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As ExxonMobil asks for handouts, startups get to work on carbon capture and sequestration
Earlier this week, ExxonMobil, a company among the largest producers of greenhouse gas emissions and a longtime leader in the corporate fight against climate change regulations, called for a massive $100 billion project (backed in part by the government) to sequester hundreds of millions of metric tons of carbon dioxide in geologic formations off the Gulf of Mexico.
The gall of Exxon’s flag-planting request is matched only by the grit from startup companies that are already working on carbon capture and storage or carbon utilization projects and have announced significant milestones along their own path to commercialization even as Exxon was asking for handouts.
These are companies like Charm Industrial, which just completed the first pilot test of its technology through a contract with Stripe. That pilot project saw the company remove 416 tons of carbon dioxide equivalent from the atmosphere. That’s a small fraction of the hundred million tons Exxon thinks could be captured in its hypothetical sequestration project located off the Gulf Coast, but the difference between Exxon’s proposal and Charm’s sequestration project is that Charm has actually managed to already sequester the carbon.
The company’s technology, verified by outside observers like Shopify, Microsoft, CarbonPlan, CarbonDirect and others, converts biomass into an oil-like substance and then injects that goop underground — permanently sequestering the carbon dioxide, the company said.
Eventually, Charm would use its bio-based oil equivalent to produce “green hydrogen” and replace pumped or fracked hydrocarbons in industries that may still require combustible fuel for their operations.
While Charm is converting biomass into an oil-equivalent and pumping it back underground, other companies like CarbonCure, Blue Planet, Solidia, Forterra, CarbiCrete and Brimstone Energy are capturing carbon dioxide and fixing it in building materials.
“The easy way to think about CarbonCure is we have a mission to reduce 500 million tons per year by 2030. On the innovation side of things we really pioneered this area of science using CO2 in a value-added, hyper low-cost way in the value chain,” said CarbonCure founder and chief executive Rob Niven. “We look at CO2 as a value-added input into making concrete production. It has to raise profits.”
Niven stresses that CarbonCure, which recently won one half of the $20 million carbon capture XPrize alongside CarbonBuilt, is not a hypothetical solution for carbon dioxide removal. The company already has 330 plants operating around the world capturing carbon dioxide emissions and sequestering them in building materials.
Applications for carbon utilization are important to reduce the emissions footprints of industry, but for nations to achieve their climate objectives, the world needs to move to dramatically reduce its reliance on emissions spewing energy sources and simultaneously permanently draw down massive amounts of greenhouse gases that are already in the atmosphere.
It’s why the ExxonMobil call for a massive project to explore the permanent sequestration of carbon dioxide isn’t wrong, necessarily, just questionable coming from the source.
The U.S. Department of Energy does think that the Gulf Coast has geological formations that can store 500 billion metric tons of carbon dioxide (which the company says is more than 130 years of the country’s total industrial and power generation emissions). But in ExxonMobil’s calculation that’s a reason to continue with business-as-usual (actually with more government subsidies for its business).
Here’s how the company’s top executives explained it in the pages of The Wall Street Journal:
The Houston CCS Innovation Zone concept would require the “whole of government” approach to the climate challenge that President Biden has championed. Based on our experience with projects of this scale, we estimate the approach could generate tens of thousands of new jobs needed to make and install the equipment to capture the CO2 and transport it via a pipeline for storage. Such a project would also protect thousands of existing jobs in industries seeking to reduce emissions. In short, large-scale CCS would reduce emissions while protecting the economy.
These oil industry executives are playing into a false narrative that the switch to renewable energy and a greener economy will cost the U.S. jobs. It’s a fact that oil industry jobs will be erased, but those jobs will be replaced by other opportunities, according to research published in Scientific American.
“With the more aggressive $60 carbon tax, U.S. employment would still exceed the reference-case forecast, but the increase would be less than that of the $25 tax,” write authors Marilyn Brown and Majid Ahmadi. “The higher tax causes much larger supply-side job losses, but they are still smaller than the gains in energy-efficiency jobs motivated by higher energy prices. Overall, 35 million job years would be created between 2020 and 2050, with net job increases in almost all regions.”
