TD Bank Group, the sixth-largest bank in North America, has entered into a significant purchase deal for carbon removal credits with 1PointFive, a subsidiary of Occidental Petroleum. The credits will be sourced from 1PointFive’s STRATOS direct air capture (DAC) plant, which is currently under construction in Texas. This agreement marks one of the largest purchases of carbon removal credits by a financial institution, with TD Securities set to buy 27,500 metric tons of carbon dioxide removal credits over four years.
DAC technology, also known as direct air capture, is an emerging carbon removal technology that has the potential to help the economy achieve net-zero emissions. 1PointFive’s STRATOS DAC plant has the capacity to capture and remove up to 500,000 metric tons of carbon dioxide from the atmosphere annually. It is also designed to be the world’s first large-scale commercial deployment of DAC technology for secure and durable storage in geologic formations.
The STRATOS project is part of the U.S. Department of Energy’s $1.2 billion grant program, along with Climeworks’ Project Cypress. The carbon removal credits from 1PointFive’s DAC plant will provide a reliable solution for companies looking to reach their net-zero targets. The facility has the potential to remove up to 1 million tons of CO2, with scalability up to 30 million tons per year, making it one of the largest experiments in DAC.
1PointFive’s STRATOS plant utilizes DAC technology from Carbon Engineering, a company acquired by Occidental for $1.1 billion. The technology involves using large fans to draw in CO2, which can then be pumped underground or used to create valuable products. The credits generated by DAC will be measurable, transparent, and durable, offering organizations a viable option to address their emissions.
Notably, Amazon and Houston sports franchises, the Texans and Astros, have also purchased carbon removal credits from 1PointFive. This marks Amazon’s first significant investment in carbon removal credits. The captured carbon underlying the credits sold to TD Securities will be securely stored underground in geologic formations.
TD Securities’ purchase of CDR credits from 1PointFive aligns with its goal to expand its portfolio of carbon offsets and enhance its trading capabilities in both voluntary and compliance carbon markets. Ernst & Young (EY) has projected the volume and contribution of carbon removal credits by 2050, including nature-based and technology-enabled scenarios like DAC. TD Securities’ Global Head of ESG Solutions, Amy West, emphasized the importance of tangible actions to achieve net-zero goals and expressed pride in partnering with 1PointFive to support innovative, technology-based solutions.
This deal complements TD Securities’ broader ESG Solutions platform, which focuses on providing clients with short, medium, and long-term solutions for transitioning to a lower carbon economy. The carbon removal credits from the transaction will also be used to offset TD’s own operational emissions. TD has unveiled its Climate Action Plan, which aims to achieve net-zero emissions associated with its operating and financing activities by 2050. The plan includes the establishment of a new TD Finance and Corporate Transitions Group to provide clients with advisory services and sustainability-focused financing globally.
TD Securities has a strong commitment to sustainable finance and has been listed on the Dow Jones Sustainability World Index for nine consecutive years. It is currently the top-ranked North American-based bank on the index and an active member of the International Emissions Trading Association (IETA). The bank has also formed a Carbon Markets Advisory team and invested $10 million in the Boreal Wildlands Carbon Project, the largest private land conservation effort in Canadian history.
Last year, TD Securities joined Rubicon Carbon’s coalition of corporate sustainability lenders, aiming to scale up the carbon market and promote confidence and innovation across its segments. This year, the bank announced its Sustainable and Decarbonization Finance Target, with a goal to generate CAD$500 billion through various financial activities over the next decade.
Transitioning to a low-carbon economy requires revolutionary approaches and the adoption of innovative technologies. TD’s senior vice president believes that direct air capture is a promising tool that can advance progress in this sector. The purchase deal between 1PointFive and TD Bank Group is a significant step towards bolstering carbon removal efforts and could inspire confidence and scalability in the emerging carbon removal market.