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Could carbon removal become a trillion dollar business?

“handtoday we meet A new species is born,” proclaimed Julio Friedman, looking out over the desolate landscape. The renowned energy engineer was invited by One Point Five, a division of the American oil company Occidental Petroleum, and a division of the American oil company Carbon Engineering, along with hundreds of other greats to join Notries and At the end of April, I visited a remote corner of the so-called oil fields of Texas. Canadian tech startup backed by Bill Gates. The species in question resembles trees in some ways, but they are not of the biological variety and are nowhere to be found in barren land. Rather, it was arboreal and was the first commercial-scale “direct air capture” (DACs) plants around the world.

like a tree, DACs It sucks carbon dioxide out of the air, condenses it, and makes it available for some use. In nature, its use is the creation of organic molecules through photosynthesis.for DACswhich could be what humans already use CO2This includes adding carbonation to drinks, making plants grow faster in greenhouses and, in Occidental’s case, injecting oil into underground reservoirs to squeeze more oil out of every nook and cranny.

But part of the 500,000 tons of CO2 When the Notrees plant is fully operational in 2025, the water collected each year will be pumped under the plains of Texas for the grander goal of fighting climate change.This is because, unlike the carbon stored in biological plants, which can be released when the plants are cut down or burned, CO2 Those artificially quarantined may remain quarantined indefinitely. Companies that want to offset a portion of their carbon footprint but don’t trust biologically-based offsets will pay project managers a per-hidden-tonne amount. This would lead the Notley family to embark on another field: the green shoots of the real industry.

Carbon Engineering and its rivals, such as Climb Works, Swiss firms, Global Thermostats, California firms and countless start-ups around the world are attracting private capital.Occidental plans to build 100 large facilities DACs Other companies are trying to remove the carbon dioxide produced by power plants and industrial processes before it is released into the atmosphere. This is an approach known as carbon capture and storage (CCS). ExxonMobil announced ambitious plans for a new low-carbon division in April. The division’s long-term goal is to offer decarbonization as a service to its industrial customers, such as steel and cement, who are struggling to cut emissions. Oil giants believe the sector could generate $6 trillion in annual revenue globally by 2050.

The boom in carbon removal, whether from atmospheric or industrial point sources, cannot come fast enough.of united nationsThe backed Intergovernmental Panel on Climate Change says that if the world has a chance to limit global warming to 2°C below pre-industrial levels, in accordance with the Paris Climate Agreement, renewable energy, electric vehicles and other decarbonized We assume that technology alone is not enough. . CCS and sources of “negative emissions” DACs would need to play a role.

The U.S. Department of Energy calculates that the country’s climate change goals require the capture and storage of between 400 million and 1.8 billion tons of carbon dioxide.2 It will increase from the current 20 million tonnes per year by 2050. Energy consultancy Wood Mackenzie estimates that around the world, one-fifth of the emissions reductions needed to reach net-zero greenhouse gas emissions by 2050 will come from various forms of carbon removal. there is If Wood Mackenzie is correct, and given that there are over 40 billion belching humans, this equates to absorbing over 8 billion tons of carbon dioxide annually.2 every year. And that will require a significant number of industrial-scale carbon removal projects (see Figure 1).

For many years, such projects were considered technically viable, but uneconomical. An influential estimate published by the American Physical Society in 2011 states that DACs $600 per tonne of CO2 Caught. By comparison, a 1-ton discharge permit currently trades for around $100 globally. EUemissions trading scheme. CCS It was a long time disappointment. Wood Mackenzie’s Simon Flowers says the power sector has spent about $10 billion over the years to bring the technology to life, but it hasn’t paid off much.

Proponents of the new carbon-removal project think this time will be different. One reason for their optimism is better and, importantly, cheaper technology (see Figure 2). Cost of sequestering 1 tonne of CO2 A 2018 paper was published in the journal, although it was not disclosed what lies beneath the Noteries. Jules Put a price tag on carbon engineering DACs At scale, systems cost between $94 and $232 per ton. That’s well below $600 and not far out of the world. EUcarbon price.

CCSshould be considerably cheaper than DACs, also shows that a little more can be expected.Canadian startup Svante uses cheap materials to capture CO2 It is recovered from dirty industrial flue gas at approximately $50 per ton (but this price does not include transportation and storage). Other companies are trying to turn the captured carbon into products that they can then sell for a profit. CarbonFree, which is we with steel blood pressureUK oil and gas company captures CO2 Transforming it from an industrial process into a specialty chemical. LanzaTech has commercial-scale partnerships with European steel giant Arcelor Mittal and several Chinese industrial companies to build bioreactors that convert industrial carbon emissions into useful substances. Some are distributed in portable carbon stores, such as Lululemon yoga pants.

