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Explainer: How Carbon Capture Contributes to Climate Strategies

Growing food in the forest for financeable flourishing

In Brief

If all energy switched to clean sources tomorrow, the buildup of carbon from yesterday would destabilize the climate. So we need to bury carbon. 

Schemes and systems exist to do that, both by planting living things that absorb carbon and by engineering the removal of carbon from the air. 

This overview scans financial prospects and limitations for the chief approaches. 

2022 has revealed what living under the effects of climate change will be like. Scorching heat waves have wreaked such havoc across Europe that London firefighters in July have been busier than any month since World War II. The megadrought in the American Southwest has left the region drier than it’s been in 1,200 years and forced seven states to drastically reduce the amounts they can send to homes. Also in 2022, the International Energy Agency (IEA) released its World Energy Investment 2022 report, highlighting key energy issues across the globe. One of its key findings is that current investment efforts are not on track to produce enough clean energy to keep global warming below 1.5℃. 
This forces us to examine other mechanisms that have the potential to reduce emissions, namely carbon capture utilization and storage (CCUS) and carbon dioxide removal (CDR).
The terms CCUS and CDR are often conflated but refer to distinct processes, so it’s important to describe each precisely. Carbon capture, utilization and storage is the process of preventing carbon dioxide produced during a combustion process from reaching the atmosphere. When operating at maximum effectiveness, a CCUS system is carbon neutral, though the best-case scenario for most CCUS operations is to catch about 90% of greenhouse gases.
Carbon dioxide removal, on the other hand, refers to techniques that can reduce the amount of carbon dioxide in the atmosphere. CDR comes in two flavors. The first, nature-based removal, amounts to planting (and maintaining) photosynthetic life. This can include large-scale afforestation, sequestering carbon underground, or ocean fertilization, which is the process of adding nutrients to marine deserts with the goal of catalyzing photosynthetic phytoplankton. The second flavor, direct-air capture (DAC), is a technology-based solution that removes carbon dioxide straight from the atmosphere and locks it away underground. DAC can use liquid pressure or solid filters to parse out the carbon dioxide from a block of air. Both CDR flavors are carbon negative if the resulting carbon is stored effectively.
For many years, climate change mitigation efforts have centered on the need to replace fossil energy with renewable sources. I have covered that necessity through the lenses of state policy and land use. However, the IEA report invites the sober conclusion that renewable energy may well not come online fast enough to avoid disastrous planetary warming. Global leaders need to continue passing policies that will bring more renewable resources online faster (the IRA is a good start, but not sufficient).  However, if there aren’t enough renewables available, a certain portion of the world’s energy will come from fossil fuels. This opens the door for the strategic and thoughtful deployment of CCUS technology, especially in regions and sectors where fossil fuel use is likely to remain heavy moving forward.
Carbon capture, utilization and storage is not without controversy or drawbacks. Efforts to generate cleaner electricity from fossil sources using CCUS, including “clean coal”, have widely failed. Given the advances that wind and solar have made, power generation seems a weak  application of CCUS. In addition, CCUS systems need to be built near the emitting source. This draws these systems close to power plants, industrial centers, or other major installations. It means the approach cannot work at scale in agriculture and transportation. Furthermore, at best, CCUS is carbon neutral, canceling out potential emissions by trapping greenhouse gasses before they can reach the atmosphere. With flaws in design or maintenance, the systems can leak greenhouse gases. Even effective systems can prolong the lifespan of dirty energy sources. Accordingly, Exxon Mobil has made CCUS a central piece of the company’s sustainability platform and has lobbied Congress to pass tax credits that bolster CCUS efforts.
On the other hand, wariness must match recognition that the energy transition succeeds when society thrives rather than when certain industries fail. This leads to the logical role for CCUS: curbing industrial emissions. In 2020, 24% of US emissions came from the industrial sector, and many of these emissions come from the production of things like steel and cement. This production is basic to the energy transition, but hard to electrify.
This presents another role for CCUS. So-called “green” hydrogen, which produces the element without burning fossil fuel, has received considerable federal funding from the Infrastructure, Investment and Jobs Act (IIJA) and a production tax credit from the new Inflation Reduction Act (IRA).  But since most hydrogen production today occurs through fossil-based steaming of methane, CCUS can help producers deploy hydrogen to build its viability. The Department of Energy’s National Energy Technology Laboratory is supporting the development of point source capture technology capable of catching at least 95% of emissions of industrial plants. A successful rollout of this technology is poised to deliver major emission reductions.
Away from chemistry and its cost curves, natural solutions present their own economic riddles. To better understand nature-based CDR, let’s examine NCX, a nature-based carbon credit marketplace co-founded by Yale School of the Environment alum Zack Parisa. NCX generates carbon removal credits through harvest deferrals. Using advanced modeling techniques that consider tree species and other forest characteristics, the company analyzes the carbon removal potential of existing forests. Trees that are more likely to survive fire, axe, or insect, make for more valuable carbon creditsThe amount of carbon that a set of trees is expected to consume via photosynthesis helps define a carbon credit that can be sold on an exchange, often to sustainability focused tech firms, financial institutions, and major consumer-product companies. NCX facilitates trades on this exchange. Participants also address complementary conservation goals by protecting valuable ecosystems.

