BlackRock Invests $550 Million in Occidental Carbon Capture
BlackRock Inc. has announced a $550 million investment in Occidental Petroleum Corp.'s Stratos project, which aims to be the world's largest plant for capturing carbon dioxide directly from the air. The investment, made through one of BlackRock's funds, will form a joint venture with Occidental's 1PointFive subsidiary to own the Stratos project. This represents approximately 40% of the project's total cost and is one of the largest investments in direct air capture to date. The Stratos project, currently under construction in Texas, is designed to remove 500,000 tons of carbon dioxide from the air annually and store it underground, generating carbon removal credits. Companies like Amazon.com Inc. and Airbus SE have already committed to purchasing these credits to offset their emissions. The project is expected to start operating in 2025 and is currently 30% complete.
Occidental Petroleum expects strong demand for the carbon removal credits, which are considered higher quality than other types of carbon offsets. The company aims to generate revenue of $580 to $810 per ton from the Stratos project, with a portion of that coming from tax breaks. The demand for carbon-removal credits is expected to increase as airline operators seek ways to offset their emissions. The joint venture with BlackRock demonstrates the growing investment potential of direct air capture technology. However, the project is not without risks, including its large-scale capacity and the potential injection of captured CO2 into old oil reservoirs. The joint venture also represents a significant investment in Texas for BlackRock, which has faced criticism from Republican politicians regarding its support for sustainable investment funds.
BlackRock's $550 million investment in Occidental Petroleum's Stratos project is a significant endorsement for the carbon capture industry. This investment could signal a shift in the business landscape, particularly for new businesses focusing on sustainable technology. The Stratos project's goal to become the world's largest plant for capturing carbon dioxide directly from the air represents a bold step forward in combating climate change.
The high demand for carbon removal credits, coupled with the potential revenue of $580 to $810 per ton, presents an attractive business model for new companies in the sustainability sector. However, the venture is not without its challenges. The large-scale capacity of the project and the controversial method of injecting captured CO2 into old oil reservoirs present potential hurdles.
Furthermore, BlackRock's investment has drawn criticism from Republican politicians, reflecting the ongoing political debate surrounding sustainable investment. Despite these challenges, the joint venture is a testament to the growing potential of direct air capture technology. For new businesses, this development underscores the increasing viability and profitability of sustainable technologies. However, it also emphasizes the need for careful navigation of the associated risks and potential political backlash.