Emerging Opportunities In Carbon Capture & Storage

CARBON CAPTURE, WHAT IS IT?

Carbon capture and storage (CCS) is the process of capturing carbon dioxide (CO2) before it enters the atmosphere from power generation and industrial activity and then injecting it deep into geologic formations for safe, secure, and permanent storage. According to climate experts, CCS will play a meaningful future role in decarbonizing the global economy.

CAN IT HELP ACHIEVE ZERO EMISSION GOALS?

A recent study by the International Energy Agency (IEA) estimated that nearly 7 gigatonnes of CO2 annually would need to be captured by the year 2050 to meet the UN’s global carbon net-zero emission targets. Currently, only about 317 million tonnes per year of CO2, which is equivalent to the emissions from about 97 million cars, could be feasibly captured in North America alone. However, as the technologies behind these alternative methods continue to improve, the hope is that significantly more CO2 emissions could be captured economically.

IS IT COST-EFFECTIVE?

Unfortunately, today the high cost and energy requirements of existing CCS technologies remain a significant barrier to its more expansive development. This is why most experts believe the most efficient and cost-effective way to reduce carbon emissions is by capturing them at their largest source: power plants and major industrial facilities.

CARBON CAPTURE TECHNOLOGIES?

Of the three CCS industrial-scale technologies currently in use – post-combustion, pre-combustion, and oxyfuel-combustion – post-combustion absorption, or scrubbing CO2 emissions with chemical amines, has become the dominant technology to capture carbon emissions. (Please see the diagram below).

Regardless of the process or technology used, captured CO2 eventually must be compressed into a liquid form. This liquid CO2 is then transported through a series of pipelines and eventually to a sequestration site, where it is stored deep underground. Storage sites are typically selected for their proximity to the source of CO2. They also must have unique geology that will allow high volumes of liquid CO2 to be pumped and stored securely underground. Because of these requirements, many sites in the U.S. are located along the gulf coast or near areas with significant oil and gas production. Importantly, capturing and permanently storing carbon in this way forms a closed carbon loop, essentially preventing carbon from entering the atmosphere and resulting in zero net carbon emissions.

CCS: DIRECT AIR CAPTURE (DAC)

There is also a fourth method of CCS, using a technology known as direct air capture (DAC). In contrast to other processes, which capture CO2 emissions at their source, DAC removes carbon dioxide directly from the atmosphere. Therefore, DAC allows not only net zero but negative carbon emissions. However, it is also much less efficient because the concentration of CO2 in the atmosphere is about 300 times less than emissions from the smokestacks of power and industrial plants. This lower efficiency also makes DAC more expensive to operate. For this reason, most sites using this technology produce CO2 for the carbonated beverage industry, which helps offset the high operating costs. In addition to a small number of commercial DAC sites currently in operation, there are eleven large-scale DAC facilities, either planned or in the advanced development stage. One of the more successful large-scale plants is operating in Iceland today (see below). Once fully operational, these proposed CCS sites are expected to capture up to 5.5 million tons of CO2 by 2030. Though this is far less than IEA’s target of 7 gigatonnes per year, it is still 700 times the current capture rate.

INVESTING IN CARBON CAPTURE: LOOKING TOWARD THE FUTURE

Although the market for carbon capture and storage has only recently become economically feasible thanks to the Inflation Reduction Act, Dividend Assets Capital is already thinking about ways to invest in this emerging technology. In fact, several companies in our clients’ investment portfolios, particularly our energy infrastructure investments, are actively engaged in this new and exciting industry. We will address more details about the economic incentives supporting carbon capture in future DAC Insights articles.