Carbon dioxide removal from the atmosphere has not stopped completely, but the current administration in Washington has certainly slowed it. This does not bode well for the next few years.
Read the original article here in the New York Times.
Comments by OSFR historian Jim Tatum.
jim.tatum@oursantaferiver.org
– A river is like a life: once taken,
it cannot be brought back © Jim Tatum
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| A Climeworks direct air capture carbon removal facility designed to scrub carbon dioxide from the sky in Iceland. Francesca Jones for The New York Times |
Carbon capture comes back down to Earth
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By David Gelles |
Six months ago, the prospects for the nascent carbon removal market seemed as vast as the sky.
Bill Gates and other investors were lining up to fund start-ups that promised to suck carbon dioxide out of the atmosphere, helping to curb global warming. Big-name companies like Google, Airbus and Amazon moved in to buy carbon removal credits. And McKinsey projected the market could be worth as much as $1.2 trillion by 2050. One investor called it “the single greatest opportunity I’ve seen in 20 years of doing venture capital.”
But less than six months into President Trump’s second term, in which he has moved to drastically reshape climate policy, the carbon capture industry is decidedly more subdued.
The Energy Department last month terminated 24 awards worth $3.7 billion, most of which had been earmarked for carbon removal projects. Applications for new carbon capture and sequestration permits in the United States were down 55 percent in the first three months of the year.
And last month Climeworks, the most prominent carbon removal company, which I reported on last year, cut 22 percent of its staff in anticipation of slower growth. Two other carbon capture start-ups, Heirloom and Pachama, have also announced layoffs in recent weeks.
“There is a new administration in the U.S.,” Jan Wurzbacher, the co-chief executive of Climeworks, told me. “That’s a fact, and the new administration puts certain things in question.”
Yet it’s not just the political landscape that has changed. There are also new questions about the viability of some prominent carbon capture technologies.
Climeworks’ flagship plant in Iceland, which uses so-called direct air capture to scrub carbon dioxide from the sky, removed just a sliver of the carbon dioxide it had hoped to during its first 10 months in operation, according to Heimildin, an Icelandic news organization.
“It takes time to ramp up,” Wurzbacher told me when I asked about the report. “We are just at the beginning, and it has taken longer than we thought.”
Achieving ‘energy security’
The industry is not in complete free fall.
Two major direct air capture developments that were greenlit by the Biden administration, including one in Louisiana involving Climeworks that is known as Project Cypress, were not among the projects canceled by the Energy Department.
Wurzbacher said his company’s interactions with the Trump administration have been limited, but that, for now, he expects Project Cypress to move forward, albeit with some delays.
Tax credits for carbon capture projects have so far survived Republican negotiations over their signature policy bill, unlike some other clean energy tax credits. (The ability to transfer these tax credits them may be limited, which could hurt some start-ups.)
And in April, Occidental Petroleum, a major oil and gas company that is also investing in direct air capture technology, received government approval to sequester the carbon dioxide it sucks out of the air with a giant new facility it is building in Texas.
Vicki Hollub, Occidental’s chief executive, said the project would “help the United States achieve energy security,” a rhetorical nod to Trump.
She added that the project would “help organizations address their emissions,” a nod to companies that want to permanently sequester carbon dioxide underground in a bid to blunt global warming.
At the same time, she said that direct air capture could help “produce vital resources and fuels,” a reference to the practice of using captured carbon dioxide to extract more gas from beneath the ground.
Proponents have portrayed carbon capture as necessary to hit longer-term global climate targets, but the prospect of using captured carbon to produce more fossil fuels leads some climate activists see it as little more than a ruse designed to help perpetuate the oil and gas business.
‘A major step backward’
The market for carbon removal depends on companies voluntarily buying credits from start-ups promising to remove the greenhouse gas from the atmosphere, a dynamic that leaves the industry vulnerable to the shifting priorities of the corporate world.
For now, big companies are still lining up to buy carbon removal credits from a raft of start-ups. CDR.fyi, a website that tracks the industry, reported that Bain & Company, Microsoft and JPMorgan were among the companies that had signed deals with carbon removal companies this year.
Yet even Alexander Rink, the chief executive of CDR.fyi, struck a cautionary note when asked about the future of the industry. Rink expects sales of carbon credits tied to direct air capture to continue growing, but he also predicts that more companies in the industry will go out of business.
The Carbon Capture Coalition, an industry group, called the Energy Department’s decision to cancel the 24 grants “a major step backward in the nationwide deployment of carbon management technologies.”
And Wurzbacher said that while Climeworks was still expecting to build its first U.S. plant in Louisiana, the company was retrenching. Instead of trying to rapidly scale up and build new plants, the company will now focus on improving the efficiency of its technology in an effort to bring costs down.
“Looking at the world around us, we’ve decided that we that we need a little bit of consolidation,” he said.
