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May 16, 2023
By Akshat Rathi
Big money rushes in before the results
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The prospect of
trapping carbon dioxide and storing it away so it can’t warm the
planet has always been tantalizing. Now governments and companies
are throwing their weight behind the technology as a way of solving
the climate problem like never before.
The oil and gas
industry has long argued that real emissions reductions can be
delivered by removing CO2 from smokestacks and burying it deep
underground — an approach known as carbon capture and storage (CCS).
But after decades of failing to reach the scale needed to make a real
difference, the people responsible for approving generous subsidies
and directing billions in investment want proof that this time it will
really work.
As part of rules
proposed last week to lower carbon pollution from US power plants,
President Joe Biden will require some plants to build CCS or shut
down. The regulation comes after incentives in the form of tax credits
of up to $85 a ton of captured CO2 were allocated in Biden’s landmark
climate bill, alongside infrastructure legislation with $8.5
billion to boost CCS technology. Those steps will see the US
host nearly half of the world’s CCS capacity by 2030, according to
BloombergNEF.
Earlier this
month, COP28 President Sultan Al Jaber signaled that CCS will also
play a major role in the annual United Nations climate summit to
be hosted by the United Arab Emirates.
Private
companies are also jumping in. JPMorgan Chase & Co., Alphabet Inc.,
Meta Platforms Inc., McKinsey & Co. and others have contributed to a
$1 billion fund that will buy
carbon-removal credits to support technologies that draw down CO2
that already exists in the atmosphere. Microsoft this week announced a
deal to buy
similar credits from the Danish energy giant Orsted A/S.
These technologies to remove existing carbon pollution from the air
will be needed at scale in the latter half of the century to keep
global warming below 1.5C, but they are much more expensive than
trapping emissions from smokestacks.
“It’s an
exciting year for the industry,” said Jessie Stolark, executive
director of Carbon Capture Coalition, a US lobby group. “But we’re not
suggesting it’s a silver bullet. It’s important to deploy
carbon-management technologies alongside a full portfolio of
emissions-reduction strategies.”
CCS is not
just one thing. It’s an umbrella term for a set of technologies that
separate CO2 — the main greenhouse gas — from a mixture of gases and
then find a way to ensure it does not enter the atmosphere. Depending
on the mixture of gases involved (if the facility burns coal or making
cement, for example) and depending on where the gas is stored (if it’s
buried underground or turned into commercial products), the cost of
building CCS plants can vary a lot.
The first
large-scale carbon capture plant was built in the 1970s. Its job was
to separate CO2 from natural gas, then inject the greenhouse gas
underground to extract more oil from a depleting reservoir. That’s
what the vast majority of the world’s captured CO2 is currently used
for, according to the Global CCS Institute. Using CCS specifically to
help mitigate global warming only started in the 1990s, and still
remains on a smaller scale.
Despite its
50-year history, all the CCS plants deployed globally capture only
about 40 million tons of CO2 each year. That’s less than 0.1% of
global greenhouse-gas emissions. If every plant in the pipeline
collated by the Global CCS Institute gets built, that would grow to
about 0.5%. But will the boom happen? The past decade is littered with
CCS plants that were announced to great fanfare but were never
constructed, along with some
multibillion-dollar failures after building began.
The majority of
CCS plants in the world are operated by oil and gas companies. That’s
because the industry has developed the expertise needed to safely
handle large volumes of gas. However, unless CCS was tied directly
to revenue in the form of oil or carbon taxes, few plants found viable
business models that
justified significant investment.
Listen to Occidental Petroleum’s Vicki Hollub on the Zero podcast talk
about how carbon capture is
crucial for the US oil company’s future.
On the other
hand, there is a growing demand for carbon-removal credits that help
global corporations
credibly meet net-zero goals. That has, in turn, led to a large
number of startups developing these technologies and shows that CCS
can thrive with alternate business models outside the confines of
large fossil-fuel corporations.
The failure of
CCS to live up to its grand promises is why the support this time also
comes with a stronger note of skepticism. “We can’t sit here and just
pretend we’re going to automatically have something we don’t have
today,” US climate envoy John Kerry
told the AP. “Because we might not. It might not work.”
Al Jaber, who
also heads the UAE’s oil giant Abu Dhabi National Oil Co., has said
that COP28 should focus on getting the world on track to halving
emissions by 2030. But serious COP watchers, including former United
Nations climate chief Christiana Figueres, aren’t sure whether Al
Jaber’s push for CCS will get us there. “We do not have carbon capture
commercially available and viable over the next five to seven years,”
she said on the
podcast Outrage and Optimism. “So just from the timing
issue... [it] cannot be where you put your eggs into that basket.”
In a world on
track to reach net-zero emissions by mid-century, global CCS capacity
needs to reach 1.3 billion tons of captured carbon annually by 2030,
according to the
International Energy Agency. That’s roughly 30 times the capacity
today. The goal is ambitious and the industry has to show progress,
according to IEA chief Fatih Birol
wrote in a LinkedIn post last week. “This year is a unique
opportunity for the oil and gas industry to show it’s serious about
tackling climate change,” he said.
Akshat
Rathi writes the Zero newsletter, which examines the world’s race to
cut emissions. You can email
him with feedback. His book Climate
Capitalism will be published later this year.
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