to removing carbon from the atmosphere at scale, Dr. Keith said in a release on Thursday.

“At Carbon Engineering, we now have the data and engineering to prove that DAC can achieve costs below US$100,” he said.

Currently, researchers and clean-tech companies have focused on capturing carbon dioxide from emissions streams from fossil fuel plants, such as coal-fired power plants or natural gas-fired turbines. The CO2 is either used in innovative industrial processes or sequestered underground.

The DAC technology will efficiently remove carbon directly from the air, as opposed to the current practice of capturing it from emission streams at industrial plants, Dr. Keith argues. That’s a key long-term goal as the scientists expect fossil-fuel use to continue for many decades. Many scientists also believe the world will miss its target of limiting concentrations in the atmosphere and holding the total increase in global temperatures to well below 2 C, as agreed at the Paris climate summit in 2015.

“What I hope is that our paper demonstrates that this is a doable technology,” he said in a telephone interview from Cambridge, Mass. “It’s not a magic bullet, it’s not too cheap to meter, but it’s something that really we think could be built out, and could be built out at relatively low technical risk. So we hope it is really a turning point.”

Dr. Keith acknowledged that scaling up to a commercial-size plant can prove more costly than anticipated, but insisted the technology is largely proven.

The projected costs of direct air capture range from less than US$100 a tonne when it is part of a fuels plant, to US$250 a tonne when it used for pure sequestration that requires compression of the gas and additional capital costs for a stand-alone operation, concluded the paper, which was published in the journal Joule. In the case of manufacturing transportation fuel, the carbon is essentially recycled and replaces fossil fuels pulled from the ground, hence the process is carbon neutral. If the carbon is sequestered under ground, that would amount to a net reduction of CO2 in the atmosphere, known as negative emissions.

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The DAC technology – combined with access to low-cost, renewable electricity – will allow Carbon Engineering to produce a clean, liquid hydrocarbon fuel that can be mixed with gasoline, and eventually used as a stand-alone fuel, said Dr. Keith, a former University of Calgary professor who maintains a home in Canmore, Alta.

The company believes it can produce virtually zero-carbon fuel at a cost roughly 25 per cent higher than that of traditional gasoline, but which can fetch premium prices.

The process is electricity-intensive and the steep decline in wind and solar energy costs is as critical to the company’s business model as the success in driving down the cost of direct carbon capture, Dr. Keith said.

Carbon Engineering recently recruited two former executives from MacDonald Dettwiler, who left the firm that has been taken over by U.S. interests. Daniel Friedmann departed MDA in 2016 and joined the startup company as board chairman; he in turn recruited Steve Oldham, who was vice-president for strategic development at MDA, to become Carbon Engineering’s chief executive last January.

In an interview, Mr. Oldham said Carbon Engineering plans to license its technology to existing industry customers or new entrants who want to invest in low-carbon fuels. The company is currently negotiating with several potential partners to build the first commercial plant, he said.

Carbon Engineering’s fuel qualifies as a high-grade renewable fuel under the Environmental Protection Agency’s renewable fuel mandate. The market will get a further boost as the Canadian government and U.S. states adopt clean fuel standards that will provide incentives for marketers to purchase low-carbon alternatives.

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Mr. Oldham said the air-to-fuel process could reduce the need to electrify the transportation system by providing a carbon-neutral alternative to traditional fuels.

“Our low-carbon fuel is entirely compatible with any automobile, any truck, any airplane that exists today,” He said. “By making the fuel carbon neutral, the entire transportation sector can become carbon neutral without changing all of the infrastructure – we don’t all have to get a new car, we don’t have to replace every gas station with an electric grid for charging.”

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