Carbon Capture: Climate Tool or Dangerous Weapon?

    Stockholm (NordSIP) – Carbon capture, use and storage (CCUS) technologies remain contentious in the eyes of many environmental campaigners.  This may stem from their apparent popularity with big oil producing companies and nations, for whom it oftens forms a key pillar of their net-zero strategies.  Earlier this year Saudi Arabia’s Aramco tendered for several hundred million US Dollars’ worth of new CCUS projects, and the firm appears keener to talk about this and other proposed technological solutions to emissions reductions rather than phasing down fossil fuel extraction.

    Like it or not, we need carbon capture

    Nevertheless, CCUS technologies are fully supported by the International Energy Association (IEA).  15% of the cumulative emissions reductions in the IEA’s Sustainable Development Scenario depend on carbon capture.  The Intergovernmental Panel on Climate Change (IPCC), International Renewable Energy Agency (IRENA) and other climate-focused organisations take similar positions.  While some CCUS procedures such as chemical absorption have already been employed around the world for decades, the IEA’s scenario depends on the rapid expansion and deployment of this and many other CCUS technologies, some of which are still under development within a limited number of pilot projects.

    Multiple CCUS applications

    How does CCUS help address climate change in practice?  The first and most direct application is at source, reducing emissions on-site for the worst greenhouse gas (GHG) emitting sectors, most of which will remain active for many years to come.  Producers of metals, cement, chemicals and fuels including hydrogen can capture their carbon dioxide (CO2) emissions while investing in a longer-term transition to lower-carbon production methods.  The second application concerns the use of captured CO2.  It can be used in its raw state in a wide variety of sector including food and beverages production, refrigeration, and agriculture.  With further conversion CO2 can be used to manufacture cement and other building materials, produce various chemicals and even be employed as an ingredient in synthetic fuels.  Finally, standalone direct air capture (DAC) facilities can be set up to draw carbon directly from the atmosphere.  The much lower CO2 concentration in air versus the emissions from industrial facilities or power stations lead to higher costs per tonne extracted.

    The highest level of sustainability occurs when the capture and subsequent use of CO2 can be co-located.  Otherwise, CO2 needs to be compressed and transported by pipeline, ship or truck for more local applications.  CO2 that is not re-used must be stored within underground geological formations.  These may be depleted fossil fuel reservoirs or saline formations that are sufficiently deep underground for the CO2 to be retained either in a semi-liquid state or mineralised through reaction with the surrounding rock.  The global storage capacity is estimated to be well in excess of what is considered necessary to meet climate objectives.

    Concerns and controversy

    There remain multiple concerns about the viability of CCUS as a major tool against climate change.  CCUS facilities are costly to build and energy intensive in operation.  Some of the applications for CO2 usage in production processes introduce significant additional costs.  The compression and transport of CO2 to production or storage facilities also have their own carbon footprint and associated costs.  It is expected that average CCUS costs will fall with technological improvements and the benefits of scale.  It is also argued that the technology’s ability to support potentially stranded assets and jobs during the transition of these sectors to low-carbon production methods has a broader economic benefit.

    Aside from technological limitations and uncertain economics, there is also the danger of CCUS being used not as a last-resort climate change mitigation technique but as a distraction strategy by fossil fuel producers.  The net-zero strategies of most large oil companies focus on reducing Scope 1 and 2 emissions relating to their own facilities, and CCUS technologies sit alongside methane reduction, flaring elimination and the introduction of renewables as the main routes to achieve these goals.  Aramco claims to be developing mobile CO2 capture for roll-out on new fossil fuel combustion engines.  In 2017, the Oil and Gas Climate Initiative (OGCI), a coalition of the largest global oil companies, announced the launch of a USD 1 billion fund to support CCUS research and development.  The amount of committed capital was denounced as insufficient by observers, given the financial resources at the disposal of OGCI members.  For instance, OGCI member Shell reported quarterly profits of almost USD 10 billion on May 4, 2023.

    The vicious circle of Enhanced Oil Recovery

    Captured CO2 can also be used by oil companies for enhanced oil recovery (EOR).  This involves injecting captured CO2 into existing oil reservoirs to maintain pressure and help extract the maximum amount of oil.  This widespread process is described by Aramco: “Every day, we have the capability to capture and process 45 million standard cubic feet of CO2 at our plant in Hawiyah.  The captured CO2 is piped 85 kilometres and pumped into the Uthmaniyah oil reservoir, sequestering the gas while also helping to maintain pressure in the reservoir and recover more oil.  Since the initial injection of CO2 in 2015, we have doubled oil production rates from four of our wells.”

    CCUS technologies are an essential part of the climate change toolbox, with the IEA and other supranational organisations adamant that the Paris climate goals cannot be achieved without them.  Nevertheless, the use of CCUS by oil companies intent on greenwashing away their Scope 3 emissions reductions cannot be tolerated.  Captured CO2 must also be either used efficiently or stored safely underground, not employed to aid the extraction of yet more fossil fuels to further exacerbate the existing crisis.

    Image courtesy of Steve Buissinne from Pixabay
    Richard Tyszkiewicz
    Richard Tyszkiewicz
    Richard has over 30 years’ experience in the international investment industry. He has worked closely with major Nordic investors on consultancy projects, focusing on the evaluation of external asset managers. While doing so, Richard built up a strong practical understanding of the challenges faced by institutional investors seeking to integrate ESG into their portfolios. Richard has an MA degree in Management and Spanish from St Andrews University, and sustainability qualifications from Cambridge University, PRI and the CFA Institute.

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