The world’s leading company capturing carbon dioxide from the atmosphere is opting not to partner with oil and gas companies, in contrast with its top competitors.
“Given the product that we are offering, being independent of the interests of a specific industry is very important, and not only that, it’s core to our strategy,” said Jan Wurzbacher, co-founder of Switzerland-based Climeworks, in Cipher’s latest “Innovators” virtual interview.
The other two leading direct air capture (DAC) companies have partnerships with and/or investments from oil companies: U.S.-based Global Thermostat with ExxonMobil and Canada-based Carbon Engineering with Occidental Petroleum and Chevron.
Wurzbacher is touching on a dicey debate.
The oil and gas industry faces criticism over its decades-long role fighting action on climate change, but more recently some companies have begun taking significant steps toward supporting new technologies, including DAC and renewable electricity.
To further complicate matters, some oil companies are using captured carbon to extract more oil, raising concerns about the climate benefits.
“I’m sure that the [oil] industry has to and will play a role,” said Wurzbacher. The industry’s engineering and geology expertise is vital when applied to capturing and storing carbon.
But he added: “For the moment, drilling for oil and gas is still quite an economically attractive business, and we need to make sure that we clearly separate between these two.”
Our conversation took place in mid-May, just a few weeks after the company raised $650 million in funding to build more and bigger plants in various parts of the world, the largest amount ever for a startup in this space.
Climeworks, founded in 2009, is leading an increasingly crowded field of startups seeking to capture carbon dioxide from the atmosphere. We already have too much carbon in the air, so this technology is necessary to avoid the most catastrophic impacts of climate change.
Climeworks has a long and diverse list of investors raising a total of more than $800 million since its 2009 founding, including the most recent round led by private equity firm Partners Group and GIC, Singapore’s sovereign wealth fund. It doesn’t have any oil and gas investors.
Another reason oil and gas companies face scrutiny is concern that investing in DAC gives the industry a pass to avoid cutting emissions.
Wurzbacher says that’s a false choice: “We just need to do both.”
Climeworks began operating the world’s largest DAC facility last year in Iceland with a capacity of 4,000 metric tons of carbon.
Numerous startups are pursuing different technologies to capture CO2, but Global Thermostat and Carbon Engineering are the only others capturing any amount of carbon right now, and their current levels are tiny compared to those of Climeworks, according to the International Energy Agency.
Yet Climeworks’ 4,000 tons are tiny compared to what’s needed. Human activity emits 51 billion tons of greenhouse gases a year. To qualify for U.S. government funding in the infrastructure law, a company’s facility must capture at least 1 million tons of carbon a year.
“Going to the United States is something that’s on the table now,” Wruzbacher said. He cited an Energy Department program that is directing $3.5 billion into regional DAC hubs, networks of facilities and infrastructure for capturing CO2.
“There are several challenges to overcome” in the U.S., said Wurzbacher, including ensuring an ample supply of renewable energy for the large amounts of electricity and heat the company’s technology needs. Finding suitable underground conditions to store carbon and transporting it are other hurdles.
Iceland, with its ample supply of clean geothermal energy and underground rock suitable for storing CO2, is “a low-hanging fruit,” Wurzbacher said. “Up until 2030, the art will be in finding the other low-hanging fruits.”
Cost is a formidable challenge facing Climeworks and all carbon removal companies largely because captured carbon currently has little intrinsic economic value.
A benchmark cost per ton at its Iceland plant is around $800, according to a Climeworks spokesperson. Wurzbacher said they’re likely to get that down to $300/ton or lower by the end of the decade. That’s triple the U.S. Energy Department goal of $100 by decade’s end.
Unlike some other DAC companies and other big-infrastructure companies, including oil producers, that aim to lower costs by going big, Climeworks is going the opposite way.
“A fundamental basis of our technology concept is building modular systems that can be mass manufactured,” Wurzbacher said. “That is the principle that made solar PV [photovoltaic] the cheapest energy source we have today on the planet.”
The Climeworks team calls their modular systems CO2 collectors, which are about the size of a cargo shipping container. The most prominent visual part of the machine are massive fans. (See this week’s photo).
Here’s a (very) simple explanation of their technology: The fans draw the air in, CO2 is captured on the surface of a filter inside the machine, and then it’s separated from the filter using low-grade heat. The carbon is further treated and injected deep underground where it’s turned to stone.
The whole process requires a lot of energy, which Climeworks says will always be powered by clean resources. That all makes it harder to lower costs.
“By using a modular system, we can do very fast iterations of our technology,” Wurzbacher said.
Editor’s note: Carbon Engineering’s investors include Bill Gates, founder of Breakthrough Energy, which supports Cipher.
