When the World Meteorological Organization (WMO) released a new report regarding the atmospheric concentration of CO2, it was the bearer of bad news. According to the report, CO2 levels reached a record high in 2016, growing 50 percent faster than the previous 10-year average. With this, the scientists argue, the goal to limit global warming to 2°C will become unattainable.
So far, the conventional response to such revelations has been to call for radical cuts to CO2-emissions by shutting down industries with the greatest carbon footprint, often accompanied by an attempt to replace fossil fuels with renewables. However, the world is not moving nearly fast enough. The International Energy Agency (IEA) predicts that global demand for steel, chemicals and plastics will continue to increase, leading to a 35 percent rise in emissions for each sector up until 2050. The simultaneous surge in energy demand, especially from developing countries, means that fossil fuels – such as coal and oil – will still account for 77 percent of world energy use through 2040.
This means that new avenues for reducing CO2 emissions associated with fossil fuels must be urgently explored. And over the years, carbon capture and storage (CCS) technology has emerged as the foremost candidate to thread the needle of blending climate goals with economic development.
CCS has received a lot of attention as of late, partly because its development has been advanced by an unlikely industry – oil. In early October, three major oil producers, namely Statoil, Shell and Total, launched a CO2 partnership aiming to develop equipment and facilities for the carbon storage of CO2 emitted by industrial plants in Norway. The project is estimated to have an annual storage capacity of roughly 1.5 million tons. Most importantly, it is part of a broader effort to advance pivotal CCS technology to encourage new carbon capture research and projects around the globe. That same month, the Oil and Gas Climate Initiative (OCDI), an investment fund led by CEOs of 10 oil and gas producers, poured millions into ventures sporting “technologies and business models” able to potentially lower greenhouse gas emissions to a significant extent.
Thus far, CCS development has been held back by the projected costs, but big oil’s involvement could be a game changer in the quest to fully commercialize CCS. Through Carbon Capture and Enhanced Oil Recovery (EOR), previously unreachable oil is made available when the CO2 emitted by fossil fuel plants is pumped into the oil basin, where it is captured underground within the local geology.
Detractors are quick to argue that any climate-saving effects would be offset by the greater production of oil. However, that’s why a market-focused, industry-led approach is so critical: the CO2 to be pumped underground could be harnessed from coal plants, whose application of CCS would allow them to operate more cleanly. Combining carbon capture technology in coal plants with the specific usage of CO2 in the oil sector means that capturing CO2 turns into a profitable business in itself while providing an effective incentive for reducing emissions. IEA analyses concluded that using CO2 in EOR can generate net emissions reductions, especially when more CO2 is used per barrel than is traditionally the case. The market will do the rest. At higher oil prices, profits from carbon storage activities lead to greater CO2 storage.
But it’s not only oil that stands to profit from CCS. The private sector’s pushing of the technology is likely to carry immense knock-on effects for other industries, the most obvious one being coal, given the role it will continue to play for energy production and EOR.
However, the private sector’s backing of the technology comes at a time when coal’s role is being reassessed internationally. In 2013, the World Bank placed severe restrictions on the funding of coal power projects, as did the EU shortly thereafter. This is unfortunate, as neither institution makes the distinction between financing old-school coal power plants and CCS projects. This conflation is highly problematic: according to IEA modeling for a two-degree future, CCS is expected to “deliver 13% the cumulative emissions reductions needed by 2050.”
The US is aware of this potential, and has instructed its delegates at multilateral development banks (MDBs) to promote access to and cleaner, more efficient fossil fuel usage in the world in a bid to reverse World Bank restrictions. Washington’s decision seems to be informed by the several CCS/EOR projects under way in the US. In Texas, the Petra Nova project, a joint venture between NRG Energy and JX Nippon Oil & Gas Exploration Corp., is capturing CO2 from coal combustion, which is then piped to an oil field 80 miles away. As of October, the site has captured and stored 1 million tons of carbon dioxide. Another carbon capture project under the aegis of state and industry actors was launched in North Dakota, where a pilot coal plant fitted with a CCS system will be tested next spring.
While the private sector’s financial involvement is helpful in driving CCS forward, a broader global policy change is needed to expedite R&D. The economic potential as well as its efficacy in reducing CO2 emissions is undeniable, and under an appropriate policy regime a whole new business sector could be effectively developed. It is time to read the writing on the wall and realize that if we hope to fulfill climate targets, CCS needs to have its chance.