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GreenBiz 101

As carbon capture heats up, old questions reignite

Government incentives have bolstered the carbon removals sector, but should that money be helping heavy industry capture their emissions or uplift technologies that are already low emitters?

Carbon Scrubbers

High emitting industries have started to look towards carbon capture as a green solution. Image via Shutterstock/Cobalt S-Elinoi.

Businesses seeking to lead on sustainability and meet net-zero commitments should be working to decarbonize their Scope 3 emissions. These include fossil fuel, steel and fertilizer companies with hard-to-reduce emissions.

Both these businesses and their big customers are hoping that a new technology suite — carbon capture, removal and storage — will save them. For example, in 2022 Exxon announced a partnership with CF Industries and EnLink Midstream to capture and store up to 2 million metric tons of carbon dioxide emissions annually from its manufacturing complex in Louisiana.

However, watchdog groups argue that investing in these technologies will just prolong the reliance on industries with heavy environmental footprints instead of phasing them out. 

This suite of carbon technologies doesn’t have a long history of successes. Removal and capture is a relatively new, expensive technology that removes only a small percentage of carbon from the atmosphere and has had some failures. But boosters of carbon capture and removal hope that an increase in investment and incentives can change that performance trend, creating both a new, highly impactful climate technology and an opportunity for the oil and gas sector to be part of the green transition.

Funds are flowing

Recently the carbon removal and capture sector has been supercharged by the Inflation Reduction Act of 2022 (IRA), which extends and expands tax credits from the 45Q tax credits of 2008 and increases payments to businesses, from $50 for every metric ton of CO2 they sequester up to between $60 and $85. 

Companies are responding. Every week it seems there is a new announcement about some aspect of the novel carbon capture, removal and storage technologies — whether a flashy investment or a bureaucratic step forward.

In May alone: JP Morgan Chase inked a huge $200 million deal with Climeworks, a startup that pulls carbon directly out of the atmosphere and stores it underground. The Gold Standard, a carbon crediting body, opened a public consultation on a new methodology for carbon capture and geological storage that integrates biomass fermentation. And the U.S. Department of Energy invested $251 million in four large scale carbon storage and transport projects in the Gulf Coast, Colorado, Alabama and Wyoming. 

On the operational side, in late April Louisiana began moving through a process to take control from the Environmental Protection Agency over granting permits to oil and gas companies for drilling Class 6 wells, which are used exclusively to store CO2 by pumping it into natural features in subterranean rock formations. If approved, Louisiana will become the third state after North Dakota and Wyoming to have this power. The Louisiana State House also passed legislation to prepare for the Class 6 permitting and provide the state with potential revenue sharing on state lands where companies may sell credits for the carbon they store. And in July, a new carbon capture demonstration pilot for a natural gas plant run by Calpine opened in California. 

Carbon capture may decarbonize hard-to-abate industries quickly, but it funnels even more money into oil and gas companies by contracting them to transport and inject the carbon into the ground, which can be an uncomfortable investment for the green economy. In addition, there are still questions about the viability of this developing technology.

What is the difference between carbon removal, carbon capture and carbon storage?

Carbon removal, carbon capture and carbon storage are three distinct processes that make up a package of solutions.

Technological carbon removal, also known as direct air capture, usually refers to pulling carbon dioxide directly out of the atmosphere, which is what startups Climeworks and Heirloom focus on. This process addresses historical emissions of carbon already in the atmosphere. (There are also nature-based solutions, such as planting trees and cultivating healthier soils, but let’s focus on the technological solutions for now). 

By contrast, carbon capture, also called point-source carbon capture, focuses on stopping emissions from a single industrial process from entering the atmosphere in the first place. Its goal is to curb future emissions. The point sources are usually from those hard-to-abate industries: Think power plants, natural gas processing, ethanol refining and the production of fertilizer, petrochemicals, hydrogen, iron and steel. These activities lack viable alternatives for production without creating greenhouse gas emissions.

"Within the next decade it’s very unlikely you're going to be able to electrify those [industries] for technical reasons," said Greg Upton, interim executive director and professor at the Center for Energy Studies (CES) at Louisiana State University (LSU).

However, retrofitting a petroleum plant to include carbon capture technology would suck up all the emissions at the source — kind of like adding a tank to the end of your car’s exhaust pipe. Then CO2 is pressurized and transported via pipeline to a well where it is injected into the ground for storage. With this system, no carbon from the manufacturing process escapes into the atmosphere.

Carbon Capture vs Removal

Image courtesy of Carbon180.

Finally, carbon storage offers the final resting place for the CO2 from both carbon capture and removal, by building new oil and gas pipelines to help companies transport the CO2 to a location with the right geological formations for storage and where a well has been drilled. By capturing the CO2 from these industrialized processes and pumping the CO2 into the ground for durable sequestration, hard-to-abate industries have found an effective way to decarbonize their businesses, and the oil and gas industry has found a business model within the green economy.

Is carbon capture the right use of resources?

High-emitting sectors are looking to decarbonize for a variety of reasons, including placating investors and preparing for upcoming regulation such as the expected SEC climate rules and state and international policy, according to David Dismukes, professor emeritus at CES.

"This is not to make any money or even to generate offsetting revenue streams," he said. "Usually, they're doing it because they've got requirements in other countries. The second reason is it's just the ESG concerns for raising capital. ‘Am I going to get dinged by Wall Street if I don't go out and take care of this problem? I’m going to have a difficult time raising capital.’"

Carbon capture and carbon removal each have their critics who argue the technologies are too expensive and don't encourage sustainable development, but carbon capture has become a bit more of a lightning rod as it gives companies with the highest emissions a direct pathway to continue their entrenched business models. Carbon removal’s tactic of addressing past emissions, on the other hand, seems more of a way to rectify old mistakes instead of continuing them, according to advocacy groups such as Carbon180.

Carbon removal growth chart

Image courtesy of Carbon180.

However, almost all the models in the 2022 Intergovernmental Panel on Climate Change report that keep the earth to 1.5 Celsius degrees of warming use carbon capture.

The IPCC’s Climate Change 2022: Mitigation of Climate Change report states that such pathways "involve substantial reductions in fossil fuel consumption and a near elimination of the use of coal without carbon capture and storage." And it states that net-zero industrialized processes will need carbon capture to mitigate the remaining emissions. The report also identifies retrofitting coal-fired power plants with carbon capture and storage as "important steps to decarbonizing the energy sector." A related synthesis report says that deeply reducing emissions in cement production will rely on substitute materials and "the availability of Carbon Capture and Storage (CCS) until new chemistries are mastered."

In other words, carbon capture is being positioned as a transition technology that will make products and energy more expensive while reducing their environmental impact. But the IPCC report also clearly states that there are costs to not using carbon capture and allowing climate change to continue. 

Retrofitting manufacturing facilities, drilling new wells to sequester CO2, and laying miles of pipeline are giant infrastructure projects with opportunity costs and giant capital needs.

Jim Walsh, policy director for Food and Water Watch, wants that money to be put toward other technologies that can create a green transition, not just continuing to funnel money toward fossil fuels and other heavy emitters.

"It undermines resources that can otherwise be put towards a real transition to clean, renewable energy, that would actually get us off of fossil fuels," he said. "We’re not addressing the easy-to-abate emission."

But according to Julio Friedmann, chief scientist at Carbon Direct, a carbon management consultancy, carbon capture retrofitting done right will create a concrete and immediate decrease in carbon releases by high emitters. It’s a fast change that doesn’t require a complete restructuring of the economy and the industries that support it.

"[These producers] are objectively changing their ways," he said. "They are no longer throwing carbon dioxide into the air and oceans."

Advocates of point-source carbon capture cast it as a transition technology to scale now while the rest of the economy takes time to shift — but that’s banking on the economy fulfilling the promise of a full green transition.

Will the future of point source carbon capture be different from its past?

Another concern swirling around this uptick in investments in carbon capture is its legacy of not delivering impactful emissions decreases. In its 50 years, carbon capture globally has sequestered only about 40 million metric tons of CO2 each year, according to the Global CCS Institute, cited in a report by Bloomberg. That’s less than 1 percent of global greenhouse gas emissions, and there have been many other complete project failures.

"It didn’t work in the past because in the past you couldn't get paid to do it," Friedmann said. The IRA has changed that, however, with its increase in payments and tax credits for every ton of carbon sequestered.

The industry also has a high-profile, recent catastrophe working against it — the rupture of a CO2 pipeline in Satartia, Mississippi, in 2020 that reportedly sickened residents. But Friedmann said these issues were caused by hydrogen sulfide being mixed into the CO2, which wouldn’t happen in a CO2 storage pipeline.

Moralizing won’t get us to build things; compromise will.

According to Brian Snyder, associate professor of environmental science at LSU, pipelines are probably the biggest environmental, human health and safety and environmental justice concerns when it comes to scaling up carbon capture. Thousands of miles of new, high-pressure pipelines would need to be laid to transport CO2 from emissions sources to the geological storage wells.

"That can be done safely and in many cases without significant environmental impacts," he said. "My biggest concern is what is sitting on top of them."

When CO2 pipelines rupture they don’t explode, because carbon dioxide isn’t flammable, but they self-excavate and push up all the dirt that they’re buried under, according to Snyder. So laying one of those pipelines near another pipeline containing something hazardous, or within soil containing something hazardous, might cause problems.

Besides toxicity risk, the pipelines also need to be built keeping in mind protected ecosystems such as wetlands and proximity to disadvantaged communities, Snyder added. Potential leaks, movements and environmental impacts can result from the final underground storage location of CO2.

Is this a new opportunity in the green economy for oil and gas?

Often, an investment into carbon capture and storage essentially means an investment in the oil or gas companies using the technologies to take care of their carbon emissions. These companies already have a trust gap with the general population, and even more so with those concerned about climate change. 

"It is sort of disquieting, I suppose, that the companies that caused the problem in the first place are going to profit again by solving the problem," Snyder said of the businesses benefiting from all the public and private investment that’s going to be pumped into this space. "But I don't know that there’s another option. Drilling and the geotechnical capability to do this is highly specialized and only exists in oil and gas companies."

Also on a positive note, carbon capture and storage of projects could create greener career paths for the next generation working in the sector. According to Dismukes, a lot of geology students pursue their degrees because of a love of the earth and nature, but once they realize that the only jobs are in the oil and gas industry they start thinking, "Oh man, I made a bad decision on my degree," he said. "I see this as a great opportunity. …[The students] perceive it as a win-win, because they can use their applied science background to do something that’s helpful as opposed to extractive in nature."

Keeping up with the trend, LSU has started a concentration in carbon capture in its petroleum engineering department. The Gulf Coast has become a hotspot of conversation around point-source carbon capture because of its many industrial operations and its skilled oil and gas labor force. It also features prime geological formations for carbon storage, so much so that Gulf Coast Sequestration, founded in 2018, is building a new carbon capture and storage hub in the middle of the coast in Calcasieu Parish. 

"We know that to get a deep abatement of emissions, we're going to have to build lots and lots of things," Friedmann said. "Collectively, as a society and as a nation, we should be trying to do this as rapidly as possible and as well as we can. Moralizing won’t get us to build things; compromise will."

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