Royal Bank of Canada (RBC) and Microsoft are among the first buyers of carbon removal credits from Montreal-based Deep Sky, paying to remove 10,000 tonnes of carbon dioxide (CO2) from the atmosphere.

The agreement will see Deep Sky use an array of direct air capture (DAC) technologies at its Deep Sky Labs site in Innisfail, Alta. starting in the summer of 2025. The plan is expected to take 10 years to complete, and both buyers have the option of purchasing an additional one million credits from Deep Sky’s expected pipeline of commercial projects.

Funds from the purchase, which marks Deep Sky’s first commercial-level activity, will go toward supporting the operations of Deep Sky Labs and further testing and validation of DAC solutions, Charlie Renzoni, vice-president of carbon markets at Deep Sky, told Sustainable Biz Canada in an email exchange.

“These founding buyers are made up of two companies who recognize carbon removal’s important role in earth’s decarbonization,” Damien Steel, Deep Sky’s CEO, said in a release. “This first group to invest catalytic capital in carbon removal gives us more confidence than ever that we can overcome humanity’s greatest challenge and reverse climate change.”

Deep Sky is a company aiming to build a network of sites across Canada to remove CO2 from the atmosphere and oceans at large scale.

How the carbon removal will happen

At Deep Sky Labs, which will be operational in the spring of 2025, a mix of eight DAC technologies are installed and being piloted.

Equipment from providers such as Airhive, Mission Zero, Skyrenu and Skytree will be employed as part of the credit purchase, Renzoni said, and other technologies could also be used.

To ensure the energy-intensive carbon removal process does not defeat its own purpose, Deep Sky Labs will be powered entirely by solar energy, the Deep Sky vice president explained. The company also said it prizes energy efficiency when it chooses technologies to test, on top of simplicity and scalability.

Once the CO2 is captured, it will be transported to an operational storage well.

Renzoni declined to disclose financial terms of the purchase, including the cost per carbon removal credit or a value to the 10,000 tonnes of CO2 removed.

“Carbon removals is an emerging segment of the voluntary carbon markets, and new, technology-based solutions are needed to support its growth,” Sarah Thompson, global head of sustainable finance at RBC Capital Markets, said in a release. The bank has a 2050 net-zero target.

Microsoft, which committed to being carbon negative by 2030, has stated it plans to remove all the carbon it has emitted directly or from electricity consumption since its founding by 2050.

Earlier this year, Microsoft announced an agreement with BTG Pactual Timberland Investment Group to support the creation of eight million carbon removal credits in South America.

Corporations spending big on reversing climate change

Though the carbon removal sector is in its infancy, greater emphasis has been placed on the technology as a means of potentially reversing global warming. The United Nations put a spotlight on carbon removal in 2022, deeming it a necessary technology to avoid the worst of climate change as global temperature records are broken every year.

JPMorgan Chase in 2023 signed agreements to purchase over US$200 million of carbon removal credits to capture and store 800,000 tonnes of CO2 equivalent.

Also that year, Stripe, Shopify and H&M Group unveiled they planned to spend US$7 million on carbon removal purchases from 12 companies.

Carbon removal technologies have also been criticized as unproven, expensive, energy-hog technologies that could distract from more effective answers and give large polluters a reason to continue their activities, despite accounting for only a fraction of the tens of billions of tonnes of greenhouse gases emitted per year.