Climeworks, a global leader in the direct air capture (DAC) industry, has entered into a significant 10-year agreement with TD Bank Group to provide a diversified portfolio of high-quality carbon removal credits. This partnership marks a pivotal step in the evolution of the voluntary carbon market, as one of Canada’s largest financial institutions commits to a long-term strategy for atmospheric carbon removal. The deal, facilitated through the newly launched "Climeworks Solutions" branch, underscores a shifting corporate preference toward high-durability, scientifically verified carbon sequestration methods over traditional carbon offsets.
Under the terms of the agreement, Zurich-based Climeworks will supply TD Bank with carbon removal units derived from a variety of advanced technologies. While Climeworks is primarily known for its pioneering work in DAC, this specific contract utilizes a multi-technology approach, incorporating solutions such as enhanced rock weathering (ERW), biochar, and bioenergy with carbon capture and storage (BECCS). This 10-year commitment provides TD Bank with a stable supply of credits while allowing Climeworks to scale its operations across North America, a region increasingly central to the company’s global expansion strategy.
The Evolution of Climeworks and the Launch of Climeworks Solutions
Founded in 2009 by Christoph Gebald and Jan Wurzbacher, Climeworks has spent over a decade transitioning from a laboratory-scale concept to an industrial-scale carbon removal provider. The company gained international recognition with the launch of "Orca" in 2021 and "Mammoth" in 2024—the world’s two largest DAC plants, both located in Iceland. These facilities utilize massive fans to pull ambient air through filters that chemically bind CO2, which is then mixed with water and pumped underground into basaltic rock formations where it mineralizes into stone.
However, the high cost of DAC technology—currently estimated between $600 and $1,000 per ton—has led the company to diversify its offerings. In early 2024, the company introduced "Climeworks Solutions." This service acts as a managed portfolio provider, allowing corporate clients to invest in a mix of carbon removal pathways. By combining DAC with more established or lower-cost technologies like afforestation, reforestation, and biochar, Climeworks can offer a blended price point that remains grounded in high-durability standards.
For TD Bank, this portfolio approach serves as a risk-mitigation strategy. By spreading its investment across multiple technological avenues, the bank ensures a more resilient path toward its sustainability goals, shielding itself from the potential delivery risks associated with any single emerging technology.
Strategic Expansion into the Canadian Market
The agreement with TD Bank is not an isolated event but rather the culmination of a concerted effort by Climeworks to establish a deep footprint in Canada. Earlier this year, the company opened its North American corporate headquarters in Calgary, Alberta. The choice of Calgary is strategic; the city serves as the hub of Canada’s energy industry, offering a concentration of engineering talent, geological expertise, and infrastructure relevant to carbon capture and storage (CCS).
Furthermore, Climeworks has indicated that the coming months will involve intensive cold-weather testing of its proprietary DAC technology. Adapting these systems to function efficiently in sub-zero temperatures is a prerequisite for building large-scale commercial facilities in the Canadian prairies or the northern United States. The deal with TD Bank effectively secures a primary "anchor customer" for the credits that will eventually be generated by these future North American facilities.
A Technical Breakdown of the Removal Portfolio
The partnership focuses on "high-durability" solutions, a term used in the industry to describe carbon sequestration that lasts for at least 1,000 years. The portfolio includes:
- Direct Air Capture (DAC): The gold standard of carbon removal, providing highly measurable and permanent storage. While currently expensive, long-term contracts from firms like TD Bank provide the "off-take" certainty needed to secure financing for larger plants.
- Enhanced Rock Weathering (ERW): This process involves spreading finely crushed silicate rocks, such as basalt, onto agricultural land. The rock reacts with rainwater and atmospheric CO2 to form stable carbonates, effectively locking the carbon away while simultaneously improving soil health and pH levels.
- Biochar: Produced by heating organic waste (biomass) in a low-oxygen environment (pyrolysis), biochar is a carbon-rich solid that can be added to soil. It prevents the biomass from decomposing and releasing CO2 back into the atmosphere, sequestering the carbon for centuries.