Lunchtime Reads and Hot Takes
America Has a Solar Red-Tape Nightmare. Here’s How to Fix It — Bloomberg (paywall) Amy’s take: I love that this is coming from one of the Energy Department’s 17 national labs (National Renewable Energy Laboratory to be specific), which has got to be one of the most trusted entities out there. Maybe one of the labs could cook up something like this to help streamline bigger cleantech infrastructure.
African nations’ dash for gas exposes division at the UN and ‘hypocrisy’ in Europe — Climate Home News Amy’s take: The world outside of Africa can’t deprive it of this fuel yet developing gas on the continent should be done in a way that provides broad economic benefits (not just to companies) and serves purposes not easily achieved with clean energy (i.e., cooking, industrial applications).
The G7 wants to dump natural gas … but not yet — POLITICO Anca’s take: The key quote here is from Germany’s Economy and Climate Minister Robert Habeck, who said that the EU’s “short-term efforts to replace Russian gas are not unsuccessful.” But he added a warning: “We have to be careful not to be too successful because we don't want to spend the next 30 or 40 years building up a gas industry across the world that, in the end, we don't want.”
AGL dumps demerger plan, yielding to Mike Cannon-Brookes — The Guardian Amy’s take: This is a fascinating use of wealth. It’s like Elon Musk’s influence over Twitter, except, well, more relevant and successful (so far).
Germany looks to speed up green hydrogen development in Australia — Reuters Anca’s take: The headline speaks for itself (and it’s a reflection of the growing urgency to reduce reliance on Russian gas), but one thing that raises questions is how the parties will factor in the carbon footprint of transporting renewable hydrogen on such a long journey—and regularly.
Miracle Fuel Hydrogen Can Actually Make Climate Change Worse — Bloomberg (paywall) Amy’s take: This raises important issues, but the framing makes it seem like hydrogen shouldn’t be a solution (though some experts do emphasize that’s not the point). The important thing is to ensure that as new technologies are developed, concerns (because every energy source has concerns), are handled properly.
Power plant shutdowns hinder France’s ‘nuclear adventure’ — Financial Times (paywall)
Anca’s take: An interesting story looking at how France’s reliance on nuclear power is making it less anxious than some of its neighbors when it comes to dependence on Russian fossil fuels. But it’s not problem-free: a series of nuclear-related challenges put that anxiety-free nuclear-powered future into doubt.
A City Fights Back Against Heavyweight Cars — Bloomberg Amy’s take: I pay more in registration fees for my hybrid, so at the very least, bigger vehicles should pay more for their size.
More of what we’re reading:
How the EU’s ban on Russian oil will rock global markets — Financial Times (paywall)
U.S. says it will cut costs for clean energy projects on public lands — Reuters
China says a third of electricity will come from renewables by 2025 — Reuters
Corporations Pledge to Buy ‘Green’ at Davos Gathering — The New York Times
Hydrogen may be a climate solution. There's debate over how clean it will truly be — NPR
Europe plans for risk that Russia cuts gas supply this year — Financial Times (paywall)
DATA DIVE
How EU aims to use clean hydrogen
Source: European Commission•The projections are based on the European Commission's May plan to shed imports of Russian fossil fuels. This only includes hydrogen produced from renewable-energy electricity.
The European Commission’s plan to help the 27-member bloc end its reliance on Russian fossil fuel imports—dubbed REPowerEU—includes a quick scale-up of renewable hydrogen production and use over the next several years.
Total investment costs are expected to be in the range of €335 billion to €471 billion by 2030, with €200 billion to €300 billion needed for additional renewable electricity production, according to the Commission.
The chart above shows the difference between the European Union’s current climate goals and targets under REPowerEU. The EU’s current plan envisions the use of 6.7 million tons of green hydrogen by 2030, while the new calculations have the potential to reach 20 million tons through increased domestic production and by importing 10 million additional tons by 2030.
“The focus of hydrogen demand should primarily remain on applications in hard-to-decarbonise sectors in industry and transport,” according to a detailed Commission staff working document.
While blending hydrogen into the natural gas grid can help the EU replace 4.7 billion cubic meters of natural gas, the Commission warned that it “requires careful consideration as it diminishes gas quality, can increase overall system costs and the costs of heating for the residential sector” since it is less efficient than direct electrification.
AND FINALLY...
That crisp, Icelandic air
Climeworks co-founders Wurzbacher (left) and Christoph Gebald are shown here at their facility in Iceland, called Orca. Above them are the giant fan structures that are central to the capture process. Photo courtesy of Climeworks.
Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.
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