Warren Buffett-backed Occidental Petroleum announced a deal with Amazon Tuesday to cut carbon emissions over the next 10 years, as the online marketplace looks to reach its goal of being net-zero by 2040.
1PointFive, an Occidental subsidiary that focuses entirely on reducing carbon emissions, said Tuesday that Amazon has agreed to purchase 250,000 metric tons of carbon dioxide removal (CDR) credits over 10 years.
OXY stock rose 4% to 66.45 Tuesday during market trade. On Monday, shares dropped 2.2% to 63.84. Amazon stock fell 1.3% to 141.23 Tuesday after jumping 3.5% to 143.10 Monday. Occidental stock has a 76.11 buy point from a 10-month base. Investors could use the Sept. 5 high of 66.90 as an early entry.
Warren Buffett has been on an OXY buying spree in the past two years. His Berkshire Hathaway holds more than a 25% stake in Occidental Petroleum. The billionaire investor has said he doesn't plan to take full control.
1PointFive reported Amazon's carbon credits will come from its first commercial-scale direct air carbon capture (DAC) plant, which is currently under construction in Texas. The plant is designed to capture up to 500,000 metric tons of CO2 annually when fully operational, making it the largest plant in the world.
Direct air carbon capture technology looks to scrub the target gases directly out of the atmosphere. This provides broader flexibility in siting facilities, allowing the scrubbing technology to sit much closer to the geological area for carbon injection.
"Amazon's purchase and long-term contract represent a significant commitment to direct air capture as a vital carbon removal solution," 1PointFive President Michael Avery said in a statement.
Amazon is looking to decarbonize its global operations and reach net-zero carbon by 2040.
"These investments in direct air capture complement our emissions reductions plans and we are excited to support the growth and deployment of this technology," Kara Hurst, vice president of worldwide sustainability at Amazon, said in a press release.
Warren Buffett: Carbon Capture
A long list of energy industry leaders have lined up to both use and provide carbon capture services. Among them are Warren Buffett's Occidental Petroleum and ExxonMobil.
Fueling Carbon Capture In the Oil Industry: Production, Net Zero And ESG
Companies are pouring billions of dollars into developing a carbon capture market estimated at a modest $2 billion in 2021. Occidental estimates the carbon capture market will hit $50 billion a year by 2030. Exxon sees it going as high as $4 trillion by 2050.
Carbon capture is nothing new. Oil and natural gas producers for decades have reinjected production site exhaust. It's a means to pressurize reservoirs and coax additional product out of the ground.
However, now it is being billed as a way to capture exhaust emissions.
Meanwhile, the Warren Buffett-backed OXY has been an early adopter of the direct air capture technology. Occidental's roadmap calls for bringing three carbon-sequestration hubs online by 2025, and building 70 direct air capture plants across the world by 2035.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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