ExxonMobil and the other oil majors definitely have a role to play in the new energy economy that’s being built worldwide, but the leading American oil companies are not going to be able to rest on their laurels or continue operating with a business-as-usual mindset. These companies run the risk of going the way of big coal — slowly sliding into obsolescence and potentially taking thousands of jobs and local economies down with them.
To avoid that, carbon sequestration is a part of the solution, but it’s one of many arrows in the quiver that oil companies need to deploy if they’re going to continue operating and adding value to shareholders. In other words, it’s not the last 130 years of emissions that ExxonMobil should be focused on, it’s the next 130 years that aim to be increasingly zero-emission.
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Geothermal startups get another boost from Chevron as the oil giant backs a geothermal project developer
The U.S.-based oil major Chevron is doubling down on its investment in geothermal power by investing in a Swedish developer of low-temperature geothermal and heat power projects called Baseload Capital.
Oil companies are under pressure to find new lines of business as the world prepares for a massive shift to renewable energy resources to power all aspects of industry in the face of mounting climate-related disasters caused by greenhouse gas emissions warming the temperature on the planet.
Joining Chevron in the investment was the ubiquitous billionaire-backed clean energy investment firm Breakthrough Energy Ventures and a Swedish investment group called Gullspang Invest AB.
The investment into Baseload follows closely on the heels of another commitment that Chevron made to the geothermal technology developer Eavor and a recent Breakthrough Energy Ventures investment in the Google-affiliated company, Dandelion Energy (a spinout from Google’s parent company’s moonshot technology development business unit, called X).
Dandelion and Eavor are just two examples of a groundswell of startups working to leverage the knowledge from the oil and gas industry to tap geothermal resources for applications ranging from baseload energy to home heating and cooling.
They’re joined by businesses like Fervo Energy, GreenFire Energy and Sage Geosystems, who’re all leveraging heat to generate power.
As Chevron noted in its press release, heat power is an affordable form of renewable energy that can be harnessed from either geothermal resources or waste heat.
The investments in Baseload and Eavor are financed by CTV’s Core Venture fund, which identifies companies with technology that can add efficiencies to Chevron’s core business in operational enhancement, digitalization and lower-carbon operations, the company said in a statement.
Together the two businesses are planning pilot projects to test technology and could look to current Baseload operations in Japan, Taiwan, Iceland or the United States to develop projects.
Financial terms of the deal were undisclosed.
“In August, we announced that we were looking for a new strategic investor to help us accelerate deployment in our key markets,” said Baseload’s Chief Executive Officer Alexander Helling. “We couldn’t have asked for a better one. Chevron complements our group of owners and adds expertise in drilling, engineering, exploration and more. These assets are expected to accelerate our ability to deploy heat power and strengthen our way of working.”
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EV charging stations, biofuels, the hydrogen transition and chemicals are pillars of Shell’s climate plan
Royal Dutch Shell Group, one of the largest publicly traded oil producers in the world, just laid out its plan for how the company will survive in a zero-emission, climate conscious world.
It’s a plan that rests on five main pillars that include the massive rollout of electric vehicle charging stations; a greater emphasis on lubricants, chemicals and biofuels; the development of a significantly larger renewable energy generation portfolio and carbon offset plan; the continued development of hydrogen and natural gas assets while slashing oil production by 1% to 2% per year; and investing heavily in carbon capture and storage.
These categories cut across the company’s business operations and represent one of the most comprehensive (if high level) plans from a major oil company on how to keep their industry from becoming the next victim of the transition to low emission (and eventually) zero emission energy and power sources (I’m looking at you, coal industry).
“Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” said Royal Dutch Shell Chief Executive Officer Ben van Beurden in a statement.