- Bioenergy with Carbon Capture and Storage (BECCS): This involves generating energy from biomass and capturing the resulting CO2 emissions at the source, then injecting them into deep geological formations.
By integrating these technologies, Climeworks ensures that TD Bank’s carbon management strategy is not only scientifically robust but also aligned with the evolving standards of the Science Based Targets initiative (SBTi), which increasingly emphasizes removal over simple avoidance.
Chronology of Key Milestones
The trajectory of the Climeworks-TD Bank partnership can be traced through several critical industry and corporate milestones:
- 2009: Climeworks is founded in Zurich as a spin-off from ETH Zurich.
- 2017: The company launches the world’s first commercial DAC plant in Hinwil, Switzerland.
- September 2021: The "Orca" plant begins operations in Iceland, capable of removing 4,000 tons of CO2 per year.
- May 2024: The "Mammoth" plant, with a capacity of 36,000 tons per year, comes online in Iceland.
- June 2024: Climeworks announces the "Climeworks Solutions" model to provide diversified portfolios.
- Late 2024: Climeworks opens its Calgary headquarters and signs the 10-year agreement with TD Bank, marking its first major Canadian financial services client.
Official Responses and Strategic Vision
The leadership of both organizations has framed the agreement as a necessary step toward maturing the carbon economy. Adrian Siegrist, Chief Commercial Officer at Climeworks, highlighted the importance of the regional focus, noting that the portfolio will prioritize North American-sourced removals. This localized approach helps reduce the carbon footprint associated with the logistics of the projects themselves and aligns with regional economic interests.
Susan Thompson, Managing Director of Sustainable Finance and Advisory at TD Securities, emphasized the flexibility of the portfolio approach. She noted that as market standards for carbon credits continue to tighten, having a managed portfolio allows TD to adapt to new methodologies without having to renegotiate individual contracts for every technological shift.
Industry analysts suggest that this move by TD Bank is a response to increasing pressure on the financial sector to address "financed emissions." As banks look to reach net-zero targets by 2050, they must account for the emissions of the companies they lend to. Investing in high-quality removals is increasingly seen as a legitimate way to neutralize the "hard-to-abate" portions of a bank’s carbon footprint.
Broader Implications for the Carbon Market
The 10-year duration of the TD Bank contract is significant. Most carbon credit transactions in the past have been "spot market" purchases—one-time buys of existing credits. Long-term agreements (off-take agreements) are essential for the "bankability" of carbon removal projects. When a company like Climeworks can show a 10-year guaranteed revenue stream from a Tier-1 financial institution, it becomes significantly easier to secure the hundreds of millions of dollars in capital expenditure required to build new DAC facilities.
Furthermore, this deal signals a "flight to quality" in the voluntary carbon market. Following various controversies surrounding low-quality nature-based offsets (such as certain forestry projects that failed to demonstrate "additionality"), corporate buyers are moving toward engineered removals. These solutions offer superior "MRV" (Monitoring, Reporting, and Verification) capabilities, as the amount of carbon removed can be precisely measured in tons rather than estimated through biomass proxies.
The partnership also highlights the growing role of Canada as a laboratory for the carbon removal industry. With the Canadian federal government offering investment tax credits for carbon capture and storage, and provinces like Alberta providing a clear regulatory framework for pore-space ownership (the right to store CO2 underground), the region is becoming a global magnet for climate tech investment.
As Climeworks begins its cold-weather testing in the coming months, the industry will be watching closely. If the technology proves resilient in the harsh Canadian winter, it could unlock vast new territories for carbon removal, transforming the atmospheric cleanup from a niche European endeavor into a cornerstone of North American industrial policy. For TD Bank, the agreement secures a front-row seat—and a guaranteed supply—in what is projected to become a trillion-dollar industry by mid-century.
