It is hard to visualise the scientific unit of measurement that counts the number of units of one substance per one million units of another (ppm). People at education platform TED-Ed have tried a number of ways:
One key from 11,363 pianos
A granule of sugar from 273 cubes
One second in 11.5 days
One kernel from 1,250 ears of corn
Therefore, seeing the measurement of atmospheric carbon dioxide (CO₂) by Scripps Institution of Oceanography reach 416.94 ppm on March 17 compared with 315 ppm 60 years ago can seem a little insignificant for most people.
After all, pre-industrialisation rates – about 250 years ago, were estimated at 250 ppm (though in ice ages it might have been as low at 160 ppm).
But as CO₂ is a so-called greenhouse gas, along with methane, the rise in concentration leads to warmer average temperatures and often more extreme climatic conditions.
And while prevention is better than cure, capturing and fixing carbon already released to tackle the prior generations’ emissions is hard. Carbon dioxide is diffuse even from an industrial flue let alone as a handful of molecules of a specific sort out of millions floating in the air. Capturing it, however, is the job in hand for those in the energy and broader industrial sectors.
Carbon focus
The Paris Accord signed in 2016 expected countries to reduce their CO₂ emissions and try to limit global temperature rises this century to less than two degrees Celsius (2°C) and ideally below 1.5°C pre-industrialisation levels.
The follow-up COP26 summit in the UK in November will probably set further conditions, to get to net-zero carbon emissions, as countries’ voluntary contributions are not likely to achieve the sub-2°C target.
A member of the Global Energy Council and head of a corporate venturing unit added: “Annually, roughly eight gigatonnes of carbon are emitted into the atmosphere through the combustion of fossil fuel. Roughly two gigatonnes are emitted through deforestation and agriculture.
“Roughly 60% of these emissions are absorbed by the oceans, the biosphere and topsoil, while the other 40% accumulates in the atmosphere, increasing CO2 concentrations with roughly 2 ppm per annum at the current rate of emission. In order to stay within the target of maximum 2°C warming by 2021, set by the Paris climate accord, mankind has no other option but to:
speed up the transition to more sustainable forms of energy (electrification, second-generation biofuels, hydrogen and other dense energy carriers for harder to abate sectors of industry); reconsider nuclear as an option for densely populated areas (where the low energy density in Watts per m2 of renewable generation remains an issue); take CO₂ out of the atmosphere at a massive scale.
“As a Global Energy Council, let us make sure we are aligned on first principles, for example, what is the role of venturing in these domains and where does it make sense for us to collaborate to speed up the commercialisation of new technologies and business models that address these challenges?”
Even if emission-less energy technologies, such as wind, solar and nuclear, were built immediately it would still take until 2050 to retire much of the CO₂-emitting infrastructure from existing coal, oil and gas power plants.
Hence the increased focus on carbon capture, utilisation and storage (CCUS) rather than relying on reducing emissions.
But a global climate-policy simulator called En-roads, developed by Climate Interactive, Ventana System, and MIT Sloan School of Management, found most CCUS policies and technologies take too long to stop emissions now. This requires more investment. There are several other carbon-removal approaches that include capturing CO₂ directly from air, locking carbon in soils or underground, and accelerated mineral formation. Add these to the mix, and potential warming by 2100 comes down by 0.5°C.
This En-roads scenario is bullish on carbon-removal technology but within limits as it requires a systems-wide overhaul of the energy industry and carbon prices.
Recent analysis from Rhodium Group said carbon capture could create 100,000 or more jobs per year and offer a $200bn-plus investment opportunity over the next 15 years.
As Ma Xin, managing director at France-listed energy group Total’s corporate venturing unit, said: “Total’s starting point is that while wind and solar will continue to advance and get cheaper, and coal will be significantly reduced, oil and gas will remain important parts of an energy system, including biogas and biofuel.
“Allied to lengthy conversion to say hydrogen for heavy industry, cement, chemicals, transport (aviation and heavy duty), then CCUS and natural-based solutions become vital to lower emissions. Energy storage, notably lithium, will play an important role in the energy system to ensure the incorporation of impermanency wind and solar. Also, carbon price will be critical as well as energy efficiency.”
