Shell DAC Partnerships, $17 M Avnos Deal, $700 M Northern Lights JV, and 3 Startup Agreements (2025)

DAC Pilot Projects, Shell’s Portfolio Strategy, and Commercial Scale-Up Risks

In 2025, Shell executed a distinct pivot in its carbon removal strategy, moving to a venture-style portfolio approach for Direct Air Capture that prioritizes funding a diverse set of external startups over developing a single, proprietary in-house technology. This strategic shift is a direct response to the extreme cost and technological uncertainty of the nascent DAC market, allowing Shell to de-risk its entry by spreading multiple small-scale bets across competing technological pathways.

• Throughout 2025, Shell, often in tandem with partner Mitsubishi Corp., built a portfolio of DAC startups, contrasting with a prior focus on larger, more integrated carbon capture projects. This model aims to identify a winning technology for future scale-up without incurring the massive upfront R&D costs of internal development.
• The portfolio deliberately targets technological diversity. It includes a $17 million investment in Avnos, which uses a hybrid technology that co-produces water; a partnership with Origen, which is developing a limestone-based DAC process; and a $3 million agreement with Rep Air Carbon Capture for its electrochemical cell technology.
• This strategy serves as an options-creation engine. By funding pilot and demonstration projects like Avnos‘s 3, 000-tonne-per-year Project Cedar, Shell gains crucial, low-cost insights into the operational realities and scaling potential of various technologies before committing to megatonne-scale capital expenditures.
• The collaborative nature of this strategy, highlighted by the consistent co-investment from Mitsubishi Corp., further distributes financial risk and combines technical due diligence capabilities, strengthening the evaluation process for these early-stage companies.

A Framework for Corporate Climate Transition Strategy

This framework outlines the key elements of capital allocation and technology management that are central to Shell’s pivot toward a diversified DAC portfolio strategy.

(Source: LinkedIn)

$733 M in Capital, Shell’s DAC and CCS Investment Strategy

Shell’s 2025 capital deployment in the carbon management sector reveals a two-pronged strategy, allocating targeted, early-stage venture funding to novel DAC technologies while simultaneously making massive infrastructure investments in the more mature field of CO 2 transportation and storage. This approach separates the high-risk technology development phase from the lower-risk, capital-intensive infrastructure phase of the value chain.

• The company’s DAC investments are characteristically early-stage project finance and venture capital. This includes $17 million in project finance for Avnos to construct its first commercial demonstration plant and participation in Origen’s $13 million Series A funding round to advance its limestone-based technology.
• An even earlier-stage bet is the commercial agreement with Rep Air Carbon Capture, valued at up to $3 million. This deal is structured to secure access to and evaluate the performance of Rep Air’s novel electrochemical DAC system.
• In stark contrast, Shell and its partners Equinor and Total Energies are investing over $700 million to expand the Northern Lights CO 2 transport and storage project in Norway. This reflects a commitment to building out the essential, large-scale infrastructure required to support carbon capture, a segment with more predictable returns than nascent DAC technology.

Table: Shell’s 2025 Carbon Management Investments

Shell’s Strategic DAC Alliances with Avnos, Origen, and Rep Air (2025)

Shell, frequently acting in a consortium with Mitsubishi Corp., methodically assembled a network of strategic partnerships in 2025. This ecosystem is designed to provide broad exposure to the most promising and diverse DAC technology pathways, positioning Shell as an informed technology adopter rather than a primary developer.

The Carbon Capture and Storage Value Chain

This diagram illustrates the CCUS value chain, which Shell addresses by partnering for ‘Capture’ and investing heavily in ‘Transport’ and ‘Storage’ infrastructure.

(Source: Oil and Gas Climate Initiative)

• The partnership with Avnos is the most advanced, moving beyond venture investment to project finance for Project Cedar. This collaboration aims to prove the commercial and technical viability of Avnos’s water-producing Hybrid DAC (HDAC) technology at a demonstration scale.
• The alliance with Origen focuses on project development, with Shell and Mitsubishi partnering to advance the Pelican Gulf Coast Carbon Removal project. This gives Shell hands-on experience with deploying a solid-sorbent, limestone-based technology in a region with favorable geology and policy support.
• The commercial agreement with Rep Air Carbon Capture represents an early-stage technology evaluation play. The deal, valued at up to $3 million, secures access to Rep Air’s electrochemical DAC system, allowing Shell to assess a technology pathway that promises higher energy efficiency.
• The consistent presence of Mitsubishi Corp. as a partner across these deals indicates a formalized, risk-sharing approach to technology scouting and validation. This consortium model leverages combined financial power and technical expertise to make more informed bets in the high-risk DAC sector.

Table: Shell’s 2025 Direct Air Capture Partnerships

US vs. Europe, Shell’s Bipolar Carbon Management Geography

Shell’s 2025 carbon management activities are geographically split, revealing a clear strategy of leveraging distinct regional advantages. The company is incubating and piloting nascent DAC technologies in the policy-rich United States while simultaneously investing in utility-scale CO 2 storage infrastructure in Europe, where offshore expertise and geology provide a mature foundation.

North America Dominates Carbon Utilization Market

This forecast validates Shell’s geographic strategy, showing that North America is the largest market for carbon utilization, which aligns with Shell’s focus on DAC development in the US.

