In late 2020, Elon Musk brought carbon capture to centre stage with the announcement of a tech competition, supported by XPrize, granting $100 Million to the best carbon capture technology. So, what’s the big deal?
The COP21 Paris agreements, held in 2015, set up the objective to keep global warming at less than 2°C, or even ideally 1.5°C, above pre-industrial levels. We are not there yet. Drastic changes still need to be made.
Keeping to a 1.5°C or 2°C target by 2030 will require us to reduce our annual net-emissions by around 50% from 2019 levels, to roughly 23 Gt CO2. Yet every year, emissions are still increasing…
Carbon capture holds massive potential in achieving this ambitious goal. Combined, of course, with the decarbonisation of corporate activities, and the transformation of human consumption habits.
In this article, we will analyse the current hype around carbon capture technologies, and highlight the barriers and levers for their global development at scale. The technologies can be divided into two categories, defined below:
1. Technology-based solutions which capture greenhouse gas (GHG) emissions from industrial activities or directly from the air.
2. Nature-based solutions which use natural assets such as trees and so-called carbon sinks to capture and store CO2 for decades.
Today’s society tends to polarise the debate around environmental issues, opposing technology-based with nature-based solutions. Carbon capture is an excellent example of this polarisation, as many criticised Musk’s “techno-centric approach”, arguing that reforestation and planting trees could do the job.
At Hello Tomorrow, our opinion is that the world needs every available technology and process at the ready in order to fight climate change. Opposing techno-centric and nature-centric approaches is counter-productive, as using them in conjunction will provide a mix of adaptable and scalable solutions to every stakeholder.
Moreover, recent studies show that only providing nature-based solutions is not economically and environmentally scalable enough to meet the Paris agreement’s objectives.
There is no doubt that technology-based CO2 mitigating solutions need to be scaled, globally. Especially in the energy, construction and industrial sectors, which represent about 60% of the world’s GHG emissions.
So, let’s have a look at some of these technology-based solutions.
Historically, there are three main processes used at an industrial scale to capture CO2 at the source of emission, within the pipes and chimneys of manufacturing facilities and electricity power plants using different processes such as injecting water while burning coal or filtering CO2 through amine scrubbing.
In addition to these processes, a new technology recently got the attention of the private sector, as well as the general public, when Bill Gates participated in a $68M investment round from Carbon Engineering, a 2009-founded company exploiting Direct Air Capture (DAC) technology to capture CO2 from the air after it was emitted.
The process consists of capturing CO2 through a large set of fans blowing air into an adsorbent material which will extract the CO2 after a series of chemical reactions.
Each of these processes are generally referred to as CCS (standing for Carbon Capture & Storage), and have been being developed for quite a few years now. They all have their respective advantages and disadvantages; however, one thing they have in common is that they require substantial upfront investments, which can go as high as a few hundred million euros for a single facility. Potential investment into these technologies will therefore be determined by the value of captured and liquified CO2 on the process end.
For now, the main value for a company capturing its CO2 comes from the carbon credit market, where companies interested in compensating their emission will buy the equivalent that was captured. However, the price of carbon has stayed consistently low (about 10$/ton), until 2019 where, it started to increase and is now over 50$/ton.
Despite the recent rise in value of carbon credits, it is still much more expensive to capture CO2 than to sell it, which is why only about 40 million tons of CO2 were captured in 2019, representing a mere 0.1% of the 37 billion tons of GHG emitted globally that year.
Indeed, Carbon Engineering declared that the cost of capturing and storing CO2 with their DAC technology would range from $94 to $230, thus going from two to five times the current value of carbon. The same issue appears for pre-emission capture technologies. Moreover, in addition to the cost of implementing these technologies, an entire infrastructure for storing and distributing the CO2 is required, adding more billions to the table.
The end-life of captured CO2 is actually where all of this could make a significant change in the race towards the Paris Agreements. CO2 is currently only valorised through storing, and is still considered as a waste product rather than a feedstock/ raw material for a net-zero economy.
Captured CO2 is liquified and then stored in dedicated geological rock-porous layers, around 700m to 1500m below the ground, for centuries. The required infrastructure for storing, distributing, earth-drilling, injecting and long-term monitoring of CO2 is highly costly and can only be done in specific places. If a company captures CO2 in a factory located hundreds of kilometres from any potential storage area, it will have to build a dedicated pipe.
There is actually a viable way to make use of CO2 in these geological storages, which is to inject it into oil wells through a process called Enhanced Oil Recovery. It allows us to extract oil more efficiently, benefiting from the infrastructure in place. This, however, is not a satisfactory solution in the long term, as it promotes fossil fuel extraction and is susceptible to the volatility of oil markets. In fact, one of the world’s largest carbon capture projects, based in a Texas power plant, was capturing about 1.1 MtonCO2 a year, but was stopped by its operator in 2020 due to low prices of oil, making enhanced oil recovery unprofitable.
Putting aside the economics of it all, let’s try to envision the infrastructure required to store the world’s GHG emissions. By doing a quick calculation based on the density of liquid CO2, we find that 37 billion tons of CO2 (2019 global GHG emissions, approximating every GHG is CO2) will fill a cube measuring 3.22 km on each side. To give you an idea of the size of that, we could fit approximately 11,700 Empire State Buildings into the same cube. And that’s just for one year! That being said, Earth’s underground storage capacity is enormous. As an example, an estimation run by researchers from the Alberta Geological Survey found that Alberta’s deep saline basin could store up to 103 Gt of CO2, three times more than the 2019 global emissions. The amount of carbon stored underground is then almost only dependent on storage costs and available funding.
