Carbon Capture: Clean Cure or False Hope?
Contents
Introduction
Is capture or reduction the best path?
Market forces
Private, public support
Investment opportunities
Repurposing Captured Carbon
Segments
Onshore, Offshore, “Community”
Market movers
Leaders & fast followers
Investors
VC / PE / Funds
Carbon Capture Support Grows as Climate Solution
Still, others emphasize reduction over caputure, sequestration
Depending on whom you talk to, carbon capture is either a badly needed solution to the climate crisis or a debacle that can’t actually do what it promises.
Companies such as Microsoft say they need more of it to meet their climate goals, while researchers cast doubt on the technology’s effectiveness. Meanwhile, Alberta, the heart of Canada’s oil patch, is moving full steam ahead with a plan for a massive carbon capture plant.
With the Earth having warmed a full degree Celsius since 1900, companies, environmentalists, and investors have gotten behind the idea that we can suck carbon out of the air with machines — although not everyone is buying in. According to the Intergovernmental Panel on Climate Change (IPCC), carbon capture would need to increase by over 100 times to meet its scenarios of rising greenhouse gas emissions, according to a 2021 report from HSBC.
The argument goes something like this: carbon capture and sequestration (CCS) distracts from the urgent need to reduce carbon emissions, there’s insufficient focus on mitigating carbon emissions, and carbon capture sequestration technology is like putting a band-aid on a gaping wound and therefore is not worth the time or investment. Reducing emissions should be prioritized over removing carbon from the atmosphere.
On the other hand, others argue that the current pace at which emissions are being curbed is too slow: despite billions of dollars invested, more carbon was discharged last year than during any other time in history. Carbon capture may be the fastest method of reducing greenhouse gases and slowing or stopping global warming because it specifically targets industries that can’t reduce emissions fast enough on their own.
“There has emerged a clear agreement in policy and energy circles that CCUS (carbon capture utilization & storage) is a critical technology to reduce emissions and achieve climate change goals.”
There is a compelling argument for reducing the amount of carbon in the atmosphere to both mitigate emission output rates and keep warming below the “point of no return” for climate feedback tipping points, which are near impossible to control once the atmosphere exceeds a certain temperature. The tipping point of the amount of carbon in the atmosphere is a highly debated subject, which is another argument for implementing additional carbon capture solutions.
Nevertheless, as scientists and engineers have been tackling the challenge for a while, there are a number of different carbon capture and storage methods now available. Despite the heated debate, the CCS market is expected to expand dramatically at a compound annual growth rate (CAGR) of 13.8% between 2021 and 2030.
Most methods of carbon capture are dependent on carbon concentration, meaning the performance of the carbon capture system relies on higher concentrations of carbon dioxide (CO2) surrounding the technology. However, these methods are energy intensive because carbon must be drawn in to increase concentrations. In 2019, MIT developed a new direct carbon capture method with the ability to capture carbon in a greater range of temperatures and pressures than previous direct air capture (DAC) techniques could.
Market Trends: Private & Public Support
Facts, figures, forces
Market Facts
With an increasing number of organizations establishing goals to reduce their carbon footprint and achieve carbon neutrality, there has been a dramatic increase in the global carbon offsets market.
In October 2021, the DOE announced a $45 million investment in 12 point source capture and DAC projects to improve CCS technology, aiming for a 95% reduction in emissions from natural gas and industrial facilities.
The Biden administration’s aim is for the country to reach carbon zero by 2050. It sees carbon capture and storage as a key component in achieving this climate goal since not all industries can be easily decarbonized, with CCS serving as a form of carbon offsets.
While carbon capture investment depends heavily on the goals of the current administration, large investment organizations continue to be major market drivers. In 2022, for example, the Bill Gates investment firm Breakthrough Energy invested $53 million in Heirloom Carbon Capture and $80 million in Verdox.
There are currently 12 CCS projects ongoing in the United States, which allegedly can store 19.64 tons of carbon total. However, this is still less than 0.5% of the total emissions in the United States.
Market figures
The global CCS market was valued at $4.17 billion in 2020 and is expected to continue growing at a CAGR of 15.7% between 2020 and 2026. It is forecasted to reach a market size of $9.42 billion by 2026.
