David Keith has an idiotically simple-sounding solution for our problematic habit of belching carbon dioxide into the atmosphere: Take it out again. Don’t just focus on capturing the CO2 as it escapes a smokestack. Make the atmosphere cleaner by running all of our air through a filter that extracts greenhouse gas. Simple, right?

Not exactly. There’s devilry in the details, as with every idea that emanates from the mind of Keith, a physicist on the faculty of Harvard who’s been named a Hero of the Environment by Time magazine and has dabbled in solar geoengineering and carbon capture and storage (CCS). Exorcising those demons is the mission of Carbon Engineering, a company Keith founded in 2009 with seed money from Microsoft founder Bill Gates and billionaire oilman Murray Edwards, among others. At this point, the company has raised more than $10 million from private sources and $5 million from government grants, and has 20 employees. And its already ambitious plans for helping to fix the earth’s pre-eminent environmental problem are about to get a whole lot bigger: It aims to manufacture carbon-neutral alternatives for the parts of our economy that remain intractably dependent on fossil fuels.

The company’s timing seems fortuitous. The G7 industrialized nations’ declaration last June, echoed in the Paris Agreement negotiated by 196 participating countries in December, set a deadline to get mankind’s net carbon dioxide emissions to zero by 2100. If a zero-emission world is hard to imagine, think of fixing humanity’s fossil-fuel addiction as a 12-step program. The first step, acknowledging the problem, is logically followed by relatively simple behavioural changes that go a long way toward eliminating the crisis—steps our society is taking right now, such as conservation (turning off the lights when we don’t need them), energy efficiency (switching to low-wattage bulbs) and fuel substitution (from coal to natural gas–fired power plants). Next come more difficult and less rewarding steps, such as building renewable and nuclear power generation plants, heating buildings geothermally and converting gasoline vehicles to electric.

What Carbon Engineering is attempting is more like step 10 or 11 on the journey to global clean living. In a convoluted way, they intend to take human activities reliant on liquid hydrocarbon fuels and render them carbon neutral. “Batteries or fuel cells aren’t going to solve long-haul transportation and aviation,” says Adrian Corless, a veteran executive in the alternative energy space who took over as CEO from Keith (now executive chairman) in 2013. As far as Corless is concerned, battery power, hydrogen, biofuels and synthetic hydrocarbons will all have niches in the carbon-neutral transportation of the future. “They’re all just derivatives of renewable energy.”

At the end of a cracked and potholed road on the tourist-unfriendly side of Squamish, B.C.—log-sorting yards to the left, a brushy slough to the right—lies a gated yard with a big metal shed, a small office and an array of humming clean machinery. This is the site of Carbon Engineering’s demonstration plant, where, in 2015, after years of designing and testing the component systems at its head office in Calgary, the company knitted all of the pieces together to demonstrate how to scrub the atmosphere using industrial machinery.

“We didn’t scale this equipment up from the lab,” explains my guide, Geoff Holmes, Carbon Engineering’s business development manager. Rather, it’s a miniaturization—1,000 times smaller—of a commercial-scale plant. An artist’s rendering of such a facility on the Carbon Engineering website shows a wall of fan blades rotating behind grills stacked four high and stretching across a barren plain.

Here in Squamish, there’s just a single “gas-liquid contactor.” It looks and sounds like a monster air conditioner, with a powerful fan stack on top and intakes at either end that suck the surrounding air through “packing,” a honeycomb of corrugated plastic. As this happens, a constant flow of a liquid solution, potassium hydroxide, runs over the honeycomb. The solution bonds with the CO2 in the air to create a salt solution called potassium carbonate. Efficiency ranges from 70% to 80%, Holmes says. “Air goes in with about 400 parts per million [of carbon dioxide, or 0.04%] and comes out with something like 100”—less carbon, in other words, than the earth’s atmosphere had prior to the Industrial Revolution.

That, of course, is far from the end of the story. Pumps and pipes take the carbonate solution to a large vessel, known as a pellet reactor, protruding from the top of the metal shed. Here, liquid calcium hydroxide is added, which causes the carbonate to transform into a solid called calcium carbonate. Further processing transforms the solid into pellets the size of a dry grain of rice. Those pellets are eventually fed into an enclosed furnace called a circulating fluid bed calciner.

Amid an inferno of natural gas and pure oxygen, the solid pellets break down, producing three things: pure CO2, water vapour and solid calcium oxide (also known as quicklime). When the last two are combined and cooled, they reconstitute as calcium hydroxide (or slaked lime) and get sent back to the pellet reactor in a perpetual closed loop.

