Skytree Lands €1 Million to Build a Carbon Capture Hub in Iceland. The Business Model Is the News.

The carbon removal industry has a revenue problem. Pulling carbon dioxide out of the air is expensive, the machines are capital hungry, and the product, a tonne of CO2 that no longer exists in the atmosphere, only pays if someone buys the credit. This week, a Dutch startup made a small but telling move toward a different answer: sell the CO2 itself, to customers nearby.

Skytree, a direct air capture company based in the Netherlands, has secured a €1 million development loan (about $1.1 million) from Invest International, the Dutch state-backed investment firm, to develop its first Skypark project outside the Netherlands: a carbon capture hub in Iceland, powered by geothermal energy. The machines are scheduled to be installed in 2028, with commercial operations starting the same year.

What the money pays for

The loan does not buy machines. It buys groundwork. The development phase runs through the end of 2026 and covers engineering, permitting, and site preparation studies, plus the unglamorous commercial work of converting letters of intent from future customers into binding contracts. In infrastructure, this is the stage where most projects quietly die, so the fact that a state-backed lender is funding it matters.

The Iceland project follows a model Skytree has already deployed at home. Its first Skypark, developed with Dutch energy company Lingezegen Energy in a joint venture announced in June 2026, serves as the template. Iceland is the first export of that template, and part of a wider pipeline of similar hubs the company is developing internationally.

Why Iceland

Iceland imports most of its carbon dioxide today, which makes it an odd but revealing place to put a machine that manufactures the stuff from thin air. The country has one major input that matters more than anything else: abundant geothermal energy, which can supply both the electricity and the heat that direct air capture units need. Heat is the underappreciated ingredient. Most DAC systems capture CO2 on a solid sorbent and then need a burst of thermal energy to release it; cheap, clean heat is a direct cost advantage.

Skytree is not the first to notice. Climeworks switched on its own DAC and storage plant in Iceland in May 2024, betting on the same combination of clean power and geology. Skytree's twist is different: rather than storing every tonne underground, it wants to sell much of its captured CO2 into a local market that currently ships the gas in from elsewhere. The company already has a foothold in that logic through a partnership with Algae Capital, which will use more than 2,000 tonnes of air-captured CO2 per year for algae cultivation in Iceland.

The carbon removal industry's biggest bet right now is not a better machine. It is a better business model.

The Skypark model: CO2 as a service

A Skypark is Skytree's regional hub model: a site partner, an energy partner, capital providers, and local CO2 offtakers assembled into a repeatable format. The company lines up long-term offtake contracts at stable prices and builds the plant where demand already clusters. As Camille Hanna, Skytree's vice-president of Skyparks, put it: the model works wherever there is clustered industrial demand for CO2, cost-effective renewable energy, and customers tired of price spikes and supply interruptions.

The appeal is bankability. A DAC plant whose output is pre-sold to greenhouse growers, drink makers, and chemical producers can be financed like infrastructure. A DAC plant whose only revenue is voluntary carbon credits is financed like a bet. One reason carbon removal has been slow to scale is that the industry keeps asking investors to take the second kind of risk. Skytree is trying to offer them the first.

A tightening market for merchant CO2

The list of buyers is longer than most people expect. Greenhouse growers pump CO2 into their houses to speed up plant growth. Beverage companies need it for fizz. It goes into dry ice, food packaging, water treatment, and increasingly into renewable fuels and chemicals. Most merchant CO2 today is a by-product of industries like ammonia production and oil refining, and that supply is tightening on three fronts: industrial emitters increasingly route their CO2 to permanent underground storage instead of selling it, transporting compressed CO2 over long distances keeps getting pricier, and energy market volatility has made prices swing.

That squeeze is Skytree's opening. Its DAC technology traces back to more than a decade of applied research at the European Space Agency, originally aimed at scrubbing CO2 in closed environments, and the company has been commercializing it for distributed CO2 supply. Iceland is a good stress test: an island economy that imports a gas it could be making from its own air, sitting on top of a near-free energy source.

What to watch

A €1 million development loan is a small sum in an industry where a single commercial plant can cost hundreds of millions. The interesting number is not the loan; it is the conversion rate. Letters of intent are cheap. Binding offtake contracts are not, and the Iceland project lives or dies on whether Skytree can sign enough of them by 2028 to justify the build.

There is also an honest accounting question underneath the business story. CO2 sold to a greenhouse or a soda bottler is not the same as CO2 stored underground for millennia; its climate value depends on what fossil-derived CO2 it displaces. The Skypark model solves the revenue problem, but the climate problem still depends on the end use. If the hub model scales across Skytree's international pipeline, it will have proven that air-captured CO2 can compete as a commodity. Whether it competes as a climate solution is the question every offtake contract will quietly have to answer.