The Master Abaters

“Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.” - Laurence J. Peter

CO2 can kill you. But not how you have been led to believe.

On August 21, 1986, a lake overturn or “limnic eruption” occurred at Lake Nyos in northwest Cameroon.  Limnic eruptions are rare natural disasters in which dissolved CO2 erupts from deep lake waters, ejecting a cloud that is heavier than air and rises rapidly, then sinks on to the surrounding area.

Hundreds of thousands (possibly millions) of tons of CO2 were released from Lake Nyos forming a gas cloud that rose at over 50 miles per hour, then descended over surrounding villages. It displaced the oxygen at ground level, suffocating people and livestock within ~15 miles of the lake. Over 1,700 villagers perished along with about 3,500 livestock in a matter of hours.

Lake Nyos hours after 1986 eruption | Wikipedia

Readers should rest assured: capturing and sequestering CO2 in underground geologic reservoirs does not create the same risks to human health and the environment as what occurred at Lake Nyos. There is no comparison.

World “leaders” show signs of beginning to accept that there is no short-term end to the need for oil, coal, and natural gas. The dialogue has begun to shift from “phasing out” hydrocarbons to “abatement” of CO2 emissions, and increased subsidies in the 2021 Infrastructure Investment & Jobs Act (IIJA) and the 2022 Inflation Reduction Act (IRA) have placed big bets on carbon capture and storage (CCS).

What is CCS?  How material is it likely to be in terms of reducing global CO2 emissions? And who are the likely beneficiaries of the political desire to pump CO2 into the ground? With this year’s 28^th annual UN Framework Convention on Climate Change “Conference of Parties” (COP28) four weeks away in Dubai, we wanted to give readers a brief overview into what is sure to be a key area of focus at the event.

We begin with a layperson’s overview of CCS. At its most basic, the two leading processes involve either removing CO2 from ambient air (known as “Direct Air Capture” or DAC) or from the back end of a combustion process, such as coal or natural gas-fired electric power plants and other industrial facilities and sequestering it deep underground in geologic formations such as depleted oil and gas fields and saline reservoirs.

Direct Air Capture (DAC) systems remove CO2 from the air using industrial machinery, filtration, and catalysts. These are generally categorized as low temperature, high-temperature, and electric-only systems. Low-temperature DAC systems typically use solid sorbents to capture CO2, whereas high-temperature systems commonly employ a liquid solvent. Thermal energy (heat) is needed to recover the CO2 from the sorbent or solvent. The visualization below depicts the low and high-temperature processes.

According to the International Energy Agency (IEA), twenty-seven DAC plants have been commissioned worldwide and are presently removing a total of around 10,000 tons of CO2 from earth’s atmosphere annually.  For perspective, that amount is roughly equivalent to the CO2 emissions from 10,000 passengers traveling round trip from Boston to London by airplane.  Or the emissions from about 25 million passenger vehicle road miles in the U.S. Before you get too excited about DAC, keep in mind that in the U.S. alone, about 3 million people fly daily, and total vehicle miles driven in 2022 exceeded 2 trillion.

Billions in green subsidies for CCS in the 2021 IIJA and the 2022 Green New Deal IRA target the establishment of strategic DAC “hubs” across the U.S., at geologic reservoirs determined to be adequately safe through extensive studies over more than two decades.  In August, the U.S. Department of Energy (DOE) announced $1.2 billion in IIJA funding for 21 projects for design, feasibility, and development of DAC facilities across the U.S., as shown on the map below. (The Global CCS Institute has a user-friendly GIS database of global projects you can find here.)

Source: The CCUStodian | Mike Matson

Carbon capture from industrial processes removes CO2 emissions either before or after the combustion of carbon-based fuels.  Post-combustion is currently the most common application proposed at coal and natural gas fired power plants and other industrial plants that consume large volumes of coal and/or natural gas.  In one common post-combustion process, CO2 is absorbed from the combustion exhaust in a separation tower using a solvent and regenerated by heating. The separated CO2 is typically cooled into a liquid phase for ease of injecting underground.

There are other competing alternative CCS technologies.  One of the more intriguing is the oxy-combustion process developed by NET Power.  It uses air separation units commonly employed in steel making and other heavy industries to separate gases (nitrogen, oxygen, argon) from ambient air, then combusts natural gas in the presence of pure oxygen.   

In NET Power’s first quarterly earnings call in August, CEO Danny Rice summarized the advantages of their process (emphasis added): (block)

“This oxy-combustion process produces three things, a whole lot of energy, carbon dioxide, and water. At this stage in the process, the carbon dioxide is in a dense phase, commonly known as supercritical state. Supercritical CO2 is a superior working fluid to spin the turbines blades to generate nearly 300 megawatts of clean electricity per hour and transmit it to the grid. With the power generated, we take the CO2 water mixture and reduce the temperature and pressure in order to remove the water, leaving us with a pure stream of CO2, nearly 900,000 tonnes per year, that is ready to be sequestered, no post-processing required. We believe this process to be the most cost-effective way to capture CO2 from gas power generation.”

