February 28, 2024

There is a lot of money available for carbon capture technology. But, what is it going towards?

Recent discussions within the research community show that the realities of carbon capture and the dreams of the IEA and governments are light-years apart. Really, they are in different universes with different laws of physics.

Most carbon capture, storage, and utilization research is still trying to do this at a cost that makes any sense at all. This involves figuring out the most efficient chemical process with the cheapest inputs possible and then trying to scale that to a reasonable size.

There are some technologies that exist to do this, but none of them are geared to actually extracting CO2 from the atmosphere to affect climate change. Apart from the destined to fail push CO2 emissions underground or bubble it into the oceans, all new research for Direct Air Capture of CO2 falls under two different focuses:

1. To use electrical energy to produce net zero combustible (bio/synthetic) fuels.
2. To use electrical energy to produce net zero plastics.

The first of these is barely if at all impaction on removing CO2 from the atmosphere. It is more focused on providing fuel that can be burned that does not add CO2 to the atmosphere. Think hydrogen/methanol/ammonia production that is not really bad for the environment.

The second is net negative in CO2 as it attempts to pull CO2 out of the air to produce ethylene to produce plastics. While this is net negative, and the technology is very interesting, even at scale it is not producing carbon chains at a rate that competes with plants.

Neither of these have any chance of having even a measurable impact on total CO2 in the atmosphere alone.

This basically nullifies the current climate agreements in the IPCC. Their models are built on the idea of CC(U)S extracting a significant amount of CO2 from the atmosphere. The goal is to stop the planet warming while we make the transition. This is a dream with no basis in reality at the moment.

We will leave aside the math around where the energy for CCUS comes from and what it competes with for the time being. And, we will put aside the real reasons that CCUS is even part of the IPCC discussions (hint: oil companies like it).

There is another side to this that makes this problematic from the left. While new technology for niche production is very interesting and should be invested in, the way that this investment is happening in the West is nonsensical economically.

Carbon markets, discussed previously, are a bit of a neoclassical economic conundrum. The mainstream likes to say that one way or another we must commodify carbon (and other climate change causing elements) to deal with it.

Briefly, the effects of Carbon are currently not valued properly in the "private markets". This results in Carbon pollution being thrown into the environment and bad things happening that "other consumers" pay for, but that cost is not in the "price".

This is a rather classic problem with value and price being set on exchange value alone.

Anyway, the "carbon market" is supposed to fix all that. But, fix it in a very specific way: by providing incentives to private capital to invest in new start-ups.

It is not working out. Small capital (start-ups) are working hard to find venture capital to pay into their companies.

• VC is only interested in investing in very niche market applications of CCUS
• VC is opposed to supporting government grant funded research initiatives.
• Most of the research is happening in universities with large public grants funding it or through agencies like the National Research Council.
• None of the VC financed initiatives are for Direct Air Capture at scale for storage, they are all for utilization.
• Carbon pricing is not high enough (or predictable enough) to pay for regular investment in CCUS innovation.
• Carbon pricing is not even high enough for VC financing.
• Government financing is the only financing driving development of this technology.

This might be unsurprising, but it is important to say out-loud. With VCs opposed to the broad public programs for research in these areas, carbon markets not providing a price that is high enough to fund non-VC private companies, VCs focused on extremely niche investment start-ups, and carbon pricing being the main Canadian investment program, things are not looking good for this being part of the climate solution.

In fact, I would go so far as to argue that while it is an interesting niche research area with some industrial production potential, it has nothing at all to do with climate change mitigation.

This is not what we have been sold when it comes to carbon markets and CC(U)S.