Armed with $150 million, DAC startup Heirloom is in a ‘unique position’

For Heirloom, the last 12 months have been a whirlwind, starting with a star-studded ribbon cutting of the nation’s first commercial direct air capture plant, and culminating yesterday in a $150 million Series B that included industrial investors from sectors like automotive, aviation, and advanced manufacturing.

Over the last four years, the San Francisco startup has been a prominent beneficiary of the Biden administration’s work to boost both the supply and demand side of the carbon removal market. Heirloom is building out a DOE-backed hub in Louisiana, for example, and is a recipient of the first federal procurement program for CDR.

This latest round of private funding is one of the largest to date for a DAC company. And it comes in the administration’s waning days — a moment when developers and investors alike are mired in uncertainty over the shape of future federal support.

But Heirloom and apparently its investors as well are optimistic about the company’s fate under an incoming Trump administration, and about the longevity of some Biden-era support systems.

“Heirloom is uniquely positioned, because we have done what most climate tech companies have not been able to do, which is build coalitions in Louisiana and build coalitions in California,” head of policy Vikrum Aiyer told Latitude Media in an interview before the raise was finalized. “That suggests that [DAC] goes beyond politics.” 

Heirloom has struck a balance, he added: describing its work as “augmenting our energy economy” and providing good jobs in red states, while highlighting its key role in meeting net zero targets in places like California. And that balance, Aiyer said, is fundamental to its success.

Funding for scale

Heirloom’s process involves using a kiln to extract carbon dioxide from limestone, spread over trays stacked 40 feet high inside a facility. The resulting gas is passed off to a sequestration partner, and the leftover calcium oxide is treated with water, and spread back onto trays to absorb more carbon dioxide.

This latest round of private funding, Heirloom said, will help the company drive down the cost of that process, develop additional projects, and access infrastructure capital.

In other words, that $150 million will get Heirloom closer to scale. Reaching commercial scale remains a serious challenge for DAC, despite federal support from both sides of the aisle and rising private sector interest.

“How quickly we’re able to scale constantly keeps our company up at night — and the ecosystem up at night,” said Aiyer. 

Heirloom’s California plant will remove just 1,000 tons of carbon dioxide annually. Climeworks, which is teaming up with Heirloom on a 1 million-ton Louisiana DAC Hub, is still struggling to get its first commercial plant to its planned full capacity of 4,000 tons. Globally, DAC’s footprint remains tiny, with domestic removal still a far cry from the up to 1.8 million tons annually that the Department of Energy estimates will be needed to reach energy transition goals by 2050.

In the wake of the election, how much federal support CDR companies will have in building a robust market is an open question. But Jane Flegal, who leads market development for the advanced market commitment Frontier, said there’s general agreement in the industry that carbon removal isn’t as polarizing as certain other sectors.

“Carbon removal does fall into this category of climate relevant technologies that has managed to remain somewhat depoliticized,” Flegal said on stage at DOE’s Deploy24 conference this week.

The industry’s success, Aiyer said, will therefore ultimately come down to ensuring that “companies in the space don’t try to pick winners and losers based on who is and isn't in office,” as well as “how quickly we can stitch together public and private coalitions.”

That said, waning government support could be a serious blow to the nascent industry. Stakeholders have long been adamant that the voluntary market — propped up by a handful of large tech companies, many of which have purchased from Heirloom — will not on its own get the technology to scale, and that meaningful public investment and support is critical.

And regardless of how much interest continues to come from the tech sector — or from automotive, advanced manufacturing, or the others that contributed to Heirloom’s $150 million raise, “it would be totally crazy to bet the future of the planet on the essentially philanthropic actions of a couple of well-meaning companies,” Flegal said.