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Dec 9 2025
Dec 9 2025
Most CO₂ used in greenhouses today comes from:
On-site flue-gas capture from CHP and boilers
Industrial CO₂ from chemical and fossil fuel processes
Biogenic CO₂ sources from fermentation or biogas
As these sources face regulatory tightening, industrial decarbonization, energy market volatility and periodic supply chain disruptions from industrial maintenance, growers are exposed to unstable prices and supply issues.
As energy systems decarbonize and circular resource use becomes central to horticulture, growers are rethinking how their current CO₂ supply fits into future production models.
Many high-tech greenhouses generate CO₂ by running Combined Heat and Power (CHP) units or dedicated boilers using natural gas. CHP units generate both electricity and heat, while boilers produce heat only; in both cases, CO₂ scrubbed from the flue gas is piped into the greenhouse.
Growers who rely on CHP or boiler systems for CO₂ face a fundamental inefficiency: they need the highest CO₂ levels during warm, sunny periods, which is exactly when they need the least heat. As a result, they end up burning gas primarily for CO₂ generation while having to store or destroy excess heat. This mismatch makes it difficult to operate the system efficiently or supply CO₂ in the most optimal way.
This reliance on natural gas is also becoming more costly and unstable, influenced by climate policies and geopolitical events. As energy costs rise and emission limits tighten, CHP and boiler systems are transitioning from a solution to a limitation.
Regulatory pressures apply direct financial consequences to greenhouse operators using CHPs or boilers. For example:
The EU operates under the European Green Deal, which makes its climate-neutrality goals legally binding and uses mechanisms like the Emissions Trading System (ETS) and national CO₂ levies to financially penalize natural gas use.
Japan takes a high-level strategic approach rather than imposing a direct tax. Its Strategy for Sustainable Food Systems (MIDORI) sets a national goal for the agriculture sector to achieve zero CO₂ emissions from fossil fuels by 2050, effectively signaling a long-term, policy-driven shift away from all such technologies.
Canada's federal carbon pricing benchmark is mandated to increase, reaching C$170 per ton by 2030.
Major US agricultural states like California use Cap-and-Trade systems that automatically increase the cost of burning fossil fuel by steadily reducing the total supply of allowable emission permits.
New Zealand has set a hard regulatory deadline, mandating that industrial sites transition away from natural gas and diesel heat sources by 2037.
A large share of external CO₂ used in greenhouses originates as an industrial by-product, captured from ammonia, hydrogen, and fertilizer production or from refineries. This CO₂ reaches greenhouses by truck as a liquefied gas or via regional pipeline networks, such as the OCAP pipeline in the Netherlands which transports CO₂ from industrial sources in Rotterdam to nearby horticultural areas.
This supply chain is inherently volatile. Both delivery routes depend on the same industrial sources, meaning their reliability is tied to sectors that are themselves rapidly decarbonizing. The 2021–2022 European energy crisis highlighted this instability: soaring natural gas prices forced major fertilizer plants to halt production, cutting off one of the primary sources of food-grade CO₂ and triggering CO₂ shortages and price spikes.
In the European Union, the Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) are making high-emission processes so expensive that companies are forced to develop new, carbon-free methods. Japan's Green Innovation Fund accelerates this by directly funding the development of next-generation industrial processes, such as hydrogen-based steelmaking. As these policies succeed, the "waste" stream of CO₂ will progressively shrink, making it an inherently finite and ultimately obsolete resource.
Furthermore, any CO₂ that is captured in the interim is being strategically funneled toward permanent storage, not utilization in sectors like horticulture, because CO₂ used in greenhouses is considered a delayed emission as most of it eventually returns to the atmosphere through leakage or plant turnover. Therefore, it does not qualify as a permanent removal under climate policy frameworks. In Canada, the Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit explicitly excludes greenhouse use as an "ineligible use," providing a massive financial incentive to bury the CO₂ instead. Australia's Carbon Credit Unit (ACCU) Scheme has the same effect, as it has no approved "methodology" for greenhouse use, making it ineligible for carbon credits. The EU's Net-Zero Industry Act solidifies this priority by mandating the build-out of 50 million tonnes of permanent CO₂ injection capacity by 2030, clearly signaling that sequestration is the intended destination for any captured carbon.