The carbon dioxide, meanwhile, can be cooled and compressed into a liquid, suitable for a number of uses. It could be piped to an underground salt cavern for permanent storage, as it is with most CCS projects. It could be injected into oil or gas wells to push out more hydrocarbons, a process known as enhanced oil recovery (EOR). As it is, the Squamish plant doesn’t have the capacity to do either of these things. The tonne of CO2 it collects per day—about what your car would emit in three months—ends up vented back into the atmosphere. Still, operating less than a year, the pilot is “absolutely a success,” says Corless, who founded Vancouver fuel cell company Cellex Power Products and went on to serve as chief technology officer of Plug Power, the American company that acquired it. Carbon Engineering has an appreciable lead over rivals such as Climeworks of Switzerland and American startup Global Thermostat at demonstrating the feasibility of direct air capture (DAC) of carbon dioxide.

Now, though, it’s undertaking a new round of financing and forging industry partnerships to pursue the vital next step that would truly set it apart from the competition. It aims to build out the system in Squamish so that it uses the captured atmospheric carbon dioxide to manufacture effectively low- or even zero-emission hydrocarbon fuel that you could burn in your car’s engine.

Basically, the company aims to take its carbon dioxide and combine it with hydrogen extracted from water (using a tried-and-true industrial process known as electrolysis) to make hydrocarbons like synthetic diesel or kerosene. “And if that’s atmospheric CO2, and you’ve used renewable electricity to make the hydrogen, then in principle you can make fuel that is fully carbon-neutral,” Holmes enthuses.

He estimates the all-in cost of producing this fuel in a commercial plant at between US$1 and $1.50 a litre—and a little more than that if you make it really carbon-neutral by replacing natural gas–burning equipment with something running on clean electricity. That can’t touch the pre-tax price of gasoline.

However, says Holmes, Carbon Engineering aims to follow Walter Gretzky’s advice to skate not to where the puck is but where it’s going to be. The introduction of government regulations and policies aimed at curbing emissions promise to fundamentally change the economics of energy production. The European Union, California and British Columbia already have low-carbon fuel standards. California, for example, has a standard of 95 grams of CO2 emitted for every megajoule of energy produced. Companies that produce or distribute fuels exceeding that threshold accumulate deficits, while lower-carbon fuels earn credits. “If all you do is produce low-carbon-intensity fuels, then you can sell your credits,” Holmes says. “In California today, those credits are selling for more than US$100 per tonne of CO2 equivalent.”

It’s in these market instruments meant to decarbonize the economy that the company sees its business case. The actual policies used may differ from one jurisdiction to the next, but “we’re fundamentally arcing toward a carbon-neutral future,” says Holmes.

Carbon Engineering has funding in place to continue running its direct air capture plant for 18 months, while finding ways to optimize the process, Corless says. By the second quarter of this year, he expects to have the next round of funding completed. He won’t say how big it will be, but he estimates the cost of adding the fuel-synthesis capability to the Squamish plant at $6 million to $8 million. Gates and Edwards, acquaintances and admirers of Keith since before Carbon Engineering’s founding, have participated in every equity fund-raising round so far, and Corless expects this one will be no different.

Should the fuel pilot turn out as successful as the air capture, the company’s next step would be to identify early markets for commercial application—places with access to cheap renewable energy or surplus industrial hydrogen and that are still able to benefit from low-carbon regulatory jurisdictions. “We’re going to be looking for those opportunities where there’s the pull,” Corless says.

A 2013 case study on Carbon Engineering by the Harvard Business School cautioned that DAC technologies all depend “on a long-term need and society’s willingness to pay for limiting atmospheric CO2” and that the “fuels produced using DAC were significantly more expensive than those obtained through CCS or EOR.” However, Carbon Engineering’s technology had an advantage over its rivals in that “the underlying components and processes had been used in industry for several decades and were largely well-understood.” Keith described it as “Russian tractor” technology, meaning the components themselves are relatively simple. Making his case for the Harvard reviewers, he noted only a small fraction of the US$300 billion being spent every year on clean energy technology is hitting a cost of US$150 per tonne of carbon emissions that is reduced or avoided. “And we’re cheaper.”

Others might argue that Keith’s solution—applying yet more industrial machinery to mitigate a problem caused by industrial machinery—is akin to giving an addict new drugs to get off the old ones. But Corless sees no alternative if we want to both decarbonize the planet in the course of a lifetime and support the population already living on it. “It’s ironic, but it’s probably going to take a technological fix to solve a problem that’s caused by technology,” he says. “What we’re proposing is to mechanize the process of photosynthesis with a footprint that is less than 1% of what would be required for the equivalent production of biofuels.”

---

MORE ABOUT CANADA’S MOST INNOVATIVE COMPANIES:

• How Canadian Tire is pioneering tomorrow’s retail experience now
• How Kinaxis harnesses the cloud to tame global supply chains
• How InteraXon plans to monetize reading people’s minds
• Axiom Zen is building a startup that builds startups

---

More Lists & Rankings