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BlackRock will invest $550 million in the world’s largest direct air capture project being developed by Occidental Petroleum, in a sign of growing investor confidence in the emerging technology.
The companies announced Tuesday that they would form a joint venture to develop Stratos, a project under construction in West Texas that aims to remove carbon emissions from the atmosphere.
“This joint venture shows that direct air capture is becoming an investable technology, and BlackRock’s commitment to Stratos underscores its importance and potential for the world,” said Vicki Hollub, chief executive of Occidental, one of the largest U.S. oil companies.
It is one of the largest investments in technology ever and a boon for Occidental, whose largest shareholder is Warren Buffett’s Berkshire Hathaway.
The company expects CO2 management to play a significant role in global decarbonization efforts in the future. Direct air capture – or DAC – sucks CO₂ emissions out of the air to bury them underground or reuse them in building materials, agricultural products or fuels, rather than contributing to global warming by remaining in the atmosphere.
The International Energy Agency said the technology will play “an important and growing role” in putting the world on track to reach net-zero targets as economies continue to burn fossil fuels. But it hasn’t been proven on a large scale, and some environmentalists fear it will slow the transition to cleaner forms of energy.
BlackRock is investing through its fourth global infrastructure fund, which focuses on climate-related projects, including those that help brown industries become more environmentally friendly. Last year, the company raised $4.5 billion from global pension funds, insurance companies and sovereign wealth funds to reach its $8 billion goal. BlackRock emphasized that it was putting money into the Occidental project because of the potential for significant returns.
“Occidental’s technical expertise brings this cutting-edge decarbonization technology to unprecedented scale,” BlackRock CEO Larry Fink said in a statement. “Stratos represents an incredible investment opportunity for BlackRock’s clients. .[and]highlights the critical role of American energy companies in climate technology innovation.”
The $9.1 trillion asset manager’s use of environmental factors in his investing has made him a target of Republican politicians, who accuse him of boycotting fossil fuels and being “woke.” Meanwhile, climate activists are upset that BlackRock voted against most climate-related shareholder proposals this year, saying the proposals were too strict. BlackRock and Fink insist that the fund manager puts investors’ returns and needs first.
Occidental says Stratos, which is designed to capture up to 500,000 tons of carbon per year, is about 30 percent complete. Commercial operations are scheduled to begin in 2025.
In August, another DAC development from Occidental was among the winners of a $1.2 billion Energy Department award as the Biden administration seeks to accelerate commercialization of the technology as part of its efforts to decarbonize the economy.