The largest DAC facility in the world is Orca by Climeworks in Iceland. Climeworks claims that each of its eight collectors can capture up to 500 tons of carbon per year.
CORSIA (carbon offsetting and reduction scheme for international aviation) carbon credit prices saw a more than 9-fold increase in 2021, while nature-based carbon credit prices tripled.
Experts predict that the demand for voluntary carbon credits will increase 15-fold by 2030, making the carbon offsets market a lucrative investment field.
Market forces
The Levelized Cost of Energy (LCOE) is the net present value of the unit of cost of usable energy production over the life cycle of the fuel product, from material sourcing to combustion.
The LCOE of DAC and sequestration ranges from $134 to $342 per metric ton of CO2 captured according to the IEA, though the range is expected to dramatically drop due to funding.
Point source carbon capture is now heavily subsidized by the U.S. government, having received a total of $45 million in 2021.
Government Support
The Biden administration’s aim is for the U.S. to reach carbon zero by 2050. It sees carbon capture and storage as a key component in achieving this climate goal since not all industries can be easily decarbonized, with CCS serving as a form of carbon offsets..
Investment Opportunities: Reusing Captured Carbon
DAC and point source capture research and development offer investment opportunities.
According to the IEA, DAC is currently the most expensive type of carbon capture. Lowering the cost and increasing accessibility involves investing in long-term technology development and enhancements.
Improving the durability of some of the technology could potentially reduce the long-term costs.
Further decarbonization opportunities in the supply chain.
The industry still has room to decarbonize and improve its technology in such areas as decarbonizing the technology involved in the CCS process.
For example, decarbonizing and increasing the efficiency of the carbon nanotube manufacturing process could be a key factor in lowering the cost and driving down the carbon captured-to-emitted ratio.
Repurposing captured CO2
One of the biggest challenges and criticisms of DAC is the cost relative to natural alternatives. A potential solution is to sell the sequestered CO2 as a functional product.
One way carbon capture companies can repurpose the captured CO2 is to sell it to soda and carbonated water companies, as the carbonated beverage industry currently must burn fossil fuels in order to create carbonation. CCS companies could sell their captured CO2 to beverage companies, thus both repurposing the CO2 and reducing the carbon footprint of the carbonated beverage industry.
CO2 can also be used in enhanced oil recovery, despite being a more controversial use for repurposing the captured carbon.
Segments: Onshore, Offshore, Small-Scale “Community”
Carbon capture technologies are categorized according to how they mitigate CO2 in the ambient atmosphere and depending on how they control or remove carbon emissions. There are two types of carbon capture: point source capture and DAC.
Point source carbon capture captures the carbon at the source of emissions before they can enter the ambient atmosphere. It can target various stages in the production process, but what distinguishes it from DAC is the removal of carbon prior to being released into the ambient atmosphere.
Point source carbon capture can be pre-combustion, where the carbon is removed before a material undergoes combustion, or post-combustion, in which carbon is extracted by separating it from flue gas at the emission release or point of exhaust.
Bioenergy with carbon capture and storage (BECCS) is a type of point source carbon capture that involves sequestering carbon during the process of converting bioenergy to ethanol.
The IEA defines DAC as a system for removing carbon directly from the ambient atmosphere. While point source carbon capture captures carbon from the source of emission before it can enter the ambient atmosphere, DAC targets carbon emissions by blowing air through fabricators.
Although DAC technologies can refer to any technology that removes CO2 from the ambient atmosphere, it most commonly refers to industrial technology that utilizes large blowers and carbon absorbing material engineered to remove CO2 from the atmosphere.
DAC technologies can have future potential for decarbonization if the chemicals they rely on for carbon capture are also decarbonized.
DAC is the most widely debated type of carbon capture, often compared against forest management carbon capture methods.
Two Kinds of Capture
Direct air capture (left) and point source capture (right).
Reforestation, afforestation, and forest management are methods of carbon capture that prioritize forest preservation and expansion. Forest management services and treatment are forms of DAC, since vegetation removes carbon directly from the ambient atmosphere.
