Occidental (Oxy) and its carbon-focused subsidiary 1PointFive have partnered with XRG, ADNOC’s energy investment company, to build a large Direct Air Capture (DAC) facility in South Texas. XRG is considering an investment of up to $500 million to support the project. The proposed plant would pull 500,000 tonnes of CO₂ from the air every year.
Occidental and 1PointFive: Driving Low-Carbon Energy Solutions
The global energy leader has major operations in the United States, the Middle East, and North Africa. In the U.S., Oxy ranks among the top oil and gas producers, with strong operations in the Permian Basin, DJ Basin, and the Gulf of Mexico.
But the company isn’t just focused on fossil fuels. Through its subsidiary Oxy Low Carbon Ventures, Occidental is taking major steps toward a cleaner future. In 2020, it launched 1PointFive to develop and scale up carbon removal and storage technologies for industries that are hard to decarbonize.
1PointFive has a clear mission to reduce CO₂ in the atmosphere and help limit global warming to 1.5°C by 2050, in line with the Paris Agreement. To achieve this, the company focuses on Carbon Capture, Utilization, and Storage (CCUS) as a key tool in the fight against climate change.
Pioneering Direct Air Capture and Clean Fuels
One of 1PointFive’s flagship technologies is Direct Air Capture, developed with Carbon Engineering. It also offers AIR TO FUELS, a clean fuel solution made using captured CO₂. These technologies are backed by large-scale underground storage hubs that safely lock away carbon.
Furthermore, Occidental brings years of experience in CO₂ transportation, use, and storage, making it well prepared to lead low-carbon energy projects. Together, they aim to grow responsibly, cut emissions, and support global climate goals.
Supporting Oxy’s Net Zero Strategy
Oxy aims to reach net-zero emissions from its operations and energy use by 2040. A key part of this plan is led by Oxy Low Carbon Ventures, which follows a four-part strategy: revolutionize, reduce, reuse/recycle, and remove.
In 2023, 1PointFive made significant progress by signing agreements to sell direct air capture (DAC) carbon dioxide removal (CDR) credits to major global companies. These credits help organizations reduce their greenhouse gas (GHG) footprints.
DAC CDR credits are unique compared to other carbon credits because:
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They’re long-lasting: CO₂ is captured from the air and stored deep underground, where it stays safely for thousands of years.
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They’re trustworthy: These credits use strong monitoring, reporting, and verification standards to ensure transparency and effectiveness.
By developing high-integrity, science-backed solutions like DAC, Occidental and 1PointFive are paving the way toward a lower-carbon future.
Unlocking the Oxy-ADNOC Carbon Capture JV
Now talking about XRG, the global investment arm of ADNOC, based in Abu Dhabi, has a valuation of over $80 billion. It invests in lower-carbon energy and essential chemical solutions.
This potential joint venture exemplifies the fight against climate change using carbon capture technology. The press release revealed that the agreement was signed by Occidental CEO Vicki Hollub and ADNOC CEO Dr. Sultan Ahmed Al Jaber during a visit by former U.S. President Donald Trump to the UAE.
Vicki Hollub, President and Chief Executive Officer of Oxy said,
“We are proud to advance our decades-long partnership with ADNOC and XRG on our South Texas DAC Hub, which we believe will deliver game-changing technology to support U.S. energy independence and global goals. Agreements like this, along with U.S. DOE support, demonstrate continued confidence in DAC as an investable technology that can create jobs and economic value in the United States and Texas.”
What’s DAC and Why South Texas?
Direct Air Capture (DAC) pulls CO₂ directly from the atmosphere, which can then be stored underground or reused. As per the IEA, so far, 27 DAC plants are running globally, capturing only about 0.01 million tonnes of CO₂ per year. However, more than 130 large-scale DAC projects (each designed to capture over 1,000 tonnes annually) are now in the pipeline.
If all proposed facilities move ahead, DAC could capture 65 million tonnes annually by 2030. This figure is close to the level needed under the Net Zero Emissions by 2050 scenario. DAC plants typically take 2 to 6 years to build, making this target possible with strong policy backing.
According to BloombergNEF, the global market for carbon capture and removal could reach $100 billion by 2030. This growth comes from stricter climate rules, net-zero goals, and rising investment in clean tech.
Currently, most projects are still in early planning stages and need market incentives to move forward. Supportive policies and pricing mechanisms will be key to making these carbon removal services viable.
U.S. Backs Big Direct Air Capture Projects
The IEA also highlighted that the United States has significantly invested in Direct Air Capture technology. Two large hubs in Texas and Louisiana will share $3.5 billion in federal funds and could pull 2 million tonnes of CO₂ from the air each year.
New incentives make these projects more attractive:
- The Inflation Reduction Act raised the 45Q tax credit to $180 per tonne of CO₂ stored through DAC.
- Projects as small as 1,000 tonnes per year can now qualify.
- A federal buying program promises long-term contracts to purchase the CO₂ that DAC plants capture.
These moves aim to boost deployment and build a strong market for carbon removal in the U.S.
Moving on, this South Texas Project is planned at King Ranch in Kleberg County, a site near Gulf Coast industrial zones and energy infrastructure. This location is ideal for transporting and storing CO₂.
- The hub has the potential to store up to 3 billion tonnes of carbon underground across 165 square miles.
Ongoing Progress and Support
- Occidental is already building a DAC facility called STRATOS in West Texas. It’s expected to begin operations in 2025.
- The U.S. Department of Energy has awarded Occidental up to $650 million to support DAC development in South Texas.
- The technology behind DAC is becoming more reliable and cost-effective.
Interestingly, Occidental and ADNOC have been working together since signing an MoU in 2023. They are exploring opportunities in carbon capture and storage across both the U.S. and the UAE. They also partner on major energy projects like Al Hosn Gas, one of the largest gas developments in the Middle East.
Khaled Salmeen, Chief Operating Officer, XRG, also commented on this JV,
“Our longstanding partnership with Occidental continues to drive scalable, high-growth and strategically attractive projects that create long-term sustainable value. The U.S. is a priority market for XRG and we look forward to building on this partnership as we continue to invest in strategic projects across the energy value chain.”
This partnership could mark a major step forward in the use of carbon capture to tackle climate change. With significant backing, ideal location, and proven collaboration, Occidental, 1PointFive, and XRG are aiming to scale up climate tech with South Texas as its base.
The post Occidental and ADNOC’s $500M Texas DAC Deal Marks a Global Milestone in Carbon Removal appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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