Taking action
Mevin Kistnassamy, partner at Blue Pelican Capital, a climate innovation fund, and former co-founder of the corporate venture capital arm of offshore energy services company Subsea 7, agreed a system-wide approach needed to be taken. “There is too much evangelism of cleantech without a full evaluation of emissions. In China, coal plus CCS might be better than liquified natural gas plus CCS once the emissions cost of production, liquefaction and transportation are taken into account.
“This is not a sexy message to ecologists, but an important one, as in absolute terms oil and gas use is not going to change much at 100 million barrels of oil equivalent per day up to 2040 and so emissions will be as much. We need to recognise that change will not be as fast as needed and we also need to invest to mitigate continued fossil fuel use. CCS is an evolution rather than revolution, as in most cases, you need a lot of energy to reduce a little CO₂.
“Given the need for efficiency in the process, startups’ niche technologies in purification of CO₂, membranes for capturing carbon and logistics to take it to pipelines can all help corporations which are good at deploying at scale.”
But VCs generally dislike startups that bring a combination of regulatory, market and technology risks in a niche area. And so there has been relatively little venture investment in CCUS outside corporate venturing since the cleantech bubble in the mid-2000s burst with the global financial crisis in 2008-09.
VC-backed carbon capture startups took in $336.5m last year to set a modest record, according to Pitchbook data. Much of that investment was driven by non-traditional investors – oil companies, governments and others, which participated in about half of the near-30 deals, Pitchbook tracked. Traditional, or independent, VC firms invested in about a third.
The more comprehensive i3 database from Cleantech Group identified a record first quarter of deal activity with 15 deals worth a disclosed, aggregate $251m.
But for startups to scale their technology up from pilot to industrial plants requires the main state and corporate incumbents to invest resources and money in expectation of strategic as well as potential financial returns. When asked if entrepreneurs in CCUS could help corporations given the challenges, Barbara Burger, vice-president for innovation and president of Technology Ventures at Chevron, said: “Bring it on. Decarbonising the energy system from generation to consumption is a hard problem.
“CCUS has been around for decades, but there are probably only 20 projects around the world because it is hard to scale and there have been limited policy incentives to invest in lower-carbon innovation.
“CCUS is needed in energy and other industries to help meet the global aims of the Paris agreement. Chevron supports the Paris agreement, and we and our portfolio companies in this area, such as Svante, Carbon Engineering and Carbon Clean, are working to drive innovation to overcome the challenges of scaling negative emissions technologies driving demand for them. Now we need 100 more Svantes and Carbon Engineerings.”
The other main energy companies have almost all launched significant projects to catch and bury carbon, while heavy emitters, such as steelmakers and industrial, tech and transport companies, are requesting clean energy and often setting up corporate venturing funds.
Last month, ArcelorMittal launched its XCarb innovation fund to invest up to $100m per year in companies developing pioneering or breakthrough technologies that will accelerate the industry’s transition to carbon neutral steelmaking.
In total, nearly 1,400 companies have promised to cut their net carbon dioxide emissions to zero over the coming decades particularly through carbon offsets, where the gas is removed from the atmosphere, according to the United Nations’ Race to Zero campaign.
In turn, this is causing interest in how these promises can be tracked, with Plan A, a Germany-based platform for corporate carbon footprint tracking and reporting, raising $3m in seed funding from VCs Demeter and Coparion and Japan-listed conglomerate SoftBank.
Anil Achyuta, partner at TDK Ventures, the corporate venturing unit of the eponymous Japan-based advanced materials company, said: “Renewable adoption is a major driving force for TDK in order to reduce our carbon footprint by 100% by 2050 per our corporate goals. However, we believe there are a whole host of innovations in the carbon capture technologies into building materials, chemicals, and in food or nutrient production that we are very interested to deep dive and understand better.”
CCUS options
CCUS is the catch-all term for applications, such as the treatment of flue gases from fossil-fuelled power plants, gas turbines, industrial applications and the cement industry, as well as taking carbon directly from the air and storing or using it.
It splits into a number of ways to tackle carbon through capture and removal for utilisation and storage.