Biogenic CO₂, sourced from bioethanol fermentation or biogas upgrading, is often seen as the ideal sustainable alternative to fossil-based CO₂. Despite its carbon-neutral credentials, it cannot scale to meet the greenhouse sector's large and continuous demand.
The primary constraint is regional variability and logistics. Biogenic CO₂ availability depends on the location of large bioprocessing industries like bioethanol plants in the US Midwest or biogas facilities in the Netherlands, not on greenhouse locations. In regions without these industries, like much of Australia, this source is unavailable. Even when a plant is nearby, the high costs of purifying, liquefying and transporting the CO₂ by truck often make it economically unviable.
The supply chain also suffers from market dependency. Since CO₂ is only a byproduct, its supply depends entirely on the producer's primary business model. A bioethanol plant, for example, may shut down for maintenance or halt production due to high feedstock prices or low fuel demand. This feedstock competition and market fragility create severe reliability risks for greenhouses, which require a continuous, year-round CO₂ supply and cannot rely on an intermittent source.
Finally, this limited supply faces a new economic competitor: the voluntary carbon market (VCM). This creates a conflict between Carbon Capture & Utilization (CCU) selling CO₂ as a commodity to a greenhouse and Carbon Capture & Storage (CCS).
Through CCS, a plant can sequester its biogenic CO₂ underground, a process known as Bioenergy with Carbon Capture and Storage (BECCS), creating a verifiable carbon dioxide removal (CDR). These CDRs command a significant price premium per ton of CO₂ on the VCM. Given this massive financial incentive, producers are increasingly diverting their limited supply away from the horticultural market and towards permanent storage simply because it is more profitable.
This new market pressure reinforces that biogenic CO₂ is constrained by geography, logistics, market fragility, and superior economic alternatives.
Given the increasing pressures on traditional CO₂ sources, CHP systems and boilers, greenhouse operators are now evaluating CO₂ strategies that reduce dependence on these sources.
Research from leading horticulture research institute Wageningen University & Research (WUR) in the Netherlands emphasizes that greenhouse horticulture must prepare for a fossil-free future and develop new CO₂ supply strategies as reliance on natural gas and industrial by-products becomes unsustainable.
To take this CO₂ challenge head on, growers are now turning to a new solution: capturing CO₂ from the air, directly on-site.
Direct Air Capture (DAC) technology for greenhouses is designed to extract CO₂ directly from ambient air, offering growers a future-proof alternative to fossil-based CO₂ sources. DAC machines eliminate dependency on industrial CO₂, long-distance liquid CO₂ deliveries, and volatile fossil-fuel supply chains.
DAC systems like Skytree Stratus draw in air and use special capture material to filter, concentrate, and release high-purity CO₂ for injection into the greenhouse. This results in four key advantages:
An autonomous, on-site CO₂ supply: DAC captures CO₂ on-site, eliminating dependencies on unreliable long-distance or imported CO₂ shipments. This reduces the risk of price swings, transportation issues and supply shortages.
Energy efficiency: DAC integrates with on-site renewable energy sources like solar panels as well as local hot and cold water sources, reducing electricity consumption. It can also operate on-demand, allowing grid-connected growers to capture CO₂ when electricity prices are low and pause during peak prices.
Alignment with climate goals: DAC frees growers from dependence on fossil-based sources, reducing exposure to future climate regulations. This directly addresses the increasing demands from retailers and consumers for sustainably grown produce.
Increased crop quality and yield: DAC enables growers who do not currently enrich with CO2 to introduce CO₂ dosing, and unlock crop yield benefits without relying on fossil-based systems.
The era of cheap, stable CO₂ supply from industrial sources has shifted, driven by urgent climate policy and chronic market instability.
Direct Air Capture technology offers a viable path forward. It provides reliable CO₂ supply security, increases operational autonomy, and aligns with the global goal of fossil-free horticulture.
Early adopters are proving that change is possible and commercially viable. For example, industry leaders like Koppert Cress in the Netherlands are already adopting DAC technology as a reliable, on-site CO₂ source, demonstrating that the industry is willing to innovate and that there is a genuine commitment to sustainability.
As the industry rethinks how it sources carbon, the next competitive advantage will come from systems designed to thrive in a decarbonized economy. Direct Air Capture is one of those solutions.
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Skytree partners with greenhouse operators worldwide to deliver a resilient, fossil-free CO₂ source. Connect with our team to discuss how Direct Air Capture could support your facility’s CO₂ supply strategy.