Carbon storage or use?

Last week I was at a meeting of major industrial emitters and the discussion moved on to the subject of carbon capture. This shouldn’t have come as a surprise, but one aspect of it did; the context was entirely carbon capture and use (CCU) rather than carbon capture and storage (CCS). One participant did mention CCS, but corrected himself to CCU. These are two very different approaches to managing atmospheric carbon dioxide and don’t behave in the same way or necessarily give the same outcome.

CCS for industrial processes involves geological storage of the carbon dioxide, typically 2-3 km below the surface. The Shell Quest facility in Canada operates in this way. This removes carbon from the biosphere and returns it to the geosphere such that it has no impact on atmospheric carbon dioxide concentration or ocean acidity. It is the basis of a permanent solution to elevated carbon levels in the atmosphere and effectively replicates in a very short space of time what nature would otherwise do over hundreds or thousands of years. Most climate models show that even when a rapid reduction in fossil fuel use is assumed, society will likely still require large scale storage of carbon to limit warming to 1.5°C and probably for the 2°C case as well.

Carbon capture and use operates in a very different way. There are examples in practice today or in the pipeline, including the use of carbon dioxide for enhanced oil recovery (EOR), the conversion of carbon dioxide to certain chemicals (e.g. urea) and the production of materials such as polycarbonates. These processes all require carbon dioxide to operate, but are not necessarily designed to store the carbon dioxide permanently (although in most cases this is what happens with EOR). If the carbon is returned to the atmosphere, such as through the degradation of the compound that is made, then the overall impact of the process may be zero in terms of atmospheric carbon dioxide levels. However, the impact may be delayed for quite some time, possibly stretching into hundreds of years. CCU may therefore solve a local carbon dioxide emission issue, but does not necessarily address the bigger question of climate change. There are two ways in which CCU could become effective;

  1. CCU might be used to manufacture synthetic hydrocarbon fuels, which could displace the need to extract fossil hydrocarbons. However, the synthetic fuels industry would have to scale very significantly before it could be claimed that this was indeed a reduction. Further, as is always the issue with mitigation analysis, it is even more difficult to claim that the total fossil resource extracted over time diminishes. There is always the possibility that the same amount is eventually extracted, but over a longer period.
  2. CCU could be applied to the manufacture of certain goods, for example building materials. But to act as a mitigation mechanism akin to CCS, CCU has to lead to storage. This would be accomplished by increasing the total stock of the material in use at any one time. Say for example that homes are built with the new material. The starting point would be zero, but in a decade or so there might be 50 million homes constructed. Even if the homes are eventually torn down (and the carbon released), so long as the total number of such homes in use continues to increase, then more and more carbon is stored. The issue here is that the total stock has to be maintained for a very long time (at least a century or more) for CCU to approach CCS equivalence.

As populations grow and development proceeds, the stock of all goods in circulation has generally increased, even as old items are removed and new ones added. We have more buildings than ever before, more stuff in the buildings and more machines such as cars, ships and planes. All of these could be potential carbon stocks for century long storage. But we will need to be aware of the corollary, i.e. winding down the global stock of a certain item will result in the stored carbon being returned to the atmosphere.

In the recent Shell publication, A Better Life with a Healthy Planet, Pathways to Net Zero Emissions, the net zero outcome made use of both CCU and CCS, as shown in the chart below. This a scenario for later in the century so it is important to recognise that not all the technologies are sufficiently developed to fully deliver this. For example, air capture of carbon dioxide is still at pilot-plant stage.  Nevertheless, in the scenario the on-going use of some fossil fuels in certain applications is balanced by geological storage of carbon dioxide and embedding carbon in materials, with the assumption that the stock of that material in circulation globally increases over time.

nze-balance

This means that accounting plays a critical role. Assigning a mitigation value to CCS is a relatively simple task; each tonne stored can be counted as permanent mitigation and will contribute to the overall task of reaching net zero emissions. The same cannot be said for CCU yet. While it is clear that carbon can be embedded in urea or polycarbonates, there is no established protocol to define this as permanent mitigation. Work remains to be done in this field.

 

 


“The New Lens Scenarios” and “A Better Life with a Healthy Planet” are part of an ongoing process – scenario-building – used in Shell for more than 40 years to challenge executives’ perspectives on the future business environment. We base them on plausible assumptions and quantification, and they are designed to stretch management thinking and even to consider events that may only be remotely possible. Scenarios, therefore, are not intended to be predictions of likely future events or outcomes, and investors should not rely on them when making an investment decision with regard to Royal Dutch Shell plc securities.

 

It is important to note that Shell’s existing portfolio has been decades in development.  While we believe our portfolio is resilient under a wide range of outlooks, including the IEA’s 450 scenario, it includes assets across a spectrum of energy intensities including some with above –average intensity. While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years.