Sadly the economic cost of all this is throwing a wrench in our projections, as the cost for capture and storing infrastructure is immense. Indeed, the first phase of the European flagship project, ‘Northern Lights’, supported by Equinor, Shell and Total in Norway will cost about $800M for transport and sequestration, for a capacity of 1.5 Mt CO2/yr.
“Support to develop infrastructure like pipeline hubs will be probably necessary” confirms Antoine Delafargue, Managing Director & Chief Technology Officer at Total Carbon Neutrality Ventures. We asked him for some insight into Total venture capital arm’s position on carbon capture.
In his opinion, we can “anticipate a first wave of cheaper, ‘low hanging fruit’ point capture projects around the most obvious carbon dioxide hubs, followed by a potentially larger volume of somewhat more expensive direct air capture initiatives.”
The development of flagship projects within Total, such as Northern Lights and others, aiming to get CCS costs to around $70/tCO2 with a projected 3-5 MtCO2/yr capture capacity by 2030, are necessary for the global development of this technology.
As we have seen, CCS can definitely play an important role in the race for the Paris Agreements, but will not be sufficient to meet the increasing demand for low-carbon solutions due to its high operational and maintenance costs, as well as the long development time.
There’s still hope, though! Exciting valorisation routes for captured CO2, both economically and environmentally speaking, do exist and are mainly called Carbon Capture & Utilisation (CCUS) technologies. These innovations propose a change of paradigm: CO2 is considered as a raw material for the economy instead of a waste product!
CO2 can indeed be used as an alternative material for various products and industries. The economic and environmental benefits are then coupled, as we extract CO2 from the atmosphere while cutting emissions of a raw material that is being replaced.
These are precisely the solutions we are highlighting at Hello Tomorrow. Carbon Upcycling Technologies, for example, one of the Hello Tomorrow Global Challenge 2020 finalists in the Environment category! We interviewed Madison Savilow, Carbon Upcycling’s Chief of Staff, in order to understand their environmental and economic impact better.
“Carbon Upcycling Technologies basically sequesters gaseous CO2 in inorganic powders sourced from industrial wastes and by-products (fly ash in landfills, steel manufacturing wastes, graphite, yellowstone…). From the resulting material, we propose additives with enhanced properties and reduced environmental footprint to various industries including concrete and plastics manufacturers.”
That is the most fascinating part of their innovation; not only do they store CO2 in end-products, but they also make it possible to reuse industrial waste, as well as reduce the cement used in concrete manufacturing.
“Our CO2-enhanced additives are reducing up to 20% the amount of cement needed for concrete production, thus providing a 2% to 5% cost reduction as well as an overall 25% lowered carbon footprint”, Madison told us.
Savilow also mentioned that their technology is ready and mature enough to scale, however they are facing a relatively conservative industry that does show interest, but is still reluctant to jump into the future of concrete production. To accelerate their scaling, the public sector could help them to gain traction and clients through low-carbon policies. For example, a recent initiative in New York state, called LECCLA (Low Embodied Carbon Concrete Leadership Acts) that Madison told us about, which puts “producers with the lowest-carbon concrete in the best position to win public sector business”; in that concrete producers with lowest GWP (Global Warming Potential) would access to a tax rebate of up to 5% of their bid price.
Antoine Delafargue also shared with us that he believes a carbon utilisation strategy of “industrial clusters, where we combine capture and valorisation” is the way to go, and that it will help to drive the global scaling of carbon capture technologies. The French multinational is active in the Carbon Utilisation business, as they spend about $50M/yr in CCUS-related research and development projects, which is close to 10% of their R&D budget. Their venture fund recently invested in Deep Branch, a UK startup that developed a fermentation process to make proteins from carbon dioxide, who they met at the Hello Tomorrow Global Summit in 2019!
As we have seen, carbon capture storage & utilisation technologies hold real hope in the race for mitigating climate change. Most of these technologies are not mature yet, and there is quite some work to be done regarding economic, cultural as well as regulatory improvements. Carbon utilisation in particular, should be promoted and investigated by industry leaders, as it is projected to become a $550 billion market by 2040, driven by the decarbonisation of the building industry as well as its leading role in the shift towards Industrial Ecology (the development of eco-industrial clusters to decarbonize activities while providing a circular transport of energy and matter).
A recent article from the Global CCS Institute, for example, shows a wide variety of applications for carbon utilisation:
As we can see, several heavily polluting industries will be impacted. There are already plenty of scientists, entrepreneurs and industry leaders positioning themselves in this field.
We would like to conclude with a few key recommendations to promote and develop CCUS technologies, through:
Are you left wanting more? Good news, as we have plenty more where that came from, and ways that you and your company can deep dive into carbon capture.
JUNE 8TH, 4PM CEST
We sit down and discuss Carbon Capture, the challenges the solutions and the process of scaling with Total Carbon Neutrality Ventures and BCG. Find out more and sign up here!