How carbon capture networks could help curb climate change Bas Sudmeijer
Transcriber: Leslie Gauthier
Reviewer: Camille Martínez
If you’re in charge of a major
metropolitan city,
it’s almost a must these days
to be sustainable.
Us city dwellers pride ourselves
on living in places that are
taking action on climate change
and achieving net zero.
But what if you’re Don Iveson?
You’re the mayor of oil and gas town
Edmonton, in northern Alberta, Canada.
Or across the Atlantic,
Holly Mumby-Croft,
UK member of parliament for Scunthorpe,
home to one of the last
steel plants of Britain.
Or much smaller,
you’re Dave Smiglewski.
You’re the mayor of the little city
of Granite Falls, Minnesota,
with a large-scale ethanol
production facility nearby.
All these places,
no matter how far apart
and how different in size,
have something big in common:
millions of tons
of greenhouse gas emissions
linked to significant local employment.
And we’re going to have to find a way
to maintain the critical economic
and social functions of these towns
if we’re to have any hope
of combating climate change.
Not an easy feat,
if you think that we can’t really put
a solar panel on a gas processing facility
or a steel mill.
Fortunately, these places have another
interesting thing in common,
which might offer some hope
to these local officials.
The main sources
of pollution in their areas
are in close proximity to rock formations
with the ability to trap carbon dioxide,
the greenhouse gas we often call CO2.
And this puts into reach a potential
solution to both their problems:
pollution and employment.
It’s called “carbon capture and storage.”
It’s the process whereby
we capture the CO2,
which results from burning fossil fuels,
before it’s emitted into the atmosphere
and instead bury it underground.
Effectively, we take part of what
we’ve extracted from the earth –
the carbon –
back to where it came from.
Now, this is not a new idea.
People have been experimenting
with this technology for decades.
Today, however, there are very few
operational carbon capture facilities
in the world,
capturing about 14 million
tons of CO2 equivalent per year.
And while that may sound
like a big number,
it’s less than .1 percent of global
greenhouse gas emissions.
The International Energy Agency predicts
that we need to capture
between four and seven gigatons –
that’s four to seven
billion metric tons –
of CO2 per year by 2040
to stay at or below
two degrees Celsius warming.
And that’s a more than
100 to 200 times increase
in today’s carbon capture capacity.
To get us there will definitely require
a price on greenhouse gas pollution.
There is a cost,
and it needs to be settled.
And if we’re not smart about it,
the price could be very high.
Should we then solely rely
on the future improvements
in the fundamental technology?
No.
There is another way.
And it’s the need for
well-thought-through rollouts
of what might be called CO2 networks.
In BCG, I lead a team of consultants,
analysts and data scientists
whose focus is on advancing
carbon capture utilization and storage.
By our estimates,
if we want to hit the IEA forecast,
we need at least 110 billion dollars
per year for the next 20 years
to build out the required carbon capture
and storage infrastructure.
And there’s only one way to bring down
this essential but hefty price tag,
which is to share
the cost through networks.
Consider it the waste
disposal service for CO2.
Our research suggests that policymakers
and companies can learn a lot
by looking at a map –
lots of maps, actually,
both the ones that you and I look at
on our smartphones
as well as the less common ones
that show what lies below the surface
in terms of depleted oil and gas fields
and saline aquifers with the ability
to trap CO2 underground.
And by looking at these maps,
we can look for the optimal distances
between both the sources of emissions,
like Scunthorpe’s steel plant,
and the sinks, like the saline
aquifers of Alberta.
We had a first go,
and it yields interesting results.
By building up a detailed
database of emitters
as well as potential sinks,
we found up to 200 clusters
that have the ability to be scaled up
to low-cost carbon networks.
And they can capture more
than one gigaton of emissions,
a big step to the four to seven
gigatons that we need.
And when we dig a little deeper,
we find that optimization of distances
between sinks and sources matters.
It matters a lot in terms of the cost.
Network effects,
which is the mechanism whereby
the benefits of a system to a user
increases with the amount
of others' use of it,
can reduce the capture and storage cost
of many emitters by up a third,
to below 100 dollars
per ton of CO2 captured,
based on current costs of technology.