To keep those shareholders from abandoning ship, the company also committed to slashing costs and boosting its dividend per share by around 4% per year. That means giving money back to investors that might have been spent on expensive oil and gas exploration operations. The company also committed to pay down its debt and make its payouts to shareholders 20% to 30% of its cash flow from operations. That’s… very generous.
Image Credits: Bryce Durbin
The Plan
Shell is a massive business with more than 1 million commercial and industrial customers and about 30 million customers coming to its 46,000 retail service stations daily, according to the company’s own estimates. The company organized its thinking around what it sees as growth opportunities, energy transition opportunities and then the gradual obsolescence of its upstream drilling and petroleum production operations.
In what it sees as areas for growth, Shell intends to invest around $5 billion to $6 billion to its initiatives, including the development of 500,000 electric vehicle charging locations by 2025 (up from 60,000 today) and an attendant boost in retail and service locations to facilitate charging.
The company also said it would be investing heavily in the expansion of biofuels and renewable energy generation and carbon offsets. The company wants to generate 560 terawatt hours a year by 2030, which is double the amount of electricity it generates today. Expect to see Shell operate as an independent power producer that will provide renewable energy generation as a service to an expected 15 million retail and commercial customers.
Finally the company sees the hydrogen economy as another area where it can grow.
In places where Shell already has assets that can be transitioned to the low carbon economy, the company’s going to be doubling down on its bets. That means zero emission natural gas production and a trebling down on chemicals manufacturing (watch out Dow and BASF). That means more recycling as well, as the company intends to process 1 million tons of plastic waste to produce circular chemicals.
Upstream, which was the heart of the oil and gas business for years, the company said it would “focus on value over volume” in a statement. What that means in practice is looking for easier, low-cost wells to drill (something that points to the continued importance of the Middle East in the oil economy for the foreseeable future). The company expects to reduce its oil production by around 1% to 2% per year. And the company’s going to be investing in carbon capture and storage to the tune of 25 million tons per year through projects like the Quest CCS development in Canada, Norway’s Northern Lights project and the Porthos project n the Netherlands.
“We must give our customers the products and services they want and need – products that have the lowest environmental impact,” van Beurden said in a statement. “At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”
Money or finance green pattern with dollar banknotes. Banking, cashback, payment, e-commerce. Vector background. Image Credits: Svetlana Borovkova / Getty Images
Money talk
For the company to survive in a world where revenues from its main business are cut, it’s also going to be keeping operating expenses down and will be looking to sell off big chunks of the business that no longer make sense.
That means expenses of no more than $35 billion per year and sales of around $4 billion per year to keep those dividends and cash to investors flowing.
“Over time the balance of capital spending will shift towards the businesses in the Growth pillar, attracting around half of the additional capital spend,” the company said. “Cash flow will follow the same trend and in the long term will become less exposed to oil and gas prices, with a stronger link to broader economic growth.”
Shell set targets for reducing its carbon intensity as part of the pay that’s going to all of the company’s staff and those targets are… eye opening. It’s looking at reductions in carbon intensity of 6-8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050, using a baseline of 2016 as its benchmark.
The company said that its own carbon emissions peaked in 2018 at 1.7 giga-tons per year and its oil production peaked in 2019.
The context
Shell’s not taking these steps because it wants to, necessarily. The writing is on the wall that unless something dramatic is done to stop fossil fuel pollution and climate change, the world faces serious consequences.
A study released earlier this week indicated that air pollution from fossil fuels killed 18% of the world’s population. That means burning fossil fuels is almost as deadly as cancer, according to the study from researchers led by Harvard University.
Beyond the human toll directly tied to fossil fuels, there’s the huge cost of climate change, which the U.S. estimated could cost $500 billion per year by 2090 unless steps are taken to reverse course.
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Forsaking funding at a $1 billion valuation, Solugen preps a new green chemical product and a big 2021
Late last year, Solugen, a startup using synthetic biology to take hydrocarbons out of the chemicals industry, decided against pursuing a new round of funding that would have valued the company at over $1 billion, TechCrunch has learned.
Instead, the Houston-based bio-manufacturing company raised an internal round of roughly $30 million from existing investors and continued working on its latest project — a new bio-based manufacturing process for a high-value specialty chemical that can act as an anti-corrosive agent.
That work represents a potentially lucrative new product line for the company and charts a course for a host of other businesses that are refashioning the basic building blocks of life in an attempt to supplant chemistry with biology for manufacturing and production.
If Solugen can get its high-value chemical into commercial production, the company can follow the path that sustainable tech companies like Tesla have mastered — moving from a pricy specialty product into the mass market. And rather than over-promise and underdeliver, Solugen wanted to get the product line right first before raising big bucks, according to people familiar with the company’s thinking.
As the world looks to move away from oil and its byproducts to reduce greenhouse gas emissions and slow down or reverse global climate change, the chemicals industry is in the crosshairs as a huge target for disruption. Vehicle electrification solves only one part of the oil problem. The extractive industry doesn’t just produce fuel, but also the chemicals that make up most of the products that defined consumer goods in the twentieth century.
Chemicals are everywhere and they’re a huge business.
Companies like Zymergen raised hundreds of millions of dollars last year to develop industrial applications for synthetic biology, and they’re not alone. Startups including Geltor, Impossible Foods, Ginkgo Bioworks, Lygos, Novomer and Perfect Day have all raised significant amounts of capital to reduce the environmental footprint of food, chemicals, ingredients and plastics through synthetic biology.
Some of these companies are seeing early success in food replacements and ingredients, but the promise of biologically based chemicals have been elusive — until now.
Solugen’s new product will produce glucaric acid, a tough-to-make chemical that can be used in water treatment facilities and as an anti-corrosive agent — and the company can make it with a zero carbon (or potentially carbon negative) manufacturing process, according to Solugen co-founder and chief technology officer, Sean Hunt.
The glucaric acid from Solugen is cheaper to produce and more environmentally friendly than existing phosphonates that are used for water treatment — and the company has the benefit of competing against chemicals manufacturers in China.
Given the continuing tensions between the two countries, the U.S. is looking to make more high-value products — including chemicals — domestically, and Solugen’s technology is a good way forward to have home-grown supplies of critical materials.
Solugen still intends to raise more capital, the company just wanted to wait until its latest production plant for the acid came online, according to Hunt.
It’s also the fruit of years of planning. The two co-founders, Hunt and Gaurab Chakrabarti, first realized they could potentially use the technology they’d developed to make specialty chemicals back in 2017, according to Hunt. But first the company had to make the hydrogen peroxide as a precursor chemical, Hunt said.
“It’s advantageous for us to focus on this,” said Hunt. “As we scale, we can enter more commodity-type markets down the road.”
It’s all part of the notable strides the entire industry is making, said Hunt. “Synthetic biology has really made significant strides,” he said. “We have our commercial plant coming online this summer [and it proves] synthetic biology has gotten to the point where we can compete on price and performance.”
So the capital infusion will come as the company gets closer to the completion of these commercial scale facilities.
“It’s not like we were sitting on a term sheet and we said no,” Hunt said. “We want to make sure that we are hitting the milestones and the goals at a commensurate pace which is this year. I’m extremely bullish and optimistic of 2021.”
Solugen’s co-founder sees the path that his company is on as one that other startups working in the synthetic biology space will pursue to bring profitable products to market at the higher end before competing with more sustainable versions of commodity chemicals.
“How do you start a company that has this level of capital intensity?” Hunt asked. “You can start in the fine chemicals space where everything sells for tens to hundreds of dollars per pound. For us, glucaric acid is that specialty chemical and then we will do commodity.”
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Bolt Threads partners with Adidas, owners of Balenciaga and Gucci, and Stella McCartney on mushroom leather
Bolt Threads has brought together some new and existing partners, including Stella McCartney, Kering (the fashion house behind brands like Balenciaga, Gucci, Alexander McQueen and Bottega Veneta), Lululemon and Adidas to create a consortium that will explore the company’s use of its mushroom-based leather substitute in products, the company said.
