Carbon Capture’s colossal challenge: credibility.
In an interview for a consulting job, I was asked what I thought were the biggest challenges for Carbon Capture, Utilization and Sequestration. Well-prepared and well-structured, I replied that I saw two buckets of challenges:
1. Technical challenges
Although carbon capture has been around for decades, there is plenty of room for technical improvements.
- A first one lies incustomisation: Yes, you can buy “off-the-shelf” systems for flue gas carbon capture, but not all flue gasses are the same. The flue gas coming out of a cement mill is vastly different than the exhaust of a coal-fired power plant. At this time, more or less the same carbon capture system is being used. There is a big opportunity in optimizing the system for the application.
- Moreover, when it comes to CO2 removal for the environment (Direct Air Capture, or Indirect Ocean Capture), there is still a lot of research & development needed to be done. Whether in improving the functional materials, the layout of the units, the assembly of units. This will bring down the energy requirements, and thereby the costs, significantly.
- Finally, “what to do with the CO2?” remains a big question mark. There is a lot to say about this, but there are actually very few real-life examples. There are only a handful geological subsurface storage sites in operation, nowhere near the scale that is needed. Also the use of CO2 in niche applications is fairly limited. Finally, the transport of CO2 will also pose logistical problems when done at the gigatonne scale.
2. Strategic/Economical challenges
Bigger than the technical challenges may be the economical ones.
- The truth is: nobody really wants to pay to clean up the CO2 (in short, if that were the case, there wouldn’t a problem in the first place). So, whatever technology you invent, at whatever price, it will always be too expensive. It should become so cheap that it becomes literally a no-brainer. We’re not there yet.
- The last point is partly due to the fact that there isn’t a fixed (future) price for CO2, nor a fixed cost for CO2 capture. If that were the case, it would be much easier for emitters to plan when it becomes cheaper to capture the CO2 than to emit it.
- Finally, for a lot of companies it remains unclear how to insert carbon capture in their day-to-day operations, how to move it from a stand-alone business case to an integral part of the overall business model. This is especially difficult for large emitters that are not in the oil & gas industry, and that may have less experience with gas separations.
While re-running the interview in my head, I realized I forgot arguably the most important challenge:
Credibility.
Actually, when I thought about it, the technical part is mostly straightforward engineering. Sure, a couple of tough pain-points remain, but there is nothing a bunch of smart people won’t be able to figure out.
When it comes to the business case, at some point that will just become irrelevant. CO2 capture as well as CO2 removal simply needs to happen: some CO2 emissions are inevitable (e.g. cement) and will need to be cleaned up. Some CO2 that has already been emitted will need to be removed to remain within a 1.5C temperature increase.
Our house is on fire, and we have methods to put it out. Can we argue about the firefighters’ budget later?
But what is truly holding this essential part of the climate puzzle back, is credibility.
Oil & Gas
For decades, the oil & gas industry has received billions of dollars/euros in taxpayer money to make CO2 removal work, and has very little to show for it:
- One of the biggest carbon capture projects ever constructed, Petra Nova, was mothballed last year, but not before being plagued by all kinds of technical issues while recieving 180MUSD in subsidies and another 250 MUSD state loan. All while accumulating tax credits (45Q) to use the CO2 for pushing more oil out of existing reservoirs (Enhanced Oil Recovery).
- A pilot project in France is being used in all the PR brochures of several large industrial groups. However, of the 19.2 MEUR budget, more than 14.7 MEUR is paid by the European Union. This means that the risk for these companies is zero. They have nothing to loose, but worse: they have little incentive to gain anything either.
- Of a recent 50MAUD public funding round for carbon capture in Australia, a large part went to the oil & gas and, even worse, coal industry. I’m all for realism and pragmatism, but for coal, there simply is no excuse anymore. It’s 2021, the world is burning, RIP coal.
Start-ups
Wherever you find archaic (or fossil — pun intended) incumbents who can’t seem to change course, there are start-ups ready to disrupt them. However, when you look at CO2 removal start-ups, they also often aren’t as sustainable as they claim to be (as I wrote last week in an opinion piece for Sifted).
This situation is certainly complicated by the fact that for the massive investments and insane scale-up trajectories these start-ups require, they are almost obliged to work with the Oil & Gas industry in order to find the necessary funds and achieve their growth targets. One could argue that this presents a serious conflict of interest: it’s as if Big Tobacco would start buying a pharmaceutical company providing lung cancer treatment (sometimes, reality overtakes fiction). However, when the choice goes between accepting imperfect funding or going bust, what can a small company do?
The underlying problem
You’d be forgiven to think that CO2 capture/removal is just an excuse to maintain the fossil status quo, as the entire discussion is being highjacked by the biggest polluters — who keep polluting, and still get taxpayer money for it.
This isn’t fair: not for the taxpayers, nor for the start-ups who develop climate-essential technologies.
This is a missed opportunity for fossil fuel companies, because they are logical players in the development of this technology, and, if done correctly and intentionally, they might actually benefit from early collaborations.
This also only amplifies the skepticism of environmentalist groups, who sometimes dismiss the technology altogether because they don’t trust the discrepancy between words and actions of the most prominent players.
A lose-lose for everyone, not in the least for the climate.
How to make it work?
Carbon capture is absolutely necessary, and needs to be deployed extremely rapidly. This means that good initiatives shouldn’t be held hostage by bad actors, nor by bad feelings. I see a couple of ways to make that work.
1.Radical transparency to follow the money
First and foremost, to build trust between the different parties, I believe in radical transparency. Traditionally, companies want to keep investment tickets and expense reports as secretive as possible out of fear to give away too much sensitive information, but in this case, it’s the wrong approach
Given how much public money is going into this space, and given how much trust must be built between stakeholders in how little time, it should be clear where the money is coming from and where it is flowing.
This trend is already visible in the space: both Stripe and Microsoft have open-sourced their calls for CO2 removal projects, providing full transparency about the projects they support, and why. In turn, the organizations behind those projects have to provide details on how they will spend that money, for the community to see.
2.Everyone should pay/get a fair share
The concept of “fairness” is of course up for interpretation, and I actually think it might be counterproductive to spend too much time defining it. However, “you’ll know it when you see it”.
If oil companies make billions in profits (going to corporate bonuses and stockholder dividends), how come they rely on subsidies to run their carbon capture efforts? If a government is granting money, then why is it always the polluters who get most of it?
One CO2 removal start-up has really taken this to heart, and registered as a non-profit organization. This won’t be possible for every project, but this should be taken into account whenever subsidies or government grants are being distributed.
3.Carbon takeback obligation and other creative policies
On a government level, I believe creative mechanisms like the Carbon Takeback Obligation are very elegant, and could be used to open a whole range of new possibilities.
Instead of putting a fixed price on carbon, a mechanism like this would require oil producers to take back X% (whereby X can increase in time) of the CO2 emitted from their products. This essentially moves the problem from a financial one to a technical/logistical one. It doesn’t matter what the cost is for this company, they just NEED to make it happen.
Polluters should scoop their own poop.
A final word
The values I outline in this article are also the values I live by with my startup Out of the Blue, a startup with a mission to remove CO2 from the ocean in a safe, cost-effective and large-scale manner. As usual, I’m always up for a chat!
