Direct air carbon capture: Oil's answer to fracking?

The Gunther Report

Direct air carbon capture: Oil's answer to fracking?

Oil recovery, oil drilling, nodding donkeys

Since 1999, when Columbia University physicist Klaus Lackner wrote the first scientific paper [PDF, download] about capturing carbon dioxide from the air, his unlikely idea has grown into a nascent industry. Four startup companies, including his own, Kilimanjaro Energy, are working on technologies to extract CO2 from the atmosphere using chemical processes. The air-capture startups are funded by billionaires (Bill Gates, Edgar Bronfman Jr.) and venture capitalists (Arch Venture Partners), and they are attracting interest from private equity firms (Warburg Pincus), investment banks (Goldman Sachs), energy companies (Summit Power) and a military contractor (Boeing).

This week, a group of about 70 entrepreneurs, academics, investors and partners gathered in Calgary, Alberta, for the first ever North American conference devoted to air capture. (Someone said it felt like history in the making. That remains to be seen.) As the industry’s pioneer, Lackner, who's affiliated with Columbia’s Earth Institute, played a prominent role, but he was in no mood to celebrate. While climate change was on the agenda, much of the program focused on the biggest emerging market for air capture technology -- namely, using liquid CO2 for enhanced oil recovery.

Kilimanjaro’s CEO, Ned David, said that CO2 could do for the oil business what hydrofracking has done for natural gas, unleashing vast amounts of fossil fuels that might otherwise remain in the ground. “A money gusher,” he called it. Others talked about using air capture to make fuels at the military’s Forward Operating Bases (FOBs) and even, half in jest, to “green” the fizz in Coke and Pepsi.

This, of course, was not what Lackner had in mind way back when. “What makes air capture worth doing is its climate impacts,” he told me. “What will pay for it are these other applications.”

“The real problem I want to solve is not interested in being solved,” he lamented.

The conference was the strongest sign yet that direct air capture is becoming a business -- for better or worse.

For better? Because air capture technology has enormous potential to reduce CO2 concentrations in the atmosphere, albeit very slowly and at considerable expense. The costs remain unknown, with estimates ranging wildly from $30 per ton of CO2 captured, which is almost surely too low, to more than $600 a ton, which is almost surely too high, although the bigger number comes from a report [PDF, download] from the respected American Physical Society.

For worse? Because as air capture transitions from academia into the marketplace, the startups will need to generate revenues to stay alive, even if those revenues enable more oil to be pumped out of the ground. Put another way, air-capture technology has become a solution in search of a market, while its backers wait for the world to get serious about climate threat.

Not coincidentally, all four air-capture startups at the conference, which was organized by the Institute for Sustainable Energy, Environment and Economy at the University of Calgary, were founded by academics and financed by well-to-do investors who are concerned about climate. Lackner started Kilimanjaro with the backing of the late Gary Comer, founder of Lands End. David Keith of the University of Calgary and Harvard started Carbon Engineering, with an investment from Gates. Peter Eisenberger and Graciela Chichilnisky started Global Thermostat, where Bronfman is the lead investor and board chair. ClimeWorks was spun out of ETH Zurich, where its co-founder, Christophe Gebald was a grad student.

The startups are deploying different, proprietary technologies (see their websites for details) but all share a bold, long-term vision: recycling CO2 from the air and combining it with hydrogen to make zero-carbon hydrocarbons, and using low-carbon wind, solar or nuclear energy to power the process. “Closing the carbon cycle” is how Eisenberger describes it, and he says air capture will enable any country, anywhere in the world, to make its own sustainable transportation fuels. ExxonMobil, where Eisenberger once toiled, would survive, but OPEC would be no more.

But that’s the very long term plan. Meantime, the companies want to capitalize on existing demand for CO2, which is a valuable commodity as well as a waste product. There’s substantial, unmet demand for CO2 -- most of it from the oil industry -- at prices that can occasionally top $100 a ton, all agree. Injecting CO2 into the ground to extract oil, while unseemly at first glance, produces oil with no more than half the carbon footprint of conventional oil, assuming the CO2 stays underground. “There are real environmental benefits,” says Keith, whose plan is to sell the fuel to California, where it would command a premium because of the state’s Low Carbon Fuel Standard. Summit Power, which develops low carbon energy projects, including a $2-billion “clean coal’ project in Texas, is also interested in air capture, said Sasha Mackler, the firm’s vice president for carbon capture.

Kilimanjaro’s Ned David, for his part, talked about capturing CO2 to feed algae, a business he knows well as a co-founder of algae startup Sapphire Energy. Global Thermostat, too, is working on an algae project, with startup Algae Systems and IHI, a Japanese industrial conglomerate. Boeing, meanwhile, is talking to all of the startups about developing ways to make fuels for the army at remote military bases or the navy on aircraft carriers. Military buyers are willing to pay a premium for fuel, particularly if they can eliminate long, costly and dangerous supply lines.

Goldman Sachs and Warburg Pincus didn’t show up in Calgary, but insiders tell me that Goldman is advising Global Thermostat, as it negotiates with an array of partners and potential investors, including Warburg, which is talking about a $75-million equity investment in GT. One investor who did make the trip was Nigel Tuersley, a London-based entrepreneur and ecologist who plans to buy a stake in Keith’s Carbon Engineering. “I’m impressed by the tenacity and the sheer inventiveness of the people here,” Tuersley said. “This is very exciting virgin territory, and it has all the hallmarks of a potentially important industry.”

Environmentalists still need some convincing. David Hawkins, the veteran climate campaigner with the Natural Resources Defense Council, observed that air capture has “morphed very rapidly from a technology whose purpose is to remove CO2 to a technology whose purpose is to produce CO2.” There’s a risk, he said, that commercial imperatives could lead the startups to drift away from their environmental mission. “We didn’t decide to pursue scrubbers by relying on the market for gypsum as the driver,” he said.

Steve Hamburg, chief scientist of the Environmental Defense Fund, said the air-capture industry needs to be clear about how it is measuring CO2 benefits, if any, and transparent about its needs for energy, water and land.

“It’s a promising technology,” Hamburg acknowledged. “But promising for what?”

[You can read more about air capture, climate politics and geoengineering in my new Kindle Single e-book, Suck It Up: How capturing carbon from the air can help solve the climate crisis, on sale at Amazon for $1.99.]

Here’s a great video from Carbon Engineering explaining how the technology and the business will work: