Direct air capture startup Spiritus is shifting its business from permanent carbon removal to enhanced oil recovery. The company has signed letters of intent with three US oil and gas producers to supply more than three million tonnes of CO2 a year for EOR, which injects CO2 into ageing wells to extract remaining crude. Spiritus says the deals could support over 70 million extra barrels of oil, and expects its first commercial plant online within two years. The pivot comes as federal support for DAC shrinks. The Trump administration cancelled Energy Department funding for roughly half of the inherited direct air capture hub projects, and Microsoft cut its carbon removal purchases by about 80% in the first half of the year. Other startups like Noya have shut down, while CarbonCapture's True North Carbon moved its pilot to Canada. The move raises a key question for carbon markets: captured CO2 sold for oil recovery does not equal durable removal. Spiritus has not delivered any removal credits to customers, and the economics of EOR now look more certain than the removal market. For anyone tracking climate finance, this is a sign of where DAC deployment may land when policy and corporate buyers pull back.
