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Can Carbon Capture Save The Oil Industry?
No. But possibly yes, just not how you might think.
To save this beautiful planet and ourselves from a self-made apocalypse, we need to not only stop stuffing the atmosphere full of asphyxiating emissions, but also actively remove carbon from the atmosphere. This has sparked a race to create the most efficient carbon-ensnaring machines. But, surprisingly, an oil company has become one of the major payers in this world after investing over a billion dollars in carbon capture technology. Surely, this is a good thing. An oil company taking responsibility for its planetary sins. But no, as it turns out, they are using it to justify oil expansion, which flies in the face of science, practicality and economics. What’s worse is the US government has paid $500 million into this delusional pseudoscience. However, there is a chance this could be a good thing…
Okay, so let’s start at the beginning. A few days ago, the Texas oil and gas producer Occidental paid Carbon Engineering Ltd $1.1 billion to develop and build several carbon capture sites for them. In total, Occidental aims to have 100 carbon capture sites in its control, running all year round, pulling carbon out of the atmosphere and burying it underground. More on why they did this in a minute.
Way back in November 2021, congress agreed to a Bipartisan Infrastructure Law; within this legislation was a $1.2 billion fund for Direct Air Capture (DAC) facilities. Last Friday, it was announced that up to $500 million from this fund would be awarded to Occidental and Climeworks (who is the industry leader in DAC technology and roll-out).
So, why is this all so bad?
Well, oil companies don’t need government help to fix their environmental damage, especially right now. In 2022, the oil industry had its highest-ever profits. The five largest private sector oil and gas companies: Chevron, ExxonMobil, Shell, BP and TotalEnergies, had combined profits of $195 billion! That is nearly 120% more than the previous year and the highest level in the industry’s history. Needless to say, they can afford to sink serious money into carbon capture and don’t need yet more support from governments to do so.
But, the big worry is how Occidental plans to use these DAC sites. Their CEO Vicki Hollub has said that DAC “is going to be technology that helps to preserve our industry” and gives it “a license to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed”. She even suggested that DAC would enable them to get more oil out of the ground. This viewpoint is not only fundamentally flawed but demonstrably dangerous. Let me explain.
We need to hit our climate goals, and all the major governments in the world know this and are persistently moving towards meeting these targets. The IEA (who helped inform these goals) has repeatedly stated that we need to stop oil expansion into untapped reserves to meet these targets, as the reserves already tapped contain enough carbon to see us to 2 degrees Celsius of global warming (the upper limit of our climate goals). They have also said that by 2050 our global energy mix can’t be more than 5% fossil fuel derived, which is significantly less than the 84% of today.
Even with all of this, the IEA has stated that we need just shy of a billion tons of carbon removed from the atmosphere each year by 2050 to meet net zero and avoid a climate disaster. With current DAC pricing, that would cost $600 billion annually and only offset less than 9% of the oil industry’s 11 billion tons of current annual carbon emissions. Now, even with their record profits of 2022, the oil industry simply couldn’t afford to offset this fraction of their emissions. This is why the Author of the IPCC report on the future of carbon capture, Glen Peters, told Climate News that Hollub’s views are “not consistent with the science” and that Occidental “do not really understand the role of carbon dioxide removal.”
But by 2050, DAC prices should fall to only $100 per ton. Now, many experts question if this price point is even possible, but it is the goal of the DAC industry. This means that the annual DAC bill in 2050 should be far less, at a mere $100 billion. Now, the oil industry can afford that today, but as their sector is set to shrink 94% over the next 30 years, they definitely can’t afford to in 2050. The economics are clear, oil can’t use DAC to reach net zero operations.
Okay, but let’s take science and finances out of the picture. In a blue-sky-thinking scenario, can oil companies carry on at their current output and offset their emissions with DAC to reach net zero?
Well, the oil industry emits 11.2 billion tons of carbon dioxide each year. So let’s see how big of a DAC facility we would need to offset this. Climeworks has operated a DAC facility in Hinwil, Switzerland, for a few years now. So let’s scale this plant up and see what we get. This facility is powered by waste heat from a waste recovery facility; it cost $4 million to build, takes up 90 square meters of land area and captures 900 tons of carbon dioxide annually. Per tonne of captured carbon dioxide, it requires 1 MWh of energy.
The oil industry would need to build 12,444,444 Hinwil-sized facilities to capture their 11.2 billion tonnes of annual emissions, which would take up 1,120 km² of land area. Now, there aren’t enough waste recovery facilities in the world to power these, so let’s power them with solar panels (as we need cheap, ultra-low-carbon energy). Each year, a square kilometre of solar makes around 86,666 MWh of solar energy, meaning we would need 129,232 km² of solar panels to power this mega DAC facility. This means that this hypothetical DAC site and its solar farm would take up as much land area as Greece! Converting such a vast amount of land like this would have some substantial ecological implications, and the practicality of building such a megastructure by 2050 is basically impossible. What’s more, constructing the DAC units would cost tens of trillions of dollars, making it the most expensive object ever built by a significant order of magnitude, and that doesn’t even account for the cost of building the required solar power.
Let’s also not forget that there is less than 50 years worth of oil left on Earth. So all this effort and expense will only let the oil industry last a few more decades.
This is why Vicki Hollub’s stance is utterly moronic. No matter how you look at it, DAC technology can never be a saving grace for the oil industry. What she is selling to Occidental’s shareholders and the US Government is snake oil. This is why it is appalling that Occidental got $500 million worth of governmental funding, as it is effectively the government funding high-tech greenwashing.
It’s not just Occidental doing this. Almost all the large oil companies are engaged in some form of dodgy, unscientific carbon offsets program. Even if the fundamentals of their offsetting are correct (they often aren’t), what they claim it will let them do is way off the mark.
But I did say there was a possible silver lining here.
Reaching nearly a billion tons of carbon removed per year by 2050 will take trillions of dollars of investment. Once set up, this carbon removal industry will be a profitable cornerstone of our future economy. If oil companies can use the insane profits they currently have to transition their business model away from fossil fuels and towards genuine, scientifically backed carbon removal, they can survive well past 2050. The CEOs of these oil companies will know this. So, there is a slight chance that Vicki Hollub’s brain-dead stance is just to please shareholders and oil-loving Republicans while she remodels the company in such a fashion by investing profits in high-grade verifiable DAC facilities. That way, she can position Occidental as a critical player in the future carbon market and keep profits up even after net-zero. Sadly though, considering her career, I highly doubt this is the case. Let’s hope I’m wrong though
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Sources: Climate Change News, Reuters, Global Witness, IEA, Nature, Protocol, EPA, IEA, IEA, Research Square, Climeworks, IEA, Our World In Data, Bloomberg, Carbon Brief, MCC, Solar Empower, Met Group