Amazon Is Betting on Oil Giant Oxy’s Carbon Removal Project

The retail giant agreed to purchase 250,000 tons of carbon removal services over 10 years.

(Bloomberg) — Inc. is backing a massive project by oil giant Occidental Petroleum Corp. to suck carbon from the air, the retailer’s latest effort to offset greenhouse gases emitted by its fleet of trucks, delivery vans and aircraft.

The Seattle-based company said on Tuesday that it would purchase 250,000 metric tons of carbon removal services over 10 years from Oxy. The oil driller’s carbon-removal subsidiary, 1PointFive, is currently building a massive plant in West Texas that is designed to pull carbon from the atmosphere, a process known as direct air capture.

Amazon, which aims to eliminate its carbon emissions by 2040, says it will meet that goal primarily through operational changes like relying on solar power and electric vehicles. The company will also use purchased credits to offset the portion of its greenhouse gas emissions that it isn’t able to wipe out. In recent years, Amazon has spent millions on reforestation and forest preservation projects around the world. Trees absorb carbon as they grow.

Amazon in July said it emitted 71.27 million metric tons of CO2 equivalent in 2022, down 0.4% from the prior year as its growth slowed and renewable energy projects came online. The company’s emissions are up by about 40% since Amazon set its net zero target in 2019.

Tuesday’s announcement marks Amazon’s first investment in technological solutions designed to extract carbon from the air. Amazon didn’t disclose how much it would pay per ton of carbon removed as part of the Oxy deal, which deepens an existing corporate partnership. In July, Oxy made Amazon Web Services its “preferred cloud provider,” saying it would rely on the cloud unit for its core production systems and analytics tools, as well as technology for its direct air capture plants.

Such partnerships between cloud giants and oil drillers are controversial among environmental activists and some Big Tech employees who see them as extending a lifeline to fossil fuel companies. AWS and some rivals say their cloud services can help customers operate more efficiently and meet their own climate goals. 

Oxy also plans to pump CO2 into existing oil wells to force more to the surface — a process it claims will produce emissions-free crude oil. The carbon removal services Amazon acquires from Oxy will be stored in saline aquifers, not used to extract oil, Jamey Mulligan, Amazon’s head of carbon neutralization, said in a statement. “Direct air capture will be critical to combat global climate change, and the science tells us we have a narrow window to massively scale the technology,” he said. “We will work across industries and sectors that have existing expertise and assets that can help us accelerate a net-zero carbon future.”

Companies including All Nippon Airways, Airbus and Shopify have announced purchases of carbon removal credits from 1PointFive.

Separately, Amazon said it would invest in CarbonCapture Inc., a company that builds direct air capture systems. As part of the deal, Amazon is acquiring the right to up to 100,000 metric tons of carbon credits from CarbonCapture, which it subsequently will allocate among its own businesses, or make available to its partners, suppliers and customers.

The world will need to remove billions of tons of CO2 annually by mid-century to avert the worst impacts of climate change.  The carbon removal industry remains nascent, though, and only pulls a few thousand tons of carbon from the atmosphere annually. A number of corporations have purchased services in an effort to expand the market, and the federal government recently announced $1.2 billion in investments for so-called DAC hubs to help the technology mature faster. That includes an award for Oxy to build another Texas plant where it will solely store CO2.

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