Big Oil’s Ridiculous, Delusional Climate “Solution”
Big oil is hijacking the UN COP process, but with a scheme so ridiculous that it’s bound to backfire: Carbon capture and storage.
I started out this article as a pessimistic argument that anyone who’s serious about fighting climate catastrophe should give up on the UN COP climate conferences, because they have been hijacked by the oil industry and its supporters. But the more I worked with that notion, the more I found optimism creeping in. The COP takeover by oil interests is real enough, but it will backfire on Big Oil.
What the oil industry and the United Arab Emirates (UAE) national oil company head who will chair COP28 this fall in Abu Dhabi are proposing is ridiculous, not just by my standards, but by their own: It is hugely expensive, requires massive government support forever, provides no clear path to the high corporate profits oil companies crave, and may not even work technologically. It’s a joke that will leave its proponents looking like jokers.
What is this loser of a climate solution? It’s carbon capture and storage (CCS) and the potentially dependent concept of “clean hydrogen.”
There are reasons why these “solutions” are favorites of the fossil fuel crowd, including the governments of the United States and Arab Gulf oil exporters Saudi Arabia and the UAE. CCS and clean hydrogen would use existing plant, equipment, and resources owned by existing fossil fuel companies — resources that might otherwise end up “stranded,” jargon for being abandoned before the end of their “useful life.” Sound good? Well, think again.
Vision or Delusion?
In the most ambitious CCS visions (delusions), instead of having to rebuild the global economy from scratch to get off fossil fuels, people could keep using fossil fuels and get rid only of the carbon emissions. It’s the dream scheme of the global economic elite — and the nightmare of anyone who genuinely cares about the Earth and its inhabitants and realizes that getting rid of CO2 won’t prevent catastrophe if humans continue to ravage the planet in all the other ways they have been. Luckily for those of us in the second category, that CCS vision almost certainly won’t be realized — for other reasons.
The CCS technology that is the foundation of this dream (nightmare) scheme has been around for 50 years or so, and remains barely used, by the oil industry or anybody else, despite repeated government offers to help with billions of dollars or Euros in funding. It involves stripping carbon dioxide (CO2) or other greenhouse gases out of emission streams and injecting the bad stuff back into the Earth for “permanent sequestration.” It tacks enormous extra costs onto oil, gas, and other heavily polluting products that can compete barely, if at all, as it is.
To quote Bloomberg News on the topic: “The past decade is littered with CCS plants that were announced to great fanfare but were never constructed, along with some multibillion-dollar failures after building began.”
To quote another specialty energy publisher: “Business models must overcome high costs and a lack of obvious revenue streams, relying on tax credits, voluntary buyers and/or service fees. Large-scale projects face huge complexity in both engineering and contracting and … differing degrees of operational challenges or public skepticism. CCS must also compete against much cheaper decarbonization tools like solar and wind with more obvious revenue models.”
Wow. Even if you wanted the bridge to a new energy system that CCS supposedly provides, would you buy shares in a company that adopted that strategy? It’s ridiculous.
There Is a Good Alternative (Tiga)
The contrast with solar power couldn’t be starker: Solar is cheap. Costs have fallen 90% over the last 15 years and are projected to drop another 40%. It no longer requires much, if anything, from governments. Along with wind and batteries, it can provide most of the needed electricity in most places.
This renewable electricity, in turn, is rapidly taking over the road transport market that accounts for more than half of global oil use and is poised to snap up the space-heating market that — like power generation itself — is a natural gas mainstay.
Another problem for the oil industry is that the technology and management skills needed to build out solar generation and produce EVs are very different from the ones they claim to possess now. As if that weren’t bad enough for Big Oil, indications are that the solar business won’t have high enough profit margins for their taste. Plenty of solar equipment manufacturers and installers appear willing to accept returns of less than 10% on their investments, rather than the 15% or more Exxon thinks it deserves.
Which side would you bet on in a competition between solar and CCS?
Governments
The main reason anybody is even talking about CCS as more than an oil-infused pipedream is that government support has recently been revved up: In the US via the so-called Inflation Reduction Act (IRA); and from the UAE via the messaging by the head of its state oil and (much smaller) new-energy companies, Sultan al-Jaber, in his other capacity as president-designate of the COP28 UN climate conference scheduled to be held this fall in its capital city of Abu Dhabi. Did I mention that the COP process has been hijacked by Big Oil?
In the US, the IRA offers CCS developers tax credits of $85 per ton of CO2 or other greenhouse gas removed. That’s a lot. It’s roughly equivalent to the highest-ever carbon prices under the EU’s carbon-trading system, and it’s about the same amount Exxon — the biggest Western corporate booster of CCS — says is needed to make initial CCS schemes work.
However, Exxon also says government support would need to double, and technology costs to fall by 10%-20%, to move onto a second phase of CCS development. For the third stage in Exxon’s CCS vision, costs would need to fall 30%-70% and government support triple. Whether that’s triple the original base or triple the higher stage-two base doesn’t really matter, since either would be pie-in-the-sky.
But wait, you say. If CCS is so obviously crazy, why would anybody — much less the supposedly climate-friendly Biden administration and Democratic-controlled congress — support it?
One explanation could be that this part of the IRA was demanded by former coal executive and West Virginia Senator Joe Manchin, whose support was vital for the IRA’s passage.
There’s also climate envoy John Kerry’s explanation: The IRA funding and US support for the UAE’s al-Jaber to chair COP28 together amount to a kind of dare to the fossil fuel industry to turn their talk about CCS into action, or quit talking about it and accept a quick switch to renewable electricity.
In an interview with AP in March, Kerry said he had “serious questions” as to whether technology breakthroughs the oil industry is promising in CCS will ever come and, if they do, “whether it will be price-competitive.” Even while saying that the US will not support calls for halting oil and gas production and will go only for a prohibition on “unabated” oil and gas use — unabated means without CCS — he told AP: “We can’t let the wish or the hope govern common sense here… If we know that we can get the job done by deploying more renewables and current technology, we ought to be doing that.” Duh.
It’s an odd kind of double-speak. We know solar and other renewables are cheaper and more dependable, but we‘ll subsidize oil company attempts to do something more risky and expensive. Why exactly would we do that? Kerry doesn’t say. The answer seems to be, so these companies will finally shut up and accept the inevitable. Oil companies have lobbying power. Economically they are no longer worth enough to crash the stock market, much less the economy of Texas, which has more solar and wind combined than any other US state. But politically, the oil industry matters. It’s ridiculous, like so much in US politics.
The Middle East
If it worked, there would be one good reason to at least consider CCS: The Middle East North African (Mena) region, with its 500 million people, depend on oil and gas income to pay the bills. What will happen once oil and gas exports start to dry up? Nothing pretty. However, severe climate change would be even harder on the region, what with temperatures around the Gulf and elsewhere rising to levels humans can’t tolerate and desertification spreading even faster across the Sahel belt just south of the Sahara, killing and displacing millions and feeding Islamist violence.
This part isn’t funny, and it needs desperately to be addressed. But that doesn’t change the fact that a ridiculous joke dressed up as a solution is no solution. It’s a distraction. A stalling maneuver. Not an answer. These people need real answers. The Earth demands real answers. Let’s quit being ridiculous.
