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Carbon capture: Solution or sideshow?

Dec 28, 2022 | Public | 0 comments

You can add “CCS” — shorthand for carbon capture and storage — to the short list of controversial, three-letter green investment practices (think ESG) in the run-up to a net-zero economy. CCS is either the climate tech breakthrough of the 21st century, according to its advocates, or a multibillion-dollar boondoggle, say activists.

Proponents claim that innovative, “negative emissions” CCS technology will play a major role in decarbonizing the global economy as part of an “all of the above” strategy required to make progress to net zero by 2050. Critics retort that CCS is an uneconomical distraction that misdirects investments that should be put toward the renewables needed to achieve the clean energy transition. Furthermore, it is championed by a fossil fuel industry that is the root source of generating the emissions that are the problem it proposes to resolve.

So, CCS: Scheme or scam? The pros and cons are several and knotty, and answers so far are conditional — it’s complicated.

The basic premise of CCS proffers a boldly simple solution to a complex issue. If there’s too much CO2 in the atmosphere, why not just remove it, transport it and bury it deep underground? While the CCS idea has been around for some time, it’s gathered much more traction recently. That’s because it has attracted increasingly large amounts of investment from those who think it a potentially profitable clean tech practice.

This largesse is coming from both government and companies, notably the turbocharge given to it recently by the Biden administration. The Inflation Reduction Act allocates $369 billion to address climate change, and directs a significant portion to CCS — $7 billion — through expanded tax credits, raising its subsidy from $50 to $85 a metric ton. With the removal of millions of metric tons of CO2 being projected, that’s a lot of financial support. The bill also simplifies the process for receiving those tax credits, and it opens the subsidy to smaller carbon capture projects.

“We cannot overemphasize the transformative effect that the Inflation Reduction Act will have on the deployment of carbon capture technologies,” said Matt Bright, carbon capture policy manager at the Clean Air Task Force.

Companies have noticed. As of now, there are 153 CCS projects in the planning phase, more than at any time in history, according to the Global CCS Institute in its recently published annual survey. They join 30 projects already operating and another 11 under construction.

The list of major CCS projects includes the recently announced partnership of ExxonMobil and Mitsubishi Heavy Industries to deploy carbon capture technology as a “solution” for industrial customers. Both companies claim more than 30 years experience in the field, with Mitsubishi having delivered 14 commercial capture plants worldwide.

In another initiative, Exxon is partnering with CF Industries to capture and store up to 2 million metric tons of CO2 emissions annually from a plant in Louisiana, projecting a market of $4 trillion for CCS activities by 2050. Competing oil major Occidental Petroleum is building a plant to capture 500,000 metric tons of CO2 and earn money by selling carbon offsets. The company is also projecting profits from selling “net-zero oil” produced by injecting more CO2 into oil reservoirs.

Even with a land rush to invest in CCS/CCUS, there’s not nearly enough projected activity to produce outcomes on a scale equal to the resources being poured into the concept — and to fulfill its purpose of emissions reduction.

Occidental’s strategy points to another often-hyped benefit of CCS projects: The ability to use captured and stored CO2 for other purposes. From fizzy drinks to fertilizer production, CO2 is a major component in industries that depend on the gas. More controversially, another use for captured CO2 is the pumping of the compressed gas into old oil wells to retrieve the remaining hydrocarbons, thereby enhancing fossil fuel production — an end result exactly contrary to that of reducing emissions in the first place. Big oil and gas companies have been doing CCS for years, as a matter of business-as-usual — exactly what activists say is so wrong-headed about using this technology as a solution to climate change. If oil and gas production and consumption is not reduced overall by 2050, they argue, there will be no achievement of a net-zero economy by that target date. Energy companies reply that commercial uses for captured carbon gas provide the bottom-line incentive to invest in and operate the process. And that they are best-positioned by their resources and experience to manage it.

Other, non-energy corporations are joining up with startups to take advantage of this newly favorable climate for CCS. Three big deals have just recently been concluded, among them a long-term commitment by Microsoft to support Heirloom, a San Francisco-based firm; the tech giant is both investor and customer, receiving carbon credits in return for its investment.

Investors have fixated on the profit potential. In one example, Brookfield Asset Management has committed up to $2 billion for three carbon capture businesses. Plants at one of the project developments, LanzaTech NZ, will convert the gas from industrial emissions into materials used in fuels, clothes and perfume.

Naysayers say: Not so fast. A report by Institute for Energy Economics and Financial analysis  IIEEFA finds that the majority of 13 CCS projects currently operating have either failed entirely or captured much less CO2 than expected.

They also tell an alternate story about the promise of CCS. It’s a fact that the current landscape of active operations is a fairly small one that is currently not making much of a difference in the larger scheme of things. In 2021, around 40 million metric tons of CO2 was captured by existing CCS projects. To achieve net zero, that number would have to grow 40X, to 1.7. billion tons of CO2 removed over the next eight years. Current and planned projects would mitigate 244 million metric tons of CO2 annually, less than one percent of the 36 billion metric tons of the gas that the International Energy Agency (IEA) estimates was added to the atmosphere last year.

So, even with a land rush to invest in CCS/CCUS, there’s not nearly enough projected activity to produce outcomes on a scale equal to the resources being poured into the concept — and to fulfill its purpose of emissions reduction.

“We’re still far short of the scale to achieve and help achieve net zero,” admits Jarad Daniel, CEO of the Global CCS Institute. “The installed capacity needs to increase by at least 100-fold between now and 2050.” The IEA has said much more capacity is needed than the Institute’s projected figure of 425-650 million metric tons to be removed annually by 2050; the IEA figure is much higher, 1.6 billion metric tons. Its figure for required growth in investment in CCS to contribute meaningfully to net zero by 2050: 1,700 percent. That’s an impossible, target, say critics.

Investments in CCS have exponentially increased in response. Global funding for CCS grew four times in 2021, to $1.44 billion, according to data from CB insights. Up to 2020, investments in CCS amounted to only 0.5 percent of investment in all forms of clean energy investments up to 2020.

Undeterred by these daunting figures and controversies, the World Economic Forum’s First Movers Coalition, which aims to accelerate industrial decarbonization through advanced market commitments to climate tech, includes CO2 removal as of its core goals. The Intergovernmental Panel on Climate Change and the IEA also tout the idea as likely to play an important role in addressing climate change.

Will CCS be a critical part of reducing emissions in industries that are particularly hard to decarbonize, such as steel and cement? Or will the technology turn out to be an ultra-expensive detour that soaks up valuable investment funding that could be directed to turbocharge renewables, solar and wind energy? Billions of dollars as well as the health of the planet are riding on the bets being made during the CCS debate — winning ones to be determined.

The post "Carbon capture: Solution or sideshow?" appeared first on Green Biz


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