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CERAWeek: Rollout of CCUS for climate needs depends on right policies

08 March 2021 Cristina Brooks

High costs for carbon capture, utilization, and storage (CCUS) mean that governments must assist with its commercialization if they want to lower global carbon emissions, according to executives speaking on a panel on the case for carbon capture at the CERAWeek by IHS Markit conference.

Market-scale CCUS is critical for countries to reach their emissions reductions commitments under the Paris Agreement, said Richard Newell, CEO of the research nonprofit Resources for the Future (RFF), whose business council includes Shell, BP, and Chevron.

"Global climate models show there is really little ambiguity about the critical importance of carbon removal alongside deep emission reductions to limit the rise in global temperatures to 1.5 degrees Celsius above pre-industrial levels," said Newell.

Calls are growing to limit emissions to net zero by the middle of the century, he said. "It's near impossible to change the global energy system that fast. And there are also some emission sources [that] apparently lack any scalable solution at any cost and are extremely hard to decarbonize," he warned.

Therefore, a carbon-negative solution is necessary, and while nature-based solutions like reforestation can be in the range of "single dollars to tens of dollars" per ton of carbon dioxide, the land for them is scarce, and forests can burn down.

"So, it's not as permanent as an engineered solution can be. If you turn to engineered solutions, I would say Bioenergy with Carbon Capture and Storage (BECCS) is currently the most tested and least expensive," said Newell, referring to the process of capturing carbon from biomass that is burned for energy to lower carbon.

The other engineered solutions include direct air capture, which involves capturing the carbon from the air with a solvent, and carbon mineralization, which is the storage of captured carbon in rocks. "All three of those have the potential to make a substantial contribution," he added.

"Direct air capture is definitely the most scalable. It's not limited by the availability of mineral resources, or the availability of bio-energy as a fuel. It's really only limited by the availability of carbon dioxide storage and engineered solutions, [which] tend to be significantly more expensive currently, or they're in the range of, let's say, high tens of dollars per ton to hundreds of dollars per ton. So, there is a real need for innovation and development."

Pratima Rangarajan is the CEO of the industry-led climate initiative OGCI Climate Investments, which is an investor in the UK-based NetZero Teesside demonstration project.

The project aims to decarbonize the UK's largest industrial zone by capturing and storing businesses' carbon emissions at an offshore site under the North Sea. The UK-government backed project aims to reduce the cost of CCUS, a key technology in the UK's plan to reach its 2050 net-zero target.

Rangarajan agreed that offsetting through reforestation would not remove enough gas, and recommended capturing carbon directly from the chimneys of cement, iron, and steel plants. "The best, most cost-effective way to decarbonize is not to emit carbon dioxide. The second-best way, then, is to go to where the concentrated sources of carbon dioxide are, and to capture those and sequester them," she said.

If the technology were more cost-effective, then the markets served by carbon capture could include offsets for a wide range of industries, including emissions for transportation sectors like aviation.

That was the picture painted by Robert Zeller, vice president of technology at Occidental Petroleum's Oxy Low Carbon Ventures division, which manages its CCUS-linked businesses.

"Over the next decade, as we drive costs down in direct air capture, we're going to start seeing carbon as a service," Zeller said during a different panel discussion on emerging models for CCUS. "Basically, a simple phone call or click of a button will get you an offset. And it'll be certified by an independent third party, etc., so that the emitter can drive efficiencies and drive reductions."

Oil, gas extraction and cement can use CCUS byproduct

Oxy Low Carbon Ventures operates in the enhanced oil recovery business, which consumes carbon dioxide, a likely by-product of future CCUS markets. Through this technique, carbon dioxide can be permanently injected into the earth to allow increased exploitation of existing oil and natural gas fields.

Occidental produces, processes, and consumes carbon in a way that leads to removal of 18 million metric tons of carbon dioxide a year, which is the emissions equivalent of about 4 million cars.

Already Occidental incorporates CCUS' footprint measurement, energy efficiency, and emissions-free energy in its net-zero plan for the future. The company sees so much potential in its carbon sequestration technology -- honed through years of enhanced oil recovery operations in the US -- that CEO Vicki Hollub told CERAWeek: "We do not expect to be an oil company only in the next 10 to 20 years. We expect to become a carbon management company."

Occidental President, Operations, US Onshore Resources and Carbon Management Richard Jackson explained similarly aggressive carbon-reduction plans for its business model. "And so, when you put these together with CCUS, we really do have an opportunity to capture and retire as much carbon dioxide as we create. As we look forward as a company, we set a net-zero emissions target by 2050 that covers our mission, inventory, total emission inventory across scope, one, two, and three," he said.

Occidental is trying to make further emissions reductions in oil and gas production. "You know, for us it's really the responsible management of hydrocarbons from extraction to utilization. That includes what we're talking about today around storage and cycling. It really is working to reduce waste, to be able to create a true net-zero capable system as we think about energy going forward," said Jackson.

Cement manufacturing is another industry that could potentially make use of captured carbon. William Tynan, CEO of Solidia Technologies, said this held out the promise of one day turning cement carbon-negative, noting his company was testing the use of captured carbon in a cement mix with the transportation department of a US state.

Governments to pay for CCUS?

One of the potential sources of funding for CCUS could be public-private partnerships such as has been seen in Norway's Longship CCS project. This idea was affirmed by King Abdullah Petroleum Studies and Research Center President Adam Sieminski, speaking in a panel on emerging CCUS models at CERAWeek.

Alternatively, a future subsidy or tax credit approach could bankroll CCS in the US, according to Bank of America Securities Managing Director in Energy Corporate Banking JR Rickertsen.

"What we see in Europe seems to be kind of more of a traditional government-supported project finance around the larger ports, but both certainly have a role to play," he said.

The issue is achieving public support for such a credit. "We may find … concerns if there is overall a political will to assign a certain degree of a social cost to do so, and that in turn, if that price is a bit higher than kind of where we are today, it may end up driving additional incentives, and really the proliferation of CCUS," he said.

"So we'd like to see some benchmark projects well-supported, for example in California, but also outside of California, internationally and domestically, and really see if we can get them built with a more stable and higher price for the carbon dioxide sequestration," he added.

Jackson thinks that both investor and policy support is needed to fund the expected multi-billion-dollar costs of CCUS commercialization. "I think it's important to understand the need for research and development, but we're entering a period where technologies are becoming important to deploy commercially, and thinking about not millions of dollars, but billions of dollars over the next 10 years in terms of deployment is very important," said Jackson.

Posted 08 March 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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