Agreeing on their fifth assessment report two weeks ago, the 195 member governments of the Intergovernmental Panel on Climate Change accepted that to meet their goal of limiting global warming to 2°C, the planetary carbon budget - total carbon emissions released from the dawn of the industrial age - must be limited to one trillion tonnes.
But today’s latest report from the Global Carbon Capture and Storage Institute suggests the governments did not comprehend what this really entails.
Carbon capture and storage (CCS) projects are struggling, with five cancelled and seven put on hold in the past year alone. As the IPCC gathered in Stockholm, neighbouring Norway announced the cancellation of their flagship Mongstad CCS project, which would have stripped CO2 from a petrochemical and power plant and injected it into geological formations below the North Sea.
We have already burned through more than half of those trillion tonnes of carbon, with at least double the remainder lying in economically viable reserves of fossil fuels, and an energy industry that keeps finding more.
Don’t blame the industry. The value of our pensions is based on the assumption that these reserves will be sold and burnt. So limiting carbon emissions to a trillion tonnes means either we accept global warming beyond 2°C, or we develop CCS to use fossil fuels without releasing CO2, or the value of our pensions takes a hit.
CCS is often seen as “one of a suite of options” in combating climate change. But once we accept that the world’s fossil energy stores will be used someday (and what right have we to tell the citizens of India in 2080 no to burn their coal?) then the only question that really matters is what fraction of remaining reserves will be captured and stored. If we are to meet the 2°C goal, that fraction needs to be at 50% by mid-century and heading for 100% by 2100. We might even need to “go negative” - pulling CO2 out of the air in order to stabilise the climate. That’s not something that can be done with low-energy lightbulbs.
The maths are simple: to limit remaining carbon emissions to 450 billion tonnes, the fraction of extracted carbon we sequester must increase by 1/450th, or 0.22%, for every billion tonnes of carbon released into the atmosphere. That’s not a policy, that’s a fact.
Many environmentalists find this fact uncomfortable, and complain that CCS is “unproven technology” - this isn’t true, the industry has been doing it for decades - or worry the reservoirs may leak.
With the right geology, nature herself has demonstrated that CCS works: ancient CO2 is often found in oil and gas fields. But finding the right formations, and learning to avoid less reliable ones, is indeed one of the biggest challenges facing the CCS industry. All the more reason to roll out CCS progressively - and why a global carbon tax or cap-and-trade regime won’t work. The price of CCS is relatively inelastic, so we cannot afford to wait until the carbon price is high enough for CCS to be viable and then expect to deploy it overnight.
The only aspect of CCS that can truly be called “unproven” is this price. When the Mongstad CSS project was launched, the then Prime Minister Jens Stoltenberg called the plant “Norway’s moon landing.” The analogy proved all too apt: as a tax-payer-funded demonstration project, costs predictably spiraled out of control.
Compare the Gorgon gas project in Australia, where a US$2 billion CO2 reinjection facility is coming on stream, despite the change of government, with less then 3% of the cost paid by the taxpayer. How? Because the Western Australian state government made it a condition for granting a licence to extract natural gas that the CO2 be buried back underground. The gas was so valuable that, as one industry insider put it to me, “We thought about it for five minutes and said yes”.
This is how to solve climate change without squandering taxpayers’ money or restricting economic development. Anyone wishing to extract or import fossil fuel should be required to demonstrate that an increasing fraction of the carbon content of that fuel has been verifiably sequestered.
This is not asking the impossible of either politicians or industry. Imposing a regulation on a few major companies is far simpler than negotiating a global carbon tax or emissions trading regime. Provided the sequestered fraction is increased gradually, and the cost borne at the point of extraction, the effect on energy prices would be manageable. To be fair and effective, the rules should apply to all fossil fuels - the effects of carbon on the climate is the same whether from coal, oil or gas.
Needless to say, many in industry prefer the idea of a modest carbon tax, but that will achieve nothing except making climate policy unpopular. Climate change sceptics claim CCS is unnecessary, but even they accept we are unlikely to be able to dump one-and-a-half trillion tonnes of carbon into the atmosphere without negative consequences. And given how profitable this practice is today, why should we expect tomorrow’s taxpayers to clean up the mess?
Environmentalists hate the idea most of all: it won’t work, will cost too much, would be cheaper to put up more windmills. But all that renewables, nuclear and energy efficiency can do is slow the rate at which we carbonise the atmosphere. The bottom line on the IPCC’s carbon budget is if we still blow the budget in the end, it doesn’t matter if we blow it slower. Once we recognise this inescapable fact, there really is no alternative.
The fossil fuel industry is getting on for 10% of the world economy. If ensuring CCS is made reliable and affordable was the price of staying in this remarkably profitable business, I’m happy to bet my pension they would make it happen. I wonder whether the environmentalists’ real fear is not that the industry will fail