Agriculture sinks
Kelp is a fast-growing seaweed that, along with land-based plants, acts as a carbon sink, and is already used in numerous products, including agri-feed, fertiliser and cellulose fibre. Hence the interest in the development and commercialisation of the world’s first large-scale kelp farm from Netherlands-based Blue Kelp by Climate Fund Managers, a joint venture between FMO, the Dutch entrepreneurial development bank, and Sanlam InfraWorks, which is part of South Africa’s Sanlam Group.
Trees might be slower growing than kelp and take a few decades to reach canopy height, but this has not stopped corporations from investing as forests absorb CO₂ from the atmosphere and certification is well established.
Greenpeace has estimated that the reforestation targets of Italy-listed oil and gas major Eni and British Airways owner IAG would use about 12% of land available for new forests globally by 2050.
France-listed energy group Total said it would plant a 40,000-hectare forest in the Republic of Congo to sequester 10 million tons of CO₂ over 20 years. This is part of a $100m a year portfolio of carbon sequestration announced by Patrick Pouyanné, the oil major’s chief executive, in 2019. He said reforestation was the most effective way to eliminate excess carbon, at a cost of less than $10 per tonne.
By 2080, new forests could draw 6 gigatonnes of CO₂ out of the air, or about 16% of 2019 emissions.
But forests have to compete with other uses for land, such as agriculture, which generates about a fifth of global CO₂ emissions. Regenerative farming techniques, including reduced soil tillage, planting cover crops and cyclical grazing by livestock, can create carbon offset credits.
These farm carbon-credit markets are recent developments, but the farming methods are well established and could benefit from the US’s proposed infrastructure bill. Regenerative farming in the US could capture 250 million tonnes of greenhouse gases annually – around 5% of 2019 domestic emissions – according to National Academy of Sciences estimates.
A bigger shift in farming comes from reinventing its feedstocks. Deep Branch, a UK-based carbon dioxide recycling company, last month completed an €8m ($10m) series A round from corporate venturing units Novo, DSM Venturing, Total Carbon Neutrality Ventures and Barclays Sustainable Impact Capital. Deep Branch’s ingredient, Proton, turns gas into bulk protein.
Pieter Wolters, managing director of DSM Venturing, said: “Protein is vital for good health yet producing it is one of the largest greenhouse gas contributors. At DSM we are applying our scientific know-how to feed the world more sustainably, such as reducing the carbon footprint of animal farming and creating alternatives to wild caught fish for feed.”
Cindi Choi, managing director at Total Carbon Neutrality Ventures, added: “[Deep Branch’s] innovation could be instrumental to decarbonise the agri-food industry, which accounts today for close to a quarter of global greenhouse gases emissions annually.”
Capture
Impact and philanthropic, often-billionaire, investors have come to the fore in carbon capture. Elon Musk offered $100m as part of an XPrize competition for carbon capture startups, while actor Robert Downey unveiled his environmental-focused fund in January.
There are two broad approaches to capture: at the source of emission or from the air.
Bill Gates, co-founder of Microsoft – who with other billionaires has set up Breakthrough Energy Ventures to tackle disruptive startups – has backed Carbon Engineering, a startup that captures CO₂ directly from the atmosphere and is being used by payments platform Shopify sro tore 10,000 metric tons of its carbon emissions.
In August, Climeworks raised $110m in the largest direct air capture investment for its technology, which removes CO₂ directly from the air (and by using clean, renewable energy is a negative CO2 removal solution).
Climeworks’ founders Christoph Gebald and Jan Wurzbacher in front of their direct air capture plant
This would be helpful for flight operator United Airlines, which has committed to meet its 2050 net zero goal through direct air capture and sustainable aviation fuels, without any carbon offsets.
(Air travel accounts for 2% to 3% of global CO₂ emissions and 12% of transportation-specific emissions. Planes also release nitrous oxide emissions and particulate matter that create contrails, both of which may more than double the warming impact of aviation emissions.)
On the other side, Svante, formerly known as Inventys, is working on an industrial-level system designed to help companies capture CO₂ emissions from existing facilities using cryogenic technologies and equipment.
Spun out of University of Leeds in 2009, UK-based C-Capture has also built CO2 capture and storage systems intended to enable factories and power plants to catch and eliminate combustion furnace gases in the smoke flue.
