Trapping greenhouse gas emissions has been likened to attaching the planet to a dialysis machine. But carbon capture and storage is increasingly viewed as a critical technology for curbing global warming. Advisers to the British government, which on Tuesday set a tough new emissions target, call it essential. The International Energy Agency argues that the world cannot reach climate goals without it.
ExxonMobil’s proposal for a $100bn public-private carbon storage project under the Gulf of Mexico could therefore be more than a mere marketing stunt by an energy company under pressure to reduce its environmental impact. There is a business opportunity, if it can secure sufficient political support.
Government intervention is required, whether through tax breaks, carbon pricing or direct funding. In the case of the pioneering Northern Lights project, which aims to store CO2 in the porous rocks below the North Sea, the Norwegian government is expected to cover about 80 per cent of the $751m initial cost. The rest will be met by Equinor, Shell and Total.
The economics otherwise do not stack up — except where the gases can enhance oil recovery. The costs of capture are $40-$120/t CO2 for processes with “dilute” gas streams, such as cement production and power generation, says the IEA. Onshore pipeline transport and storage might add another $12-$24/t CO2. High costs resulted in the mothballing of a Texan clean coal carbon capture plant, the US’s largest, last year.
Yet it can still be cheaper than other green alternatives for sectors such as steel. Incorporating CO2 capture into processes raises costs by less than a tenth, says the IEA. Moreover, overheads are coming down. Aker Carbon Capture, which became the European sector’s only pure-play quoted company when it listed in Oslo last August, forecasts sharp falls. Overall costs could fall by at least 55 per cent over the next decade, to less than €80/t C02, according to Berenberg.
The technology should not be used to avoid emissions that can be abated in other ways. It involves risks, of which carbon dioxide leakage from storage site is the most serious. Yet even if it is limited to hard-to-decarbonise sectors, carbon capture could still play an important role. The technology needs to be scaled up. But given enough incentives, industries should be willing to pay for carbon to be taken off their hands.
The Lex team is interested in hearing more from readers. Please tell us whether you think carbon capture can become financially viable in the comments section below.