Illustration: Rebecca Zisser/Axios

Two companies together have set their sights on Texas oil country for building the world's largest facility for sucking carbon dioxide out of the atmosphere, a project that would use the trapped CO2 for boosting oil production.

Driving the news: Carbon Engineering and Occidental Petroleum said Tuesday they're going ahead with engineering and design for a plant in the booming Permian Basin of Texas.

Why it matters: A major UN-led scientific report last year concluded that pathways for holding global temperature rise to 1.5 degrees Celsius all require atmospheric carbon removal in addition to steep emissions cuts.

  • Canada-based Carbon Engineering — whose investors include Bill Gates, the venture arms of Occidental and Chevron, and private equity backers — hopes to commercialize a direct air capture (DAC) technology.
  • Occidental, which specializes in using CO2 injections to boost production from oil wells, can use that trapped CO2.

Where it stands: They're weighing plans for an initial plant that would capture around 500 kilotonnes of CO2 annually, and then scale up with additional facilities around twice that size.

  • If the project moves forward, construction of the first plant would likely begin in 2021.
  • One thing helping to make the project possible are expanded tax credits for carbon-trapping projects signed into law last year.

The big picture: If this project indeed moves ahead, it'll be an important move. "This project shows that this technology isn’t 10 or 20 years away," said Erin Burns of Carbon180, a nonprofit that advocates for negative emissions tech.

  • "The first few projects like this are important not just because of the carbon dioxide they’ll pull out of the air, but because they’ll help pave the way for next tens and hundreds of these plants," she said.

The intrigue: Carbon Engineering CEO Steve Oldham told me the plant would cost in the hundreds of millions of dollars.

  • He said Carbon Engineering is looking at multiple funding options, including existing investors and other parties. “We have some interested third parties who like the look of the business model,” he added.
  • Carbon Engineering had closed a $68 million financing round earlier this year.

But, but, but: There's a tradeoff in using CO2 for producing oil that's later burned in engines.

  • But Oldham said that the crude produced using the captured CO2 would pencil out to be carbon-neutral or even negative.
  • And, he added, it's a big step toward helping DAC become a tool in fighting global warming.
  • “This is proving the technology to achieve what the [UN's Intergovernmental Panel on Climate Change] says is utterly necessary,” he said.

Go deeper: What's needed for worldwide CO2 cuts

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