Imagine driving up to your local gas station and being able to choose between regular, premium, or carbon-free gasoline.

Carbon Engineering, a Canadian company, is already making a liquid fuel by sucking carbon dioxide (CO2) out of the atmosphere and combining it with hydrogen from water. This is an engineering breakthrough on two fronts: A potentially cost-effective way to take CO2 out of the atmosphere to fight climate change and a potentially cost-competitive way to make gasoline, diesel, or jet fuel that doesn’t add any additional CO2 to the atmosphere.

“This isn’t going to save the world from the impacts of climate change, but it’s going to be a big step on the path to a low-carbon economy,” said David Keith, a Harvard Professor of Applied Physics and founder of Carbon Engineering. Keith said capturing CO2 from the air and making fuel didn’t require scientific breakthroughs per se as much as $30 million, eight years of engineering, and a “million little details” to get the process right.

Getting it right also meant keeping the costs below $100 for each ton of CO2 removed from the atmosphere. The design and engineering cost of the pilot project that’s been running since 2015 in Squamish, British Columbia, was published today in the peer-reviewed energy journal Joule. The company used existing industrial processes to scale up and reduce costs.

“Our paper shows the costs and engineering for a full-scale plant that could capture one million tons of CO2 a year,” Keith said.

Removing Carbon: Why It Matters

Until now, the costs of CO2 removal, or what’s known as “direct air capture,” were believed to be at least $600 per ton. That was far too much to be useful in sucking large amounts of CO2 out of the atmosphere. Every year the world burns enough fossil fuels to add close to 40 billion tonnes of CO2. However, keeping global warming to less than 2 degrees C (the international target to avoid the most dangerous impacts) will likely require “negative emissions”—some way of taking lots of CO2 out of the atmosphere and storing it permanently, according to the Intergovernmental Panel on Climate Change (IPCC).

Watch: "Carbon Can't Hide Anymore." This film is part of the Shortfilm Showcase and any views expressed are those of the filmmakers.

Still, even at $100 per ton, there aren’t enough CO2 buyers right now. So the company decided to make a carbon-neutral liquid fuel, said Steve Oldham, CEO of Carbon Engineering. The captured CO2 is combined with hydrogen, which is made through the electrolysis of water. While the process requires a lot of electricity, the pilot plant in Squamish uses renewable hydro power. The resulting synthetic fuel can be blended or used on its own as gasoline, diesel, or jet fuel. When it’s burned it emits the same amount of CO2 that went into making it, so it’s effectively carbon neutral.

“It costs more than a barrel of oil right now, but in places with a price on carbon of $200 a ton, like what’s enabled through California’s Low Carbon Fuel Standard, we’re competitive,” Oldham said in an interview.

View Images Carbon Engineering's equipment pulls carbon dioxide out of the atmosphere at a test plant in British Columbia. Photograph by Carbon Engineering

A carbon price is a cost applied to industries that emit carbon pollution. British Columbia has a carbon price of C$35 a ton, and all of Canada will have a $10 price in September that will rise to C$50 in 2022. No U.S. atate has joined in yet, but Washington State may be the first to charge a $15 carbon pollution fee if a new ballot measure passes. The U.S. is facing climate and air pollution costs reaching at least $360 billion annually, according to a 2017 report.

“I’m excited by the project. The numbers in Joule look good,” said Klaus Lackner of the Center for Negative Carbon Emissions at Arizona State University, who pioneered the concept of direct air capture of CO2 in the 1990s. Carbon Engineering has proven that it can be done and be cost-effective, and that is a very important step for the industry, Lackner said in an interview.

The next step is to have a number of scaled-up plants producing hundreds of thousands of barrels of carbon-free fuel, to drive down costs further, much as solar and wind energy costs have plummeted over the past decades as scale has risen. As prices fall, more governments may get on board with the idea of pulling CO2 out of the air.

“We will need a trillion-dollar industry to [keep warming below 2 degrees C]. That seems like a lot, but today’s airline industry is larger,” Lackner said.

Carbon Engineering is building a larger plant, utilizing low-cost renewable energy, that will produce 200 barrels of synthetic fuel a day. It should be operational in 2020, said Keith. The company is also looking to license their technology.

“We think this is very scalable and will have world-wide markets,” says Oldham. “All you need is air and water as feedstocks, and some electricity.” And a license to their tech.