And New York-listed oil services company Baker Hughes entered into a global exclusive licensing agreement with SRI International to use SRI’s mixed-salt process (MSP) for CO2 capture.
The MSP has a technology readiness level of four on the scale defined by the European Union as part of the Horizon 2020 framework programme. The MSP combines potassium and ammonia salt solutions.
The agreement with SRI followed Baker Hughes’ acquisition of Compact Carbon Capture, announced in November 2020.
Rod Christie, executive vice-president of turbomachinery and process solutions at Baker Hughes, said: “In this period of CCUS market formation we are strategically and purposefully investing in the development and industrialisation of innovative technologies to be deployed in a cost-effective manner once the market reaches maturity. Once commercialised, the MSP has the potential to contribute to the advancement of CCUS, providing a lower-cost and energy-efficient carbon capture solution with reduced emissions, making it ideal for commercial applications.”
Utilisation
UK-based Carbon Clean has invested in and partnered with Liquid Wind, a Sweden-based startup working on renewable liquid fuel. Carbon Clean, whose chief executive, Aniruddha Sharma, was introduced to Chevron as an investor at GCV’s Symposium in 2019, captures CO₂ from an industrial chimney, then Liquid Wind combines it with hydrogen to create methanol.
The joint venture could then provide methanol fuel to the shipping industry, with Maersk a potential customer given its commitment to methanol-powered container ships by 2023.
Because it captures CO₂ at the point of emission rather than in the air, Carbon Clean aims to collect the carbon for less than $30 per metric tonne compared to the several hundred dollars per tonne that other direct-air carbon capture methods cost.
For its methanol to compete with traditional fuel, however, costs will have to fall to between $20 and $30 per ton of captured CO₂, Liquid Wind founder and CEO Claes Fredriksson told data provider Pitchbook. It also has to source hydrogen created using fossil fuels or renewable energy and then compete with other suppliers for transport customers.
Steelmaking is a trillion-dollar global industry responsible for 8% of global CO₂ emissions and one startups are targeting. Malaysia-based oil group Petronas’s independent corporate venturing firm Piva and Germany-based car maker BMW backed the series B for Boston Metal, an emission-free, green steel maker.
As Geert van de Wouw, managing director of Shell Ventures, said in his LinkedIn feed: “Love this. The steel and cement industr[ies] are among the hardest to decarbonise.”
CarbonCure, a Canada-based startup that turns CO₂ into concrete, also recently raised a round including Denmark-based real estate company NREP and its independent corporate venturing firm, 2150. Mikkel Bülow-Lehnsby, one of the fund’s cofounders, who is also the chairman of NREP, said: “Our goal is to ensure the urban environment is liveable, healthy and sustainable in 2150.”
Likewise, Blue Planet’s system runs air from smokestacks with high concentrations of carbon dioxide through a liquid solution that causes it to form a synthetic limestone, which can replace mined sand and gravel in concrete, according to a Pitchbook interview. Its synthetic rocks have already been used in concrete at San Francisco International Airport.
Storage
CCUS can give new life to depleted oil and gas reservoirs as carbon sinks. Carbon capture and storage project economics depend on the volume and purity of CO₂ and the distance to the carbon reservoir, but it is “highly likely” a facility could be economic at carbon prices of around $100 a ton, according to Syrie Crouch, vice-president of CCS at Shell.
Stuart Haszeldine, professor of geology and carbon storage at the University of Edinburgh, said in Scotland’s report on a storage project: “In geological terms the Central North Sea is as near to perfect as you will find anywhere in the world when it comes to offshore sub-surface storage of CO₂.”
Visualisation of Liquid Wind’s facility
But transportation to these sites remains an issue. The US, for example, currently has around 50 CO₂ pipelines (primarily for enhanced oil recovery), but the existing network is vastly insufficient to transport the volume necessary for CCUS at scale to achieve net zero.
In the US, a bipartisan group introduced the country’s first CO₂ infrastructure bill – the Storing CO₂ And Lowering Emissions (SCALE) Act.