And while that is still
a substantial cost,
it starts to get in the range
of carbon taxes and market mechanisms
that governments of Western economies
are starting to think about
or have already put in place.
And we would not be able to achieve it
without collaboration
and sharing of infrastructure
between neighboring emitters.
Let us walk through
some of the cities I mentioned.
In assessing areas to build CO2 networks,
we look for three different things.
Firstly, proximity to storage.
Secondly, a cluster
of at least a few sources
with high amounts
of CO2 in their flue gas;
the more CO2 in the exhaust,
the cheaper it is to capture.
And thirdly, an ability to scale up
the network and lower the cost quickly
with few emitters.
Edmonton and its surrounding areas
provide a good example
of this idea at work.
Suitable underground rock layers
that can trap CO2 are abundant,
well exceeding what is needed,
and it also meets
the second and third criteria
in that it has a good combination
of both high- and low-
concentration CO2 streams
associated with different
industrial processes.
And it can scale up to low cost quickly.
In one of the clusters,
we find the number of emitters
with very low capture and storage cost
in the range of 40 to 50 dollars per ton,
but they only represent
1.2 megatons per year.
The total cluster, however,
can scale up to 12 megatons –
up to 10 times its original size.
But those first megatons of emissions
played a crucial role
in scaling up the network
and reducing the cost and risk
for others down the line.
That’s your network effect in action.
And it’s not just Edmonton.
If we take Scunthorpe
in Lincolnshire in the UK,
we see similar dynamics and potential.
The North Sea offers sufficient storage,
and while storing CO2 offshore
is more expensive than onshore,
there’s the potential to reduce this cost
by reusing and repurposing
existing oil and gas infrastructure.
If the steel mill standalone
would have to capture and store its CO2,
it would prove very costly.
But it can reduce this cost
by sharing the infrastructure
with refining and chemical emitters
en route to the North Sea.
Many of them have cheaper capture cost
with the ability to improve
the overall economics
and kick-start a network that has
the ability to scale up to 28 megatons.
Two examples in two different countries
with 14 megatons of potential –
already double versus what we have today.
And this network effect applies anywhere
and is actually not uncommon
when it comes to building out
infrastructure.
In fact, CO2 networks could very much
follow the principles of the past
in terms of how our energy and utility
infrastructure was developed around us,
whether it’s water, gas, electricity,
local supply chains –
all these networks apply
local economies of scale
and were built up over time
with favorable, marginal cost
of adding new connections.
The big difference here
is we’re reversing the flow.
And these networks have the potential
to enable future innovation
of using CO2 in chemical processes
to make, for example, building materials
instead of burying the CO2 underground.
Our analysis is a pure economic one.
It does not account for political
and local geographical barriers,
but creating a favorable
regulatory environment
and removing these barriers
will be critical.
Take these two neighboring
states in the US, for example:
North Dakota,
with ample, cheap storage
and existing CO2 pipelines,
and the state has put in place
tax incentives
and financial assistance to use it.
Go next door to Minnesota:
no storage within several hundred miles,
but home to 18 large-scale
ethanol production facilities,
including the one in Granite Falls,
all of which create a highly concentrated
stream of CO2 emissions.
Can the blue and the red state
work together to add 40 megatons
to our carbon capture tally?
We have no more than 20 years
to bend the curve
and combat climate change –
potentially less.
The gas networks in my two home countries
of the Netherlands and the UK
were built in similar time frames
after the Second World War –
massive undertakings
in infrastructure buildup
and at a time of similar
high national debt.
It’s time to build another network,
one for CO2.
It does not need to last forever.
It can be there just for the transition
away from fossil fuels.
But we need it now to preserve
local manufacturing jobs
and our communities
and provide a hope for a better
and more sustainable future.
It is critical that governments,
both local and national,
as well as companies,
assess the potential
for carbon capture at a local level,
start to capture the cheapest
sources of CO2
and build up the network from there.
Only in that way can local communities
like the ones in Edmonton,
Granite Falls, Scunthorpe and beyond
thrive both economically and sustainably.
Thank you.