NET Power’s process eliminates enormous capital costs for post-combustion processing equipment while avoiding substantial energy inputs to render CO2 for sequestration.  Where natural gas infrastructure overlaps with identified geologic storage sites in jurisdictions favorable for new natural gas power plants, NET Power could have a competitive advantage over other CCS processes and competitors. A lot, of course, depends on their costs and how future subsidies, carbon markets, the prices of natural gas and electricity, and sequestration tax credits evolve.

In addition to funding for the specific DAC projects under the IIJA announced in August, the IRA substantially increases tax incentives under section 45Q of the U.S. tax code for “carbon capture”. The prior tax credit for sequestered CO2 increased from $50/metric ton to $85/metric ton for power generation and industry and to a whopping $185/metric ton for DAC sequestration.  

Capturing and storing CO2, whether by DAC or post-combustion processes, requires a lot of energy.  For coal-fired power plants, for example, an additional 15% - 45% more coal needs to be burned to provide the energy required for CCS. 

The captured CO2 is injected into depleted oil and gas and saline reservoirs through wells at a depth commonly 8,000 feet or more below the surface. This is far beneath drinking water aquifers and is similar to other forms of industrial fluid injections regulated for years by U.S. Environmental Protection Agency (EPA) under the Underground Injection Control program.

Many such wells exist in targeted reservoirs throughout the United States. However, linking all the planned DAC and industrial combustion sites requires an extensive system of CO2-specific pipelines to be built, and quickly.

There are presently approximately 5,000 miles of CO2 pipelines in America used for a variety of industrial purposes. According to DOE’s estimates, reaching America’s net zero ambitions will require capturing and storing 400 million to 1.8 billion metric tons of CO2 annually by 2050. DOE estimates this will require the installation of an additional 36,000 to 90,000 miles of pipelines for CO2 sequestration.

Sequestering CO2 in geologic reservoirs carries some degree of risk to human health and the environment. While we would argue whether the benefits of CCS exceed the costs, we consider the likelihood of occurrence low.  We group them into three main categories:

·       Physical risk – large scale sudden release from reservoirs causing a CO2 cloud to settle over a populated area resulting in death of humans and animals.  Or large-scale gradual release causing sequestered CO2 to reenter the atmosphere defeating the purpose.

·       Groundwater contamination – high concentrations of CO2 in groundwater would reduce pH through formation of carbonic acid should sequestered CO2 accidentally migrate upward to drinking water aquifers. This has the potential to leach naturally occurring metals from soils, including some that are hazardous to humans and the environment.

·       Induced seismicity – forcing liquids underground under high pressure can lead to increased micro-seismic events. Localized earthquakes have been well documented from fracking.

How successful will DAC be at capturing and sequestering a material enough volume of atmospheric CO2 to make a difference? Color us skeptical.  Setting aside the capital costs and energy required, purely in terms of scale, DAC seems like trying to solve the invasive Asian carp crisis in U.S. waters like this:

As of yet, there are no large-scale CCS projects in operation capable of making any dent in global CO2 emissions. While we might hope for DAC technology that makes sucking hundreds of millions of tons of CO2 from ambient air easy and cheap, we do not see it on the horizon. And it is hard to see pre- or post-combustion CCS scaling rapidly or cost effectively, despite billions in taxpayer subsidies.

However, like many other “solutions” to the “existential crisis” of climate change, tens of billions of your tax dollars are already in the oven for CCS.  That fact virtually bakes in some degree of green grift. CCS is going to produce its own Solyndra (or three).

But the biggest winners of all in the CCS gold rush are likely to be the ones who trigger environmentalists more than any other: oil and gas companies!

For more than 50 years, oil producers have safely and successfully forced CO2 into wells to extend oil production as fields deplete over time. Known as enhanced oil recovery (EOR), the process and the oil industry stand to be among the big winners in CCS. The world’s environmentalists, who were among its biggest supporters 15 years ago, are naturally outraged.

The 5,000 miles of existing U.S. CO2 pipelines we noted earlier serve a commercial purpose. CO2 has value as a gas in certain industrial plants, food and beverage and a variety of other industries. Perhaps the most valuable use of all is for EOR in oil production.

Earth has natural geologic reservoirs of relatively pure CO2. America is blessed to have over twenty, including four large ones in Colorado, Mississippi, and New Mexico. These reservoirs are the workhorses of EOR for U.S. oil production.

Once again, ironies abound.  Due to their drilling, pipeline and geologic expertise, the Master Abaters™ of CO2 in the western nation’s CCS schemes are likely to be major oil companies. 

Two examples drive home the point. For our first example, Mr. Aw Shucks himself blows into the picture just in time to help save the planet (and create another paradox for environmentalists).

Legendary Berkshire Hathaway CEO Warren Buffet famously said in a 2014 interview:

“On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

In 2023, he struck again, this time in CCS. One of the two DAC projects awarded $500 million in DOE funding in August is called the South Texas DAC Hub. The project is being developed by an entity called 1PointFive. The name is taken from the aspirational 1.5-degree warming target.