It would include the CO₂ Infrastructure Finance and Innovation Act (CIFIA) programme to provide flexible, low-interest loans and grants for CO₂ transport infrastructure projects for reaching net-zero emissions as well as build on the existing Department of Energy CarbonSAFE programme for deployment of commercial-scale saline geologic CO₂ storage projects.
The sources of carbon emissions represent the heart of the global economy, as Gates has identified: electricity (25%), agriculture (24%), manufacturing (21%), transportation (14%), buildings (6%) and everything else (10%).
Split another way: almost three-quarters (70%) of the global greenhouse gases can be attributed to cities.
A narrow focus on renewable over fossil fuel energy production is helpful but cutting emissions quickly enough is a challenge given people’s desire for growth and improved living standards, or just to mine bitcoin.
Removing carbon or capturing it at source of emission will complement the push to renewables. It has been an area of underinvestment but that is now starting to change.
Key talking points
Carbon pricing
There are two main types of carbon pricing: emissions trading systems (ETS) and carbon taxes.
The World Bank tracks 64 carbon pricing initiatives implemented or scheduled from 46 countries. In 2020, these initiatives would cover 12 gigatonnes of equivalent carbon dioxide, representing 22.3% of global greenhouse gas emissions.
But saying an initiative would cover nearly a quarter of greenhouse gases means little if the prices set are too low to meaningfully shift activity to less CO2 being emitted.
Canada passed the Greenhouse Gas Pollution Pricing Act in 2018, and Prime Minister Justin Trudeau’s Liberal Party implemented it in 2019. Carbon emissions are taxed at C$30 ($23.88) per tonne. In December, Trudeau unveiled a new climate plan that called for the tax to rise to CA$170 in 2030.
The US’s proposed “Energy Innovation and Carbon Dividend Act 2019” has struggled to gain traction in setting an initial price on carbon emissions of $15 that would increase by $10 each year and so is unlikely to form part of the Biden administration’s green infrastructure bill.
Putting the country on a pathway to net zero emissions in 2050 means carbon prices need to be around $50 per tonne in 2025 and rise to $100 in 2030, according to the Center on Global Energy Policy. A $100 per tonne carbon price cuts carbon dioxide emissions 36% by 2050 as well as reducing harmful particulate matter pollution down 44%, according to climate-policy simulator En-roads.
In China, the average price expectation in the national carbon market starts at RMB41 ($6.30) per tonne of CO2 (for 2020), rising to RMB66 per tonne in 2025 and to RMB77 by the end of the decade.
In the European Union, prices earlier this year were about €33 per tonne with market expectations that they could rise to €100 ($121) before the end of the year.
Getting the carbon price right will encourage innovation and use of CCUS technologies.
Impact-weighted accounting
Removing CO2 from chimneys and pumping it underground or storing it as a solid has been around for decades but little-used.
Now, thanks to work by George Serafeim, professor at Harvard Business School, and Sir Ronald Cohen’s Global Steering Group, impact-weighted accounting (IWA) standards are starting to emerge.
Serafeim, in his keynote at the GCV Digital Forum in September, set out how, using publicly-available data, IWA translates social and environmental impact into normal financial accounts.
As Alicia Rubí, partner at Attalea Partners, notes to the CFA Institute: “Let us compare the environmental impacts of the competing operations of Coca-Cola and PepsiCo using IWA. PepsiCo reported 2018 sales of $64bn and net income of $12bn, double those of Coca-Cola, which were reported at $31.8bn and $6bn, respectively.
“IWA monetises the estimated negative environmental impacts of PepsiCo’s 2018 operations at $1.8bn, which is similar to Coca-Cola’s of $1.7bn. In both cases, these costs are almost entirely attributable to water-use inefficiency, according to IWA’s Corporate Environmental Impact: Data Supplement. If the negative environmental impact of Coca-Cola’s operations were an accounting line-item expense, the company’s 2018 net profit would fall by 28%.”
Bill Gates, in a Financial Times guest comment for his book, How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need, sets out how corporations are at the nexus for the innovations required.
Gates’s book provides a framework for working out what to invest in. He uses “green premiums – the differences in cost between a fossil-fuel-based way of doing something and the clean, non-emitting way of doing the same thing.”
