TD Bank Signs 10-Year Carbon Removal Deal With Deep Sky for Direct Air Capture Credits

TD Bank Group has signed a 10-year carbon removal offtake agreement with Montreal-based Deep Sky, under which the Canadian bank will purchase more than 18,000 verified direct air capture carbon dioxide removal credits. The companies did not disclose the financial terms of the deal.

The agreement adds another long-term buyer to the emerging market for engineered carbon removals, a sector that is seeking to move from pilot projects and early corporate commitments toward larger-scale infrastructure. For TD, the deal forms part of a strategy to reduce emissions first and then use high-quality removals to address residual emissions that are difficult to eliminate. For Deep Sky, it provides demand visibility for its Canadian direct air capture facilities and supports the commercial case for building permanent carbon removal infrastructure.

What Direct Air Capture Means

Direct air capture, or DAC, refers to technologies that remove carbon dioxide directly from ambient air. Once captured, the CO2 can be permanently stored underground or used in products, depending on the project design. In Deep Sky’s model, the company is focused on engineered carbon removal credits linked to direct air capture and permanent geological storage. Each credit is intended to represent one tonne of CO2 removed from the atmosphere and stored durably.

The companies said the credits purchased by TD will be verified through a third-party registry. This is important for corporate buyers because the credibility of carbon removal claims depends on measurement, reporting, verification, durability, and clear accounting. As voluntary carbon markets face continued scrutiny over quality and transparency, buyers are increasingly differentiating between avoided emissions credits, nature-based removals, and engineered removals with long-term storage.

Deep Sky’s Role in Canada’s Carbon Removal Market

Deep Sky positions itself as a technology-agnostic carbon removal project developer. Rather than relying on a single capture technology, the company works with multiple direct air capture and direct ocean capture providers, deploying them through shared infrastructure. It aims to reduce technology and delivery risk by testing and scaling different approaches across Canadian sites with access to clean power and geological storage.

One of its main facilities, Deep Sky Alpha, is located in Innisfail, Alberta. The company describes Alpha as a cross-technology carbon removal centre designed to deploy multiple DAC systems side by side, collect operational data, and identify which technologies are best suited for larger commercial deployment. Deep Sky says the site is powered by renewable solar electricity and is designed to process captured CO2 before transporting it for underground injection.

The TD agreement follows other recent Deep Sky partnerships, including arrangements with ENGIE and Lufthansa Group, and earlier founding buyer activity involving major corporate customers. This signals that the company is building a portfolio of offtake agreements across sectors, from finance to aviation and energy. For project developers in carbon removal, long-term offtake contracts are often critical because they can help secure financing, justify infrastructure investment, and reduce uncertainty around future demand.

How the Deal Fits TD Bank’s Climate Strategy

For TD, the purchase sits within a broader climate strategy that includes emissions reductions and the use of carbon credits for residual emissions. Deep Sky said TD has reduced its Scope 1 and 2 emissions by 29% against a 2019 baseline. Scope 1 emissions come from sources a company directly controls, while Scope 2 emissions are associated with purchased electricity, heating, cooling, and steam.

Banks also face significant scrutiny over Scope 3 financed emissions, which stem from lending and investment activities, but this specific deal focuses on carbon dioxide removal credits rather than financed emissions reductions.

The distinction matters. Carbon removal credits should not be treated as a substitute for reducing emissions across operations and financed portfolios. For financial institutions, the main climate impact often sits in the capital they provide to high-emitting sectors. However, durable carbon removal can help address residual emissions, support early-stage climate infrastructure, and create demand signals for technologies that may be needed in harder-to-abate sectors.

Why Corporate Buyers Are Turning to Durable Removals

The deal also reflects a wider shift in corporate climate procurement. Many companies that previously relied on lower-cost offsets are now exploring higher-integrity carbon removal credits, particularly those with measurable storage and longer durability. These credits are typically more expensive than conventional offsets because DAC infrastructure is capital intensive, energy requirements are significant, and the sector is still at an early stage of deployment.

Long-term buyers can help reduce costs over time by giving developers confidence to build larger projects and improve technology performance. They can also support the development of standards, monitoring systems, and procurement practices that may be needed if engineered removals become a larger part of net-zero strategies.

For industries working toward net zero, the practical implications are significant. Companies with residual emissions in aviation, heavy industry, logistics, finance, and technology may increasingly need to evaluate carbon removal procurement as part of their transition plans. This requires due diligence on project type, storage permanence, verification standards, delivery risk, energy sources, and whether removals are being used only after credible emissions reduction efforts.

Implications for Net-Zero Planning

For the carbon removal sector, TD’s agreement provides another example of demand from a mainstream financial institution. It also reinforces Canada’s positioning as a potential hub for DAC and carbon storage, supported by geological storage resources, clean electricity in some regions, industrial expertise, and public and private climate investment.

Still, the market remains early. DAC must prove that it can scale while lowering costs, managing energy demand, delivering verified tonnes on schedule, and maintaining public trust. Buyers will need to be transparent about how they account for removals and avoid implying that carbon credits replace operational decarbonization.

The TD and Deep Sky deal is therefore best understood as part of a developing corporate carbon removal market. It does not remove the need for rapid emissions reductions, but it shows that large financial institutions are beginning to secure long-term access to engineered removals as part of their climate strategies. If projects deliver as planned, such agreements could help move DAC from demonstration toward a more established role in net-zero planning.

Source: esgnews.com