One Step Closer to Net Zero: Carbon Capture
A complementary approach required to reach climate goals.
Historically viewed as somewhat of the “black sheep” of energy transition, carbon capture may be about to have its moment in the sun.
The once looked down upon technology has the potential to play a strategic role in global decarbonization efforts – including reducing emissions in ‘hard-to-abate’ industries (think: iron, steel, and chemicals) and also removing existing CO2 directly from the atmosphere, among the possibilities.
We asked Frank Pluta, Global Head of Energy Transition and Natural Resources at Natixis Corporate & Investment Banking, to share some insights on the technology and the role it could play in the energy transition.
What is Carbon Capture?
There are several nuances under the global term Carbon Capture Utilization and Storage or “CCUS”.
The capture can take place at industrial facilities (such as steel mills, cement plants, petro/chemical facilities, coal or gas power plants) to prevent the release of CO2 in the atmosphere. And when the CO2 is captured directly from the atmosphere and removed (absorbed by biomass or directly filtered from the air), you can even talk about negative CO2 emissions.
During the “industrial” capture stage, the carbon dioxide (CO2) is separated from the other gases that are being produced. Once this process has taken place, the CO2 is then compressed and dehydrated so that it can be transported. While pipelines are the most common transportation method, ships or rail/road tankers are also possible transport options.
The captured CO2 can then be utilized under several applications such as building materials, chemical or solvent, as yield booster in horticulture, preserving agent in food industry or even to create synthetic fuels.
However, the vast majority of the captured CO2 will then be injected into rock formations underground – usually several kilometers deep – where it will be permanently and safely stored. These rock formations are either deep saline aquifers or depleted geological structures that have held oil and gas underground for millions of years, and there is an abundance of storage available globally.
In cases like this, Carbon Capture and Storage is a well proven technology that has been safely employed for decades.
Why is Carbon Capture Important? How can Carbon Capture Drive the Energy Transition?
At Natixis CIB, we believe that Carbon Capture is not only a very credible solution for the situation we have today, but a necessary one. Without it, the world will not be able to meet its net zero targets. Indeed, in the latest International Energy Agency Net Zero Emissions scenario for instance, Carbon Capture in 2050 would represent more than 15% of today’s CO2 emissions.
If we take a hard to abate sector like cement, as an example – many governments have pledged to buy low-carbon concrete and manufacturers have committed to developing lower carbon initiatives, also to face the progressive reduction of their free carbon allowances. Which is great. But as of today, many of these solutions remain in the early stages of development, leaving the cement industry in a very difficult position to positively contribute to achieving net zero by 2050. The first carbon capture projects on cement plants are however now being developed with the objective to be rapidly standardized and further widespread.
We believe that Carbon Capture is not only a very credible solution for the situation we have today, but a necessary one. Without it, the world will not be able to meet its net zero targets.
But while carbon capture is a necessary component of the energy transition, it should not be viewed as a means to preserve or promote emissive industries or as an alternative to new and green energies. Carbon Capture would only participate to the net zero target while alternative solutions are also developed. We must continue to focus on scaling up proven renewable technologies, developing new technologies and energy storage options, improve energy efficiency - and, as difficult as it may be for all of us – change our behavior and consumption habits.
Can you tell us about some of the Carbon Capture projects Natixis CIB is working on?
We have decided to initially focus on CCUS projects in two countries where the regulatory environment (developed to support the growth of the CCUS industry) creates both visibility and opportunities : the United States where the Inflation Reduction Act strongly supports Carbon Capture projects through massive tax credit mechanisms and the United Kingdom where projects will benefit from a strong Government supports via a Regulated Assets Based economic model.
In the US, some of the projects we are looking at involve carbon capture at gas fired power plants or ethanol plants: by implementing carbon capture it will take the operations down to almost net zero.
In the UK we’re looking at the Government’s selected largest carbon transport and storage hubs being developed in historical industrial areas to capture CO2 from various sources (being power generation plants, cement plants or hydrogen generation plants for example).
In order to support the development of this much needed new industry, we have set up a dedicated transversal task force at Natixis CIB, coordinated by Aymeric Chauveau, Industry Banker - Energy Transition and Natural Resources. This new initiative benefits from the full support of Natixis CIB management as part of our global energy transition journey.