“The green premiums tell us how much it will cost to zero-out emissions in all the sectors of the economy where fossil fuels are involved – including producing electricity, manufacturing, agriculture, transportation, and heating and cooling. Armed with these green premiums, we can see which zero-carbon tools are practical now, and which ones we still need to improve or invent.”
“For some products – like wind, solar and electric passenger cars – the green premiums are already low but will go down even further if more companies buy them. In other cases, such as low-carbon steel and fuels for shipping and aviation, the green premiums are prohibitively high. These are the sectors where we need to invest the most money and effort.
“In practice, this means companies need to be willing to finance innovative low-carbon solutions where the green premiums are highest. Investors, for instance, can lower the cost of capital for these technologies and make financing easier for them as they get to large-scale demonstration projects.”
“By providing low-cost capital and other financial concessions along multiple stages of a technology’s development, you can help promising innovators navigate all the obstacles that keep them from getting their ideas out of the lab and into the market. You can also mentor clean energy entrepreneurs, sponsor pilot projects and put money into innovative funds that prioritise climate impact.”
It is a great call to arms for the power of corporate venturing to make strategic change. Already, the CEOs of large corporations see the strategic importance of being on the right side of climate change and how corporate venturing can help.
Energy is a $5trn-a-year business, and it is not accustomed to rapid change, Bill Gates observes. But change is happening. Already, the main oil companies are describing themselves as integrated energy groups and using venture-backed startups and corporate venturing to change.
Gates concludes: “It will take time to achieve the scale of change we need, so we should get to work now on creating the policies, technologies and market structures that will make it possible. The good news is that there is a growing interest among the groups best suited to drive this change – corporations and governments.”
They have the tools through the financial statements and corporate venturing to bring the trillions of dollars on businesses’ books to bear on the sustainable development goals we need to be reaching.
Methane
Carbon dioxide is not the only cause of global warming than carbon dioxide. About a quarter of the effect is a consequence of methane, a compound of one carbon atom with four hydrogens.
Over the 20 years after it is emitted a tonne of methane causes 86 times more warming than a tonne of CO2. Methane lasts about 20 years in the atmosphere whereas CO2 can last hundreds of years. But if tracking parts per million is hard for CO2, then working out the concentrations of methane in their parts per billion and doing something about it is even trickier.
The Climate and Clean Air Coalition, a collaboration of governments and environmental lobby groups, estimated halving methane emissions from people over the next 30 years could shave 0.18°C off the average global temperature in 2050.
At the moment, however, more than 300 million tonnes of methane are emitted every year thanks to human activity, and that rate is rising faster than all but the most pessimistic climate projections for the 21st century.
Fortunately, and unlike carbon dioxide – at least at the moment – methane is a valuable commodity, according to the Economist. The International Energy Agency (IEA), an intergovernmental organisation, estimated three-quarters of methane emissions from the oil and gas sector (about 16.5% of total human emissions) could be avoided with technologies available today.
Leaky natural-gas pipes in cities are one culprit identified by the Economist: “In 2018, for example, instruments mounted on planes flying downwind of Washington, Baltimore, Philadelphia, New York and Boston found that 850,000 tonnes of methane a year was wafting from these cities. That is roughly 10 times the official estimate of the American government’s Environment Protection Agency (EPA).”
Upstream has further issues, the Economist added. “A study published in Science in 2018 measured leaks from a third of America’s natural-gas supply chain and oil-production sites. Extrapolating from this sample, the team involved estimated that some 13m tonnes of methane escaped from these facilities each year, approximately 60% more than the EPA’s official figures.”
Similarly, coal mines release about 40 million tonnes of methane, according to the IEA, but more comes from cows, manure, rice paddies and rubbish tips.
Coal mines and waste disposal sites can capture methane emissions and use it as a source of power, whether for themselves or to produce bitcoin, while adding seaweed or vegetable oil to a cow’s diet and limiting irrigation for paddy fields can redress some of farming’s impact. DSM even has a synthetic chemical to reduce cow emissions by 27%-40%, if given regulatory approval.
Regulators and politicians, therefore, will be crucial in developing the will to put the innovations into practice.
The GCV Symposium will take place in London on November 3-4, to coincide with the COP26 climate confernce. For more information please click here.