(Source: Fairfield Market Research)

• The United States, specifically the Gulf Coast, has emerged as Shell’s preferred location for DAC project development. The Pelican Gulf Coast Carbon Removal project with Origen is sited there to directly benefit from the U.S. 45 Q tax credit, which provides a critical $180 per ton incentive and significantly improves the economics of these early-stage projects.
• This U.S. focus allows Shell to test and validate different DAC technologies in a supportive regulatory environment with access to existing industrial infrastructure and favorable geological formations for sequestration.
• Conversely, Shell’s largest capital commitment in the space is in Europe. The over $700 million investment in the Northern Lights CO 2 storage project in Norway capitalizes on the region’s vast offshore engineering experience and geological storage capacity in the North Sea.
• This geographic split shows Shell is strategically placing its activities where they are most advantaged: technology incubation in the U.S. driven by policy incentives, and large-scale infrastructure deployment in Europe driven by physical assets and regional expertise. The project has already secured offtake agreements with buyers like Microsoft.

TRL 6-7, Shell’s DAC Bets on Pre-Commercial Technologies

Shell’s 2025 investment strategy deliberately targets DAC technologies in the pre-commercial demonstration phase (Technology Readiness Level 6-7), indicating a clear choice to back novel approaches with disruptive potential rather than scaling more mature but costly incumbent systems. This focus on technological innovation is aimed at finding a pathway that can fundamentally alter the high-cost structure of the current DAC market.

• The Avnos HDAC technology, backed by $17 million in project finance from Shell, is a prime example. Its key innovation is the co-production of 2-5 tonnes of distilled water per tonne of CO 2 captured, a feature that could make it uniquely viable for deployment in arid regions and create an additional revenue stream, addressing a key operational constraint of other DAC methods.
• The partnership with Origen supports a technology that repurposes the well-understood industrial lime cycle for DAC. By leveraging a familiar process, Origen aims to accelerate development and reduce costs compared to building entirely new chemical systems from scratch.
• The agreement with Rep Air provides Shell with access to an electrochemical process. This pathway is attractive because it avoids the high heat requirements of many thermal-based solvent or sorbent systems, offering the potential for significantly lower energy consumption and operational costs.
• By investing in these specific pre-commercial technologies, Shell is actively avoiding the established, first-generation liquid-solvent systems, which currently have costs estimated at $600 per tonne or more. This signals a strategic verdict that a step-change in cost will come from next-generation innovation, not incremental improvements to existing methods.

SWOT Analysis, Shell’s Portfolio Strategy for DAC

Shell’s 2025 pivot to a venture-style portfolio model for DAC establishes it as a shrewd technology evaluator with the financial strength to nurture an ecosystem of innovation. However, this strategy inherently ties its success to the performance of smaller, less-resourced external startups and exposes it to significant risks if these partners fail to execute and scale their technologies effectively.

Market Forces Driving Carbon Capture and Storage

This analysis of market-wide drivers and restraints provides the macro context for the specific strengths, weaknesses, opportunities, and threats facing Shell’s DAC strategy.

(Source: Coherent Market Insights)

Table: SWOT Analysis for Shell’s 2025 DAC Strategy

Scenario Modelling for Shell’s 3, 000-Tonne Avnos Project

The single most critical event to monitor is the operational and financial performance of Avnos’s Project Cedar, the flagship demonstration of Shell’s venture-style DAC strategy. The data from this project will be the primary validation point for Shell’s investment thesis and will dictate whether it doubles down on hybrid DAC or pivots to other technologies in its portfolio.

DAC Is a Tiny Fraction of 2025 Market

This chart highlights the high-stakes nature of the Avnos pilot project by showing that DAC constitutes only 1% of the rapidly growing carbon removal market.

(Source: Carbon Removal Updates – Substack)

• If Project Cedar successfully meets its targets of capturing 3, 000 tonnes of CO 2 and producing 6, 000 tonnes of water annually within its budget by 2026, then watch for Shell and Mitsubishi to quickly announce a nine-figure final investment decision for a follow-on facility at 10 x the scale. This would signal that the HDAC technology is their chosen horse for large-scale deployment.
• If the project experiences significant cost overruns or fails to meet its dual-output performance metrics, then watch for Shell’s communications to shift focus, highlighting developmental milestones from its other portfolio companies like Origen or Rep Air. This would signal a quiet de-prioritization of the Avnos pathway.
• The outcome of this one project will have an outsized impact. A success validates the entire “invest and nurture” model. A failure could force Shell to reconsider its strategy, perhaps by acquiring a more mature technology or reverting to internal R&D, fundamentally altering its approach to the DAC market.

The questions your competitors are already asking

This report covers one angle of Shell’s portfolio strategy for Direct Air Capture. The questions that matter most depend on your work.

• Shell activities in DAC. Is its venture-style portfolio strategy progressing from pilot investments to commercial deployment commitments?
• How does Avnos’ hybrid DAC compare to Origen’s limestone-based process for scale-up potential and operational risk?
• Shell investments and funding. Is Avnos’ Project Cedar on track for its 3,000-tonne-per-year target following the $17 million investment?

This report does not answer these. Enki Brief Pro does.

Your question, your angle, your framework. SWOT, PESTL, scenario modelling. The same niche depth, built around the decision your work actually depends on.

Run your first brief in Enki Brief Pro