By Valerie Volcovici
(Reuters) -In Texas, oil and gas producer Occidental Petroleum is building a massive facility to suck 500,000 tons of carbon dioxide from the atmosphere annually to prevent the climate from warming, a project backed by hundreds of millions of dollars in investment firm BlackRock.
In Louisiana, a consortium of companies, including Switzerland’s Climeworks, is working together to build a similar facility that could remove a million tons of greenhouse gases from the air each year, boosted by hundreds of millions of dollars in U.S. subsidies. government.
The Direct Air Capture (DAC) projects are in neighboring countries, but the companies running them are far removed from their views on how carbon removal – an expensive and largely unproven family of technologies to combat or even reverse global warming to run – needs to be addressed. deployed in a climate-friendly future and the role that oil and gas must play in this.
Occidental says it would inject some of its carbon into oil fields to ramp up pressure and increase crude oil production — a strategy the company says could de-risk the world’s future fossil fuel consumption climate.
Climeworks and its partner Heirloom, meanwhile, say the carbon will go straight to underground storage, and the technology must go hand-in-hand with a transition to renewable energy.
The clashing philosophies reflect a global debate over the role that carbon removal technologies should play in preventing the world from exceeding the 1.5 degree Celsius increase that will be the focus of the 28th United Nations Climate Change Conference in Dubai on November 30-December. 12.
The host of the COP28 conference, OPEC member the United Arab Emirates, promotes the use of carbon removal – a family of technologies to keep excess CO2 out of the atmosphere – as a means to reduce fossil fuel emissions, rather than eliminating fossil fuels. himself. Scientists have said carbon removal is necessary to keep climate goals alive.
This approach has the support of global producers who want to continue profiting from fossil fuels, but is attracting skepticism among environmentalists and some governments who see it as a ploy to extend the life of oil and gas and are pushing for tough language at COP28 to to phase it out gradually. fossil fuels completely.
Underscoring the divide, the International Energy Agency (IEA) said last week that the oil and gas industry is relying too much on carbon capture to reduce emissions. a lifeline for future fossil fuel use.
“We believe that no form of direct air capture as an industry should be used as a justification for extending expanded fossil fuel production,” said Vikrum Aiyer, head of climate policy at Heirloom, a partner in the Louisiana facility called Project Cypress . .
The different approaches also reflect an important financial dynamic in the carbon removal industry: In the short term, it’s a lot easier to make money capturing carbon if it comes with a benefit like higher oil production.
Otherwise, the enormous price tag for carbon removal on a global scale would have to fall on governments if there is any chance these projects can survive.
SAVIOR OR FIG LEAF?
The IEA says DAC would need to capture as much as 1 billion tonnes annually by 2050 if the world is to meet its decarbonization targets, a huge increase from the 10,000 tonnes it currently removes.
A major problem is that DAC technology is both expensive and unproven at scale. Capturing carbon using DAC costs anywhere from $600 to $1,000 per tonne, mainly due to the enormous amount of energy required to run the equipment.
There are now two commercial DAC facilities in operation: a Climeworks project in Iceland that can capture just 4,000 tons of CO2 per year and the Heirloom project in California that can capture 1,000 tons of CO2 annually, with the remainder of the emissions removed by DAC is attributed to small pilot projects.
More than a hundred other DAC projects are in various stages of development, but it is unclear how many will be completed and when, or how they would survive financially.
The more mature carbon capture and storage (CCS) technology, which captures emissions at a point source such as a smokestack, also requires rapid scale-up to make a difference. There are 41 operational commercial CCS projects worldwide with the capacity to store 49 million tons annually, according to the Global CCS Institute – about one-thousandth of the world’s total energy and industry-related CO2 emissions.
Most of these use the carbon for enhanced oil recovery (EOR) or are linked to ethanol plants that want to generate low-carbon credits, the institute said.
New COP President Sultan al-Jaber has said that carbon capture or removal technology is needed in “any realistic scenario” to meet the world’s climate goals. The UAE’s national oil company, ADNOC, recently partnered with Occidental to evaluate investments in DAC plants and CO2 storage hubs in the US and UAE.
‘LICENSE TO CONTINUE’
Occidental CEO Vicki Hollub has said DAC could give the oil industry “a license to operate for the next 60, 70, 80 years.”
The company says its Stratos project in Texas would use removed carbon to recover oil, or otherwise generate carbon credits for storing carbon to sell to struggling industries to decarbonize and enable to label its oil as ‘net zero’. refined from there as ‘low-carbon’.
“What we’re saying is that there is a very transparent, very credible way to address the emissions from those barrels of oil,” said Mike Avery, president of 1PointFive, a Western subsidiary developing its DAC projects.
“You don’t bring in more oil than the world needs. You are tackling the emissions of the oil that the world still needs.”
Occidental also has a separate DAC hub proposal in Texas that has won half a billion dollars in federal grants. The CO2 from that project will be stored underground and has no link to oil and gas, the Ministry of Energy said.
In Louisiana, proponents of Climeworks and Heirloom’s Project Cypress want to make clear that technology should have no role in prolonging the future of fossil fuels, even if it means committing to more limited revenue sources than rivals like Occidental.
Their money will instead be made by marketing carbon removal credits to non-fossil fuel companies that want to offset unavoidable emissions, or to governments that want to stay on track with climate goals.
“If you use air capture to extract more fuels from the ground, you take away the market potential for sustainable energy,” says Christoph Gebald, CEO of Climeworks. “This is not in line with the energy transition.”
(Writing by Richard Valdmanis; Editing by Marguerita Choy)