1PointFive is a subsidiary of Occidental Petroleum (Oxy), one of the world’s largest publicly traded oil and gas companies. In June, Warren Buffet’s Berkshire Hathaway disclosed it had increased its ownership stake in Oxy to 25% (increased slightly since).

Four days after the DOE announcement awarding the South Texas DAC Hub $500 million, Oxy announced the acquisition of Canadian startup Carbon Engineering, its DAC technology partner for its West Texas Stratos project (scheduled to be the world’s largest DAC project by 2025). The South Texas DAC Hub will geologically sequester CO2, allowing Oxy to take full advantage of the new $185/metric ton tax credit under the IRA.

In the Permian basin of West Texas, Oxy is already a leading producer of oil using EOR.  The addition of the South Texas DAC Hub to Oxy’s portfolio means that the company will be earning tax credits from oil production using EOR and from DAC.

Oxy and Warren Buffet will not be the only major oils who take advantage of CCS tax credits. Ironically, America’s biggest oil and gas industry punching bag, Exxon may stand to benefit the most.

In July, three months before announcing its intent to acquire Pioneer Natural Resources (a major oil player in the Permian basin), Exxon acquired Denbury.  Aside from having quality oil and gas producing assets, Denbury has extensive EOR experience and owns more CO2 pipeline capacity in the Permian than any other firm.

We saved one other relevant CCS tax credit for last: under the IRA, the existing CCS tax credit for using EOR nearly doubled, from $35/metric ton to $60/metric ton. Meaning, Exxon, Oxy and other oil companies are going to get large (and likely increasing) tax credits to use CO2 captured from the combustion of coal and natural gas to produce more oil.  

One catch: The U.S.’ grand CCS plan suffers from one of the same complications affecting wind and solar energy.  Land use conflicts are already proving to be a potential problem and limiting factor.

Two weeks ago, a planned CCS pipeline project crossing several states in the upper Midwest was canceled. The Heartland Greenway project would have transported CO2 from regional ethanol and fertilizer plants to a sequestration site in Illinois. After suffering a permit denial in South Dakota earlier this month, and with its fate in Iowa uncertain, Nebraska-based Navigator CO2 Ventures threw in the towel.

An Energy & Environment News article noted (emphasis added):

Opponents, meanwhile, said the company treated landowners with “disdain and aggression.”

“Starting a negotiating process out telling landowners the corporation is going to take their land by eminent domain is a losing strategy,” Jane Kleeb, president of the anti-fossil-fuel group Bold Alliance, which opposes CO2 pipelines, said in a statement.

Tension between developers such as Summit and opponents is unlikely to ease. Not only do opponents of the Midwest CO2 pipeline projects challenge the process used to select a route, they also dispute the need for the projects, which they say aren’t about tackling climate change and instead aim to further the use of fossil fuels and take advantage of billions of dollars in federal subsidies.

Not Under My Backyard! | Jack Dura/AP

Warren Buffet and Exxon CEO Darren Woods were not available for comment.

Like nuclear energy, CCS opens a second major political fissure within the regressive progressive environmental Left.  Logically, those who are deeply concerned about keeping CO2 emissions out of earth’s atmosphere would support CCS as they would nuclear, and just over a decade ago most environmental non-profits were supporters of CCS.  Today, they recognize that it will not only extend the life of hydrocarbon fuels, but that taxpayer funds will be used to produce more oil under the auspices of CCS.  The same split among “environmentalists” over nuclear energy is occurring with CCS. The shakeout will separate the true believers from the closet neo-Malthusians.

Growing recognition that hydrocarbon use will outlive environmentalist’ hysteria over climate change was evident in a New York Times Opinion piece last week by Jeff Colgan, a professor of political science and the director of the Climate Solutions Lab at Brown University. In “Exxon Mobil’s Pioneer Acquisition Is a Direct Threat to Democracy”, Colgan argues that the deal “would undermine democracy in the United States, mislead investors and weaken market competition”.  Consolidations concentrate interests giving major corporations “powerful advantages that can distort outcomes and thwart progress. Take climate legislation.”

Just before concluding – naturally – that government should step in and stop the acquisition “to protect its people from corporate self-interest that’s detrimental to democracy and the global environment”, Colgan helpfully gives Exxon and government officials these words of wisdom (emphasis added):

“If Exxon were serious about preventing climate change, it could use its record $56 billion in net income from last year to invest more seriously in renewable energy, carbon capture and storage or other technologies that are compatible with long-term environmental sustainability. The Federal Trade Commission would surely allow Exxon to acquire a major solar company, for instance.”

The good news for Professor Colgan is, by his own definition, Exxon, Occidental, and other major oils making big bets on CCS are obviously serious about preventing climate change. The bad news is that his tax dollars are going to be used to prove it and produce more oil in the process.

Meanwhile, do not expect CEO Darren Woods to ask for the FTC’s approval for Exxon to acquire a major solar company any time soon.

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