US-based energy company Occidental has agreed to acquire Canadian climate solutions firm Carbon Engineering (CE) in an all-cash deal worth $1.1bn.

Under the terms of the definitive purchase agreement signed by its fully owned subsidiary, Occidental will pay the total consideration in three approximately equivalent annual payments. The first of which will be made at the closing of the deal.

Carbon Engineering is focused on globally implementing large-scale direct air capture (DAC) technology, which seizes carbon dioxide from the atmosphere. The captured carbon dioxide can either be securely stored deep underground or utilised to generate clean and cost-effective transportation fuels.

According to Occidental, the acquisition of Carbon Engineering is in line with its integrated net-zero strategy. Following the completion of the transaction, the climate solutions firm will become a fully owned subsidiary of Oxy Low Carbon Ventures.

Besides, the transaction will enable Occidental, via its 1PointFive subsidiary, to quickly advance breakthroughs in DAC technology. It will also help the energy company to expedite the deployment of DAC as a large-scale, economical, global carbon removal solution.

Occidental president and CEO Vicki Hollub said: “We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions.

”The technology partnership also adds new revenue streams in the form of technology licensing and royalties. Importantly, the acquisition enables Occidental to catalyse broader development partnerships for DAC deployment in the most capital efficient and valuable way.”

Occidental and Carbon Engineering have been collaborating on DAC deployment since 2019. The latter’s DAC-based climate solutions are said to leverage standardised processes and proven industrial equipment.

Carbon Engineering CEO Daniel Friedmann said: “We have always believed that global partnerships and cross-industry collaboration would be required to deploy DAC infrastructure at the scale required to make a climate-relevant impact.

”Carbon Engineering and Occidental have been working increasingly close together for the past five years to address the CO2 problem, making Occidental a trusted and committed partner for this next chapter in Carbon Engineering’s journey.”

Subject to Canadian court reviews, regulatory approvals in both Canada and the US, and other customary conditions, the deal is anticipated to be completed before the end of this year.

Last week, the US Department of Energy (DOE) committed to allocate up to $1.2bn towards advancing the progress of two commercial-scale direct air capture facilities in Texas and Louisiana.

The selected projects are Project Cypress in Louisiana and South Texas DAC Hub in Texas. The South Texas DAC Hub is spearheaded by 1PointFive in collaboration with Carbon Engineering and Worley.