CO2 capture, utilization and storage (CCUS Wood Mackenzie predicts that this decade will attract $150 billion in investments worldwide. The consultancy firm that evaluated the current and proposed projects CCUS Capacity – Its definition includes cCS, various methods of utilizing the recovered carbon; and DACs– Will increase more than 7-fold by 2030.

A second (perhaps larger) factor behind the recent surge in carbon removal activity is government action. One obvious way to encourage industry is to make carbon polluters pay a sufficiently high fee for each tonne of carbon they emit, and pay carbon removers to remove everything from the source or source of emissions. is to their advantage. atmosphere.Reasonable carbon price like EUThe current one is probably CCS It is viable.for DACs But taxes would probably have to be significantly higher to become profitable, which could stifle an economy still dependent on hydrocarbons. In addition, the bleak global carbon tax outlook means that state support is needed to bridge the gap between current carbon prices and the cost of extracting it.

There is an emerging view among engineers, investors and buyers that carbon capture will evolve much like waste management did decades ago. This is a costly but necessary endeavor at first, requiring public support to get off the ground, but potentially profitable over time. Policy makers are beginning to take that view.

Some of the hundreds of billions of dollars in recently approved US climate grants are aimed at self-starting and launching carbon removal industries. Enhanced tax credits included in the Containing Inflation Act, one of the laws, provide up to $85 per tonne of carbon dioxide.2 Permanent storage (as much as $60 per tonne of carbon dioxide)2 It is used to enhance oil recovery and also sequesters CO.2 to produce more hydrocarbons). Clio Crespie of investment firm Guggenheim Securities calculates that the credit will increase US emissions “in the money” for carbon removal by more than 10 times.of EUThe government’s response to climate change in the United States is likely to facilitate carbon removal as well. Earlier this year, EU Norway has announced a ‘Green Alliance’ to promote regional carbon capture programs.

at the cost of washing 1 tonne of CO2 It’s no longer completely otherworldly, and buyers are starting to line up. Big tech companies with deep pockets and a progressive image are especially enthusiastic. On May 15th, Microsoft announced that it will be releasing more than 2.7 million tonnes of carbon (amount not disclosed) that has been captured over a decade from a Danish biomass-burning power plant operated by Danish clean energy giant Orsted and transported for underground sequestration. in) announced plans to buy. It was developed in the North Sea by a consortium involving three European oil giants Equinor, Shell and Total Energy. Three days later, Frontier, a buyers club providing $1 billion in carbon-scavenging investments funded primarily by Alphabet, Meta, Stripe and Shopify, announced a $53 million deal with Charm Industrial.The company plans to remove 112,000 tons of CO2 It will provide energy between 2024 and 2030 by converting agricultural waste, which emits carbon when broken down, into oil that can be stored underground.

Carbon intermediaries are emerging to connect projects with buyers. NextGen, a joint venture between Japanese conglomerate Mitsubishi Corporation and Swiss carbon removal and management project developer South Pole, plans to acquire more than 1 million tonnes of certified carbon removal credits by 2025, and is a major buyer. is expected to acquire . The company just announced that it will purchase nearly 200,000 tonnes worth of carbon credits from 1PointFive and two of his other ventures.SwissRe and UBSMoretwo Swiss financial giants, Mitsui & Co. OSK Lines, a Japanese shipping company, and Boston Consulting Group.

Perhaps the biggest sign that the carbon removal business has a leg up is acceptance by the oil industry. Occidental focuses on DACs. ExxonMobil has announced that it will spend $17 billion on “investments in reducing emissions” from 2022 to 2027, and the investment is expected to be significant. ccs. ExxonMobil’s main U.S. rival, Chevron, has received Subante for one of its California oilfields. As the deal with Microsoft shows, European peers want to turn part of the North Sea floor into a giant carbon sink. Equinor and German oil and gas company Wintershall have already secured licenses to store carbon captured from German industry at their North Sea sites.Hugo Dijkgraf, Technical Director at Wintershall, believes his company could save up to 30 million tons of CO2 The idea, he said, is to transform “from an oil and gas company to a gas and carbon management company.”

Saudi Arabia, home to the world oil giant Saudi Aramco, has set a goal to increase its oil reserves. CCS Production capacity will increase fivefold over the next 12 years. The company’s mega-storage facility in Jubail Industrial City is expected to be operational by 2027. AdnokThe UAE’s state-owned oil company wants to increase its production capacity six-fold to 5 million tonnes per year by 2030.

Critics of the oil companies say their zeal for carbon removal is primarily about pumping more oil for longer while improving their reputation in the eyes of increasingly climate-sensitive consumers. claims to be in There is certainly some truth to this. However, given the urgent need to both capture from carbon sources and achieve massively negative emissions, aggressive efforts by large oil companies with huge capital budgets and useful expertise in engineering and geology Any involvement should be welcomed.

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https://www.economist.com/business/2023/05/21/can-carbon-removal-become-a-trillion-dollar-business Could carbon removal become a trillion dollar business?

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