Nature is dynamic, and no natural system can be expected to last forever. Here’s where a CDR intermediary can add value.

But for how long? Nature is dynamic, and no natural system can be expected to last forever. Here’s where a CDR intermediary like NCX or its competitor can add value. NCX attempts to provide higher-quality credits by delivering the credit to a buyer after the carbon removal impact has been confirmed. Traditionally, nature-based carbon credit sellers have applied a value of 100 years to their credits but have not been able to guarantee that the underlying ecosystem is maintained over that time horizon. Indeed, as climate effects compound each other, then more intense fires, storms, and droughts will reduce some species’ current resilience. 
This suggests why the second flavor of CDR, technology-based removal, appeals to some investors. First, because CO2 permeates throughout the atmosphere evenly, CDR is not constrained to the geographic locations of carbon emitting plants. This allows DAC equipment to be placed in optimal locations. It is no surprise that the world’s first commercially operating DAC system, Climeworks’ Orca, sits atop abundant geothermal sources of cheap, clean power in Iceland and offer credit for emissions thousands of miles away. Second, CDR applications are not industry specific, and can be used to abate emissions from any source and from years ago. While Orca can only remove relatively small amounts of carbon at high prices, DAC technology is promising, and future scientific advancements are poised to improve the efficiency, scale, and cost at which carbon can be removed from the atmosphere.
Even so,DAC facilities have their own durability problem: what to do with the carbon dioxide that has been extracted? The safest route is mineralization, or turning carbon dioxide into rocks, a slow natural process that needs to go faster to match emission rates. Also, since captured carbon can drive oil recovery or cement production, some worry that DAC will extend the life of dirty energy sources. Nevertheless, CDR brings significant planet-cooling potential. What’s more, the shift to renewables away from fossil fuels will have frictional costs until cheap, clean power is available. These costs will be most crippling to underserved, disadvantaged communities around the globe, risking outbreaks of energy poverty. Widespread CDR use can help mitigate the marginal oil and gas needed to support economic and social progress in the developing world without additional emissions.
Even if relying on carbon removal weakens energy-transition policies, it builds on the previous failure of insufficient climate action. More encouragingly, it has engaged private investment with removals trading around $100 per ton. Stripe, a leader in purchasing high-quality credits, pays a couple hundred dollars per credit. Despite these high prices, in April 2022, a consortium of tech companies led by Stripe announced a commitment to invest $925 million in carbon removal credits this decade. Stripe executive Zeke Hausfather calculates that it would cost $11 trillion to remove enough carbon to drop warming each tenth of a degree above 1.5℃. This monumental cost means that CDR will never be the sole solution, but alongside aggressive renewable energy deployments, efficient carbon capture systems, and widespread electrification, it will play a key role in mitigating climate change.