Morgan Stanley Partners with Climeworks to Capture CO2 and Boost Sustainability Efforts
Morgan Stanley has entered into a significant agreement with Climeworks, a leading company in direct air capture technology, to remove 40,000 tons of carbon dioxide (CO2) from the atmosphere by 2037. This move aligns Morgan Stanley with other major banks investing in carbon capture technology, including JPMorgan Chase, which made a similar commitment in 2023.
The details of the financial agreement between Morgan Stanley and Climeworks remain undisclosed, but Climeworks confirmed that this is their second-largest contract to date. Their biggest deal involved a 15-year partnership with Boston Consulting Group in 2023 to remove 80,000 metric tons of CO2. Other prominent clients of Climeworks include Microsoft, Shopify, Stripe, and H&M Group.
"Collaborating with influential partners builds credibility," said Kate Dmytrenko, Climeworks' Director of External Communications for North America. Financial institutions like Morgan Stanley have been scrutinized for their ties to fossil fuel companies, but they also play a crucial role in funding green initiatives. In 2023, JPMorgan Chase committed $200 million to carbon removal projects, including a $20 million contract with Climeworks to extract 25,000 metric tons of CO2 over nine years.
Jessica Alsford, Morgan Stanley's Chief Sustainability Officer, emphasized the importance of this partnership. “As a financial institution, we have a key role in channeling investment into low-carbon solutions,” she said. “Through our collaboration with Climeworks, we are fostering the growth of technology that can facilitate the global shift towards a sustainable economy.”
Despite this commitment, some Morgan Stanley shareholders have expressed concerns about the transparency of the bank's investments in fossil fuels compared to its support for low-carbon projects, as noted by Bloomberg Law.
Climeworks, based in Zurich, Switzerland, has seen substantial growth in 2024. It launched its Mammoth facility in Iceland in May, which will capture approximately 36,000 tons of CO2 annually once fully operational. Additionally, the company established a U.S. headquarters in Austin, Texas, and is progressing on Project Cypress, a direct air capture facility in Louisiana backed by the Department of Energy, expected to be operational by 2027.
Climeworks uses direct air capture technology that functions similarly to a vacuum. Air is pulled through a filter that captures CO2, which is then separated with steam and injected into rock formations that speed up the mineralization process, effectively turning CO2 into stone for safe storage. This method has attracted attention for its potential to mitigate climate change, despite being relatively new and costly.
As the carbon removal industry gains traction, calls for regulation are growing. The Carbon Removal Alliance, an industry group that includes Climeworks, recently urged the U.S. government to establish guidelines for monitoring, reporting, and verifying carbon removal technologies.
While carbon removal technology offers promise, it faces criticism from skeptics who worry it might distract from the urgency of reducing emissions. Strategies like shifting to renewable energy sources and cleaner transportation remain crucial. Dmytrenko acknowledged this debate, stating, “Carbon removal is a complementary tool, not a replacement for aggressive emissions reductions.”
Climeworks continues to emphasize that direct air capture is just one piece of the broader climate strategy, underscoring the necessity of simultaneous efforts to cut carbon emissions and promote sustainable practices.
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