The Who, What and Where of Elon Musk's $100 Million Prize Money for Carbon Capture Innovation

Mike Blake | Reuters

The details behind Elon Musk's $100 million prize for the best carbon capture technology are coming into focus.

On Jan. 21 when the Tesla CEO tweeted he would be donating $100 million toward a prize for the best carbon capture technology, he piqued interest, but also left many questions unanswered.

On Monday, the nonprofit organization which is running the contest, the XPRIZE Foundation, started to fill in some of those blanks. The XPRIZE has been running innovation prizes since 1994 in the areas of space, oceans, learning, health, energy, environment, transportation, safety and robotics.

The innovation prize will be awarded for the best technology created for removing carbon dioxide directly from the atmosphere or oceans and store that carbon in a safe, cost-effective way.

It will run for four years, launching on April 22, 2021 (Earth Day) and run through Earth Day 2025, XPRIZE says. Musk provided the $100 million prize purse.

"We want to make a truly meaningful impact. Carbon negativity, not neutrality," said Musk, in a written statement released Monday by XPRIZE. "This is not a theoretical competition; we want teams that will build real systems that can make a measurable impact and scale to a gigaton level. Whatever it takes. Time is of the essence."

Teams of innovators from all over the globe can participate in the XPRIZE contest.

To win, teams must create technology that can remove one ton (2000 pounds) of carbon dioxide out of the atmosphere per day. The winning team will also have to be able to demonstrate how their technological innovation can be scaled up to be able to eventually remove gigatons of carbon dioxide, XPRIZE says.

A gigaton is a unit of measuring mass which is equal to one billion metric tons, or 2.2 trillion pounds. NASA has a couple of explanations that help visualize just how large a gigaton is: One gigaton is equal to 10,000 fully-loaded U.S. aircraft carriers or a sheet of ice placed on top of Central Park in Manhattan stacked 1,119 feet high.

Ultimately, the goal of the contest is to inspire the innovation of technology that can be scaled up to collectively remove 10 gigatons of carbon dioxide per year by 2050, XPRIZE says.

"The world needs to develop the capacity to remove up to 10 billion tons of [carbon dioxide] by around the year 2050 to avoid global warming of more than 1.5 or 2 [degrees Celsius]," Marcius Extavour, the executive director of climate, energy and environment prizes for XPRIZE tells CNBC Make It. "In order to get to that capacity (10 billion tons of [carbon dioxide] removal per year), we are likely going to need hundreds of different companies or projects, using several different methods of removing [carbon dioxide]."

The innovation challenge is to catalyze an acceleration in the pace of carbon dioxide capture technological development and deployment. "Right now, we only have a handful of companies doing this, and while some removal solutions are already making great progress and are ready to scale and deploy, many others have not been demonstrated at any meaningful scale yet," Extavour tells CNBC Make It. "An incentive prize is a great way to stimulate demonstrations of new solutions to help create that ecosystem of companies and solutions that we will need."

To win the XPRIZE prize money, a team must remove carbon dioxide and store it for a very long time: "A minimum goal of 100 years is desired," XPRIZE says.

Fundamentally, cost is the lynchpin. "The main metric for this competition is fully considered cost per ton, inclusive of whatever considerations are necessary for environmental benefit, permanence, any value-added products," XPRIZE says.

The $100 million in prize money will be distributed in phases. After 18 months, in August 2022, the top 15 teams will get $1 million and 25 student teams will each get $200,000. These "Milestone Awards" will help teams fund the full technological build out.

After four years, the first place winner will get $50 million, the second place winner will get $20 million and the third place winner will get $10 million, according to XPRIZE.

"The ultimate goal is scalable carbon extraction that is measured based on the 'fully considered cost per ton' which includes the environmental impact," Musk said in the written statement from XPRIZE.

It's worth nothing carbon can also be captured from the smoke stacks of factories. But XPRIZE wanted to focus on direct carbon capture.

"Carbon removal — meaning taking [carbon dioxide] directly from air or oceans — gives us the opportunity to undo damage that's already done," Extavour tells CNBC Make It. "It allows us to take back [carbon dioxide] emissions that we have already released, anywhere in the world, and in particular emissions that may have been emitted decades ago and have accumulated in the air and oceans."

By focusing on technology that can remove carbon dioxide from the air and water, "net negative emissions" can be achieved, Extavour says. Capturing carbon dioxide from the flue of an industrial facility prevents the dangerous greenhouse gasses from being released into the air and oceans, but "the carbon dioxide still gets produced," he tells CNBC Make It.

Neither direct carbon capture from the air or carbon capture from factories are a silver bullet to solve the climate change problem, Extavour says. "It's really important to point out that neither of these solutions should take focus away from reducing and eliminating current emissions by transitioning to lower-carbon sources of energy, transportation, agriculture, and across the entire economy," he says.

Private sector innovation is important, but should not be thought of as sufficient, says Noah Deich, the President of Carbon180, a climate change non-governmental organization.

"Strong federal policy action will be necessary to scale carbon capture and removal in line with climate goals, and to 'crowd in' private sector investment," Deich tells CNBC Make It.

"Governments will need to invest in research, development, and demonstration funding, as well as deployment incentives like the 45Q tax credits," Deich tells CNBC Make It. (The Internal Revenue Service 45Q gives tax credit "on a per-ton basis for [carbon dioxide] that is sequestered.") Governments will also have to implement "equitable regulations and standards" around carbon dioxide storage and carbon accounting, Deich says.

A popular reaction to the idea of carbon capture — and to Musk's Jan. 21 tweet about the innovation prize — is that planting trees would do the job. That's because trees use carbon dioxide in their process of photosynthesis and emit oxygen.

"Most people still don't understand that technological solutions are a necessary complement to natural solutions in the removal of this legacy [carbon dioxide]. You can see this in some of the replies to Elon's tweet, where people suggested that the answer is simply to plant trees," Erica Dodds, the chief operating officer of the non-profit Foundation for Climate Restoration, tells CNBC Make It.

Planting trees at the scale necessary to combat climate change is unrealistic, Dodds says. "We would need to plant the entire land area of the U.S. in forests twice over just to offset one year of U.S. emissions," she tells CNBC Make It. "Natural solutions can't reach the scale needed to achieve net-zero emissions, let alone the much larger scale needed for climate restoration. Thus, it's critical that we look more seriously at the hundreds of technological solutions that are already in development, many of which are commercially viable and can take on a large portion of the atmospheric carbon dioxide that we need to remove."

This innovation prize is not the first time Musk has cooperated with XPRIZE to crowdsource innovation solutions to global challenges, "XPRIZE and Elon Musk have had a relationship for about 10 years," Extavour says, noting that he was a benefactor of the $15 million global learning XPRIZE which concluded in 2019.

See also:

Tesla, Elon Musk and beyond: The green companies making billionaires

Carbon capture technology has been around for decades — here's why it hasn't taken off

The '1%' are driving climate change, but it hits the poor the hardest: Oxfam report

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