Reforestation focuses on planting trees and replenishing destructed forests where trees previously stood.
Afforestation refers to planting trees and growing a forest in areas where there was previously no forest.
Forest management refers to maintaining a forest and taking action to prevent deforestation and forest fires in order to maintain the forest as a net carbon sink.
Enhanced weathering captures and sequesters carbon by taking advantage of carbon absorption through rock weathering. It involves grinding up rocks and scattering them in order to maximize surface area and relying on their natural properties to sequester carbon.
This type of carbon capture depends on both how finely the rocks are ground and regional weather conditions.
Currently, one of the most common methods of distribution is scattering the carbon-attracting rocks across farmland.
Enhanced Oil Recovery (EOR) is a method of maximizing oil extraction during the mining process. EOR curbs carbon emissions escaping to the atmosphere through oil residues while simultaneously reducing the carbon footprint of oil from the energy expenditure used to extract it. Although it is the most lucrative form of carbon capture, it is also the most controversial.
Whether EOR is actually a form of carbon capture is up for debate. EOR could incentivize oil companies to continue to rely on oil rather than encouraging a shift to renewable energy resources. Since the method is considered synonymous with oil mining, EOR technically induces more carbon emissions than it saves, which is the opposite of other carbon capture methods.
One benefit of EOR is that it is a method of repurposing CO2 from carbon capture and storage systems.
Market Movers: Current and Future Heavy Hitters
Market Movers:
Orca by Climeworks, based in Switzerland, is the world’s largest DAC and storage facility and the first DAC and storage plant. Climeworks claims that each of Orca’s devices is able to capture 500 tons of CO2. The company launched Orca in September of 2021. Climateworks also has a smaller DAC facility in Zurich.
CarbonEngineering is a carbon capture company based in Canada that sells a variety of carbon capture products ranging from DAC technology offsets to low carbon fuels. It also sells its captured CO2 to customers that would otherwise burn fossil fuels for CO2 generation.
Cormetech is the world’s largest manufacturer of environmental catalysts and was selected by the U.S. Department of Energy to improve point source carbon capture technology in the United States.
Carbon Capture USA manufactures DAC machines and sells carbon offsets to companies looking to reduce their carbon footprint or achieve carbon neutrality.
Heirloom Carbon uses an accelerated version of the natural mineralization process of carbon removal to provide CCS services.
Climeworks Orca plant
The facility consists of eight collector containers, with an annual capture capacity of 500 tons each.
Other players:
MIT has played a key role in carbon capture development and technology., such that MIT- based companies may be the leaders in the market moving forward.
Verdox is an MIT-based company that was founded in 2019. Bill Gates’s Breakthrough Energy Ventures recently invested $80 million in the company. According to an article from GasWorld, Verdox also received an additional $20 million in investment from Hydro in Norway.
Venture Capital/PE and Other Fund Investors
Breakthrough Energy Ventures is a venture capital firm founded by Bill Gates.
Hydro is a renewable energy and aluminum smelting company based in Norway whose pledge is to innovate a sustainable future, which has led them to begin investing in promising carbon capture companies. For example, they recently invested $20 million in Verdox.
The U.S. Department of Energy in 2021 pledged up to $96 million in point source carbon capture research and development, selecting 12 of the most promising point source carbon capture technologies to expand and develop.
Credit: Visual Capitalist
Final Thoughts
Carbon capture has the potential to be a key tool in reducing carbon emissions and curbing the path to a 2 degrees Celsius global temperature increase. The combined implementation of natural and technological approaches to carbon capture and storage could be the solution to industries that are difficult to decarbonize or for countries without the infrastructure to implement clean energy solutions.
One major criticism of industrial DAC technologies is that they are expensive compared with alternative sources. Building a DAC or point source capture system could cost ten times more than a biomass carbon sequestration alternative. In other words, planting trees is more cost effective in the long run. In this case, the trade-off is cost per area.
Despite the criticisms, investing in carbon capture may be the key to keeping global temperatures below 2 degrees celsius. Carbon capture could be a fundamental tool for industries that are particularly difficult to decarbonize.