DAC is struggling in America, but it’s big in Japan

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illuminem summarises for you the essential news of the day. Read the full piece on HEATMAP or enjoy below:

🗞️ Driving the news: Direct air capture (DAC) startups are struggling to raise capital in the U.S., but Japanese corporations and financial institutions are stepping in
• Major Japanese investors, including Mitsubishi, Mitsui, Japan Airlines and the Development Bank of Japan, are backing DAC companies like Heirloom and Deep Sky
• The shift comes as U.S. climate incentives weaken and capital retreats from high-cost carbon removal technologies

🔭 The context: Japan’s corporate and policy landscape is creating a different investment logic for carbon removal
• It has legally anchored emissions targets and a steadily tightening emissions trading scheme (GX-ETS)
• Large conglomerates are expected to decarbonize over decades, with less political polarization than in the U.S.
• While Japan lacks ideal geology for CO₂ storage, companies see value-chain opportunities in engineering, materials and manufacturing

🌍 Why it matters for the planet: Carbon removal could become a critical backstop for hard-to-abate emissions
• Japan’s limited land, high population density, and reliance on imported fossil fuels constrain renewable deployment
• DAC and other engineered removals may play a growing role in offsetting residual emissions from heavy industry, shipping, and aviation
• Global DAC deployment depends on stable policy, long-term capital, and rising carbon prices, conditions Japan may offer more consistently than the U.S.

⏭️ What’s next: Japan’s carbon removal ecosystem is organizing for policy influence
• Corporations have launched the Japan CDR Coalition to advocate for clearer rules and long-term recognition of carbon removal credits
• Mandatory ETS compliance begins next fiscal year, with goal to shape future demand for durable offsets
• International DAC firms will continue courting Japanese capital, though large-scale deployment may remain gradual

💬 One quote: “This is actually a great investment opportunity for Japanese companies now that the U.S. companies are out,” said Yuki Sekiguchi, founder of Startup Navigator for Climate Tech

📈 One stat: Japan aims to cut emissions 60% by 2035 and reach net-zero by 2050 compared to 2013 levels

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