an untapped potential?
A couple of weeks ago, we had the pleasure of welcoming Antoine Delafargue, CTO at Total Energies Carbon Neutrality Ventures, here speaking as an investor, and Bas Sudmeijer, Climate and Energy Transition Lead at Boston Consulting Group, to explore the opportunities of Carbon Capture, Storage and Utilization, its challenges and, of course, their insights on how Startups and large Corporations could efficiently collaborate on this issue.
Here’s a synthesis of this great discussion . Let’s dive in.
Antoine: Carbon Dioxide is in great part responsible for climate change. Therefore CCS (Carbon Capture and Storage) and CCUS (Carbon Capture, Usage and Storage) are technologies widely discussed these days. The basic idea is to capture emissions at their source and then sequester them where they will stay for good. For example, Total Energies operations generate quite a lot of carbon dioxide both at the extraction point and at the endpoint (when we burn the gas/oil). So, from an energy corporate perspective, we are interested in how to mitigate this.
Bas: To be fair, the technology used to capture carbon is decades old. We’ve been using solvents to capture CO2 for 40 years. The same goes with injecting CO2 into the ground.
So why are they expensive? Because they haven’t gone through the maturity scale like the renewables did, where through experiences and failures, we’ve made significant progress, technology-wise.
Additionally, we don’t have a carbon price to support the technology, unlike renewables, where subsidisation and support from governments have driven the price down.
Antoine: The energy requirements to capture CO2 are not negligible. But if we could power those systems with renewable energy, maybe we’ll solve the whole equation!
Let’s also bear in mind that we need to put in place infrastructures similar to those we had for gas, built over decades.
Bas: I believe there needs to be a reward for capturing carbon, either sequestering or utilising it. But because those products are high risk, especially at the beginning of the maturity cycle, they need significant government support. This will kickstart the carbon capture projects and get the first of the kind tech out of the ground.
Antoine: As an investor, I like having visibility. But when it comes to an emerging sector, you need to help them with their very first project.
In my opinion, a critical piece of solving this equation is a stable carbon price market. An idea could be a guaranteed price for CCS actors, the same as we do for renewable energy producers.
Antoine: What’s interesting with the Northern Lights Project is that it covers the whole value chain. It’s an infrastructure built to capture CO2 at heavy emitting plants, transporting it on ships to a terminal in western Norway for intermediate storage and then burying 3Km under the seabed. Total Energies along with Equinor and Shell are a part of it, with the Norwegian Government.
The goal is to sequester 1.5 million tonnes of CO2 per year by 2024. It’s a small but exciting step. It’s an example of how a whole industry, an entire supply chain, can evolve. Hubs like these are an interesting decision for government support.
Bas: The sequestration and transportation are not that expensive. It can be to a few dollars per ton. The capture side has wider variations because the CO2 comes from different places. If the flow of CO2 emissions is highly concentrated, it’s closer to 40-50€ per ton. If it’s not concentrated, it costs more.
Antoine and Bas: Let’s not be dogmatic about it. CCS can’t be the only answer to climate change. Renewables can’t either. CCS and renewable energy are very complementary. In the next 30-40 years, there’s no scenario where we reach net zero that doesn’t include carbon capture.
The problem with CCS is the time scale. So renewables have a faster time scale, less scary for investors. But CCS is pretty huge and offers massive opportunities.
Antoine: CCUS is even better! Rather than finding a hole to put CO2 in it, if we can find a market for this CO2, it’s the jackpot. But it’s tricky. You have to find the right combination between emissions, volume and being close to the source.
We are investing in Solidia (a company making cement with CO2 rather than water as a binding agent). It’s a technical feat. But scaling up takes time. We also invested in Deepbranch, which we met at the HT Summit. They’re combining hydrogen and CO2 to make single-cell protein. Those are good examples of CCUS.
Bas: This is not specific to CCUS. If you need to use renewable energy for your carbon capture, you’re equally dependent on the same rare earth. Everything is dependent on that same value chain.
Shortages might come in the short term. At BCG, we don’t see concerns for the longer term, political tensions, yes, but no shortages.
In CCS, the solvents get recycled, so you can reuse them for the same process!
Antoine: The main risk for Carbon Capture is support mechanisms in the very long term. There’s not much demand for CO2, so Startups, if they want certainty on revenues, need to do CCUS (at a lower cost than capturing it) and be the best in their category (e.g. Deep Branch, how do they compare with other sources of single-cell protein? )
Here are some trends from Total Energies Ventures
Even without certainty on carbon prices, we’ve seen the voluntary purchase of carbon credits. Climeworks in Switzerland are doing direct air capture and are already selling costly carbon credits, but people still buy them.
We see commitments from many industrial companies, who are reaffirming their carbon policies by 2050. That signals to startups that corporate are ready for their solutions. Reach out to large companies now; we need pilots!
Major contractors of the oil and gas world are wondering how to recycle our skills? Hydrogen and CCS are good leads. So those contractors could become acquirers for Startups in the CCUS field.
Bas: When it comes to Startup-Corporate collaboration in the field of Carbon Capture, Corporates can:
Act as an investor, depending on the type of Corporate you are.
Create voluntary markets. Many corporates can play a role in looking beyond just nature-based solutions.
Create demand for CO2. Long-term agreements for carbon credits are the most valuable option for startups.
Trust your startups!
Bas: Sequester now, utilise later!
Antoine: Do both!