These companies will be among the first to bring products made with Bolt Threads’ mushroom-based leather substitute to market in 2021, the company said.
“I have always been convinced that innovation is key to addressing the sustainability challenge that luxury is facing. Finding innovative, alternative materials and fabrics can potentially drastically reduce the environmental impact of our industry over the long term,” François-Henri Pinault, the chairman and chief executive of Kering, said in a statement.
The announcement is the culmination of at least two years of work from Bolt Threads, which first announced it would join the hunt for a leather substitute in 2018. The company announced its first product soon after — a $400 “Driver Bag” designed in conjunction with the Portland-based bag company, Chester Wallace.
The company, which has raised over $200 million since its launch nearly 11 years ago, faces some pretty tough competition. Companies like MycoWorks and Modern Meadow both have alternative leather products in the works. However, these partnerships may go a long way toward separating Bolt from the rest of the herd.
Swatches of Bolt Threads mushroom leather product, “Mylo.” Image Credit: Bolt Threads
Investors in Bolt Threads include Foundation Capital, Baillie Gifford, Founders Fund, Formation 8 and the Nan Fung Group, a privately held, Hong Kong-based conglomerate with significant holdings in the textile and fashion industry.
What the redoubled interest in leather goods means for the alternative spider silk that was the company’s original product is unclear. There hasn’t been much news on the silk front since the company debuted its $314 necktie back in 2017.
There’s clearly interest in the fashion industry’s ability to clean up. Consumers are demanding it, and new brands focused on sustainability are launching regularly.
As Reducetarian Foundation president and co-founder Brian Kateman wrote last year, “traditional fashion is killing the planet”:
Every year, the textile industry alone spits out 1.2 billion tons of greenhouse gases — more than all marine shipping vessels and international flights combined — and consumes 98 million tons of oil. Textile dyeing is the second-largest polluter of clean water, and on the whole, the apparel industry accounts for 10 percent of all greenhouse emissions worldwide. Worst of all, the clothes produced by this massive resource consumption produces clothes are rapidly discarded: In 2015, 73 percent of the total material used to make clothes ended up incinerated or landfilled, according to a study by the Ellen MacArthur foundation.
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Despite pandemic setbacks, the clean energy future is underway
Roger Duncan
Contributor
Contributor
Roger Duncan is a former Research Fellow at the Energy Institute at the University of Texas at Austin and the former General Manager of Austin Energy. He is the co-author of the upcoming book, “The Future of Buildings, Transportation and Power.”
The economic lockdown resulting from the coronavirus pandemic has had an immediate negative impact on renewable energy projects and electric vehicles sales, but the sustainable trends are still in place and may even be strengthened over the longer term.
For the first time in four decades, global installation of solar, wind and other renewable energy will be less than the previous year, according to the International Energy Agency, which is projecting a 13% reduction in installations in 2020 compared to 2019. Woods Mackenzie projects an 18% reduction for global solar installations in 2020. Morgan Stanley is projecting declines in U.S. solar PV installations from 48% in second quarter to 17% in the fourth quarter of 2020.
This is due to a combination of construction delays, supply chain disruptions and a capital crunch.
Installation of rooftop solar has been hit particularly hard. Access to homes and businesses was generally halted in March 2020 for several months. Installers have indicated that as much as half the workforce had to be furloughed. The supply chain was also disrupted as PV manufacturing in China was temporarily suspended. Installations and the supply chain will resume, and most contracts are still in place, but the robust projected growth in rooftop PV for 2020 will not be met, and it may take more than a year to catch up. Also, some businesses that planned installations may have higher priorities for cash and investment now as they reopen. Many of the small businesses planning solar installations may not return at all.
On the other hand, utility scale electricity generation from renewable energy continues to grow and take market share. In the first part of this year, renewable energy has produced more electricity than coal for the first time since the late 19th century, when hydropower started the power industry. Wind and solar are the cheapest alternatives for new electric generation in the U.S. The pandemic and collapse in oil prices will not change that. The closure of coal plants has been accelerating this year, and wind and solar will continue to be competitive with gas.
Furthermore, most solar and wind farms were already financed and construction underway in rural areas not affected by the lockdown. About 30 GW of new solar capacity have already been contracted, and as long as interest rates remain low, financing should not be a problem. In fact, many solar and wind projects in the U.S and China are rushing to completion this year to qualify for government incentives.
But supply chains for utility scale renewables were still disrupted. Solar panel manufacturing in China was halted during the first quarter and has now reopened, but facing reduced orders. At one point, 18 wind turbine manufacturing facilities in Spain and Italy were stopped while social distancing and sanitation measures were put in place. Mining operations in Africa and other countries were also temporarily halted and now face reduced demand.
The replacement of oil and gas electricity generation with renewables in developing countries is not going to seem as attractive as a few years ago. Emerging economies need to expand electricity as cheaply as possible, which means coal, gas and even diesel plants. New fossil fuel plants in developing nations could lock in carbon emissions for years.
Electric vehicle sales globally have also been severely impacted. The transition to electric vehicles takes place as people purchase new vehicles. The price of oil has collapsed, used-car prices are dropping and unemployment has soared to levels not seen since the Great Depression. Cheap gas, cheap cars and high unemployment will dramatically lower the expectations for multipassenger EV sales in 2020. Wood Mackenzie has projected a 43% global decline in EV sales in 2020 from 2019. Furthermore, many new electric models from the automakers are not expected until 2021.
However, the long-term transition to EVs will continue and may even accelerate. It still costs less to drive a mile on electricity compared to gasoline, and when the upfront cost of electric vehicles becomes competitive with internal combustion vehicles in a few years, the market should quickly move to EVs. Now that the battery range is adequate for the average driver, the last barrier seems to be the availability of fast charging stations between cities.
Before the collapse in oil demand this year, the oil majors were expecting peak oil demand to occur sometime during the 2040s. Now peak oil demand is expected earlier, perhaps in the mid-2020s. Some even think that 2019 might turn out to be the highest level of oil consumption historically. At any rate, it seems that it will be at least a few years until the 2019 levels are reached again, if ever.
However, the recent collapse in oil prices means the oil and gas industry will be able to supply fuel at very competitive prices for decades. This will at least make it more difficult for electric vehicles to take market share in the short term, and very difficult for alternative liquid fuels to be competitive. For biofuels and synthetic fuels, it seems to be a repeat of earlier decades when cheap oil crushed those industries. Replacing gas and diesel-powered cars is certainly going to be unattractive in the impoverished economies of developing nations.
But there are also bright spots for clean transportation alternatives emerging. Electric bicycles, for example, are a hot item. As people look for alternatives to mass transit and want something to move outdoors in the fresh air, electric-assisted bikes are a great solution and are no longer looked down upon as a vehicle for older (or lazy) cyclists.
Telecommuting struggled for years to take hold, but the pandemic seems to have finally changed that. The recent national lockdown has spurred many large businesses to set up their employees to work from home. They have found that it works fairly well, and many will not return to packed downtown offices.
Several experts have cited the potential for cleaner energy alternatives because the public is seeing cleaner air and the environmental benefits of a 30% reduction in daily oil consumption. Some consumer surveys have indicated a greater interest in electric vehicles.
There is certainly the hope that we will take the opportunity to revive the economy with cleaner technologies than before the lockdown. However, the reality is that workers and businesses need to start up again with the infrastructure they have, and investment in cleaner technology requires capital. Since many business operations are struggling to find cash and loans to just remain open, new clean technology may be delayed.
Yet the major infrastructure changes for a sustainable future are well underway. Solar and wind are rapidly replacing fossil fuels for electricity. Automakers and governments are committed to electrification of the transportation sector. The pandemic may be a near-term obstacle, but the transition to a sustainable economy is just delayed and may even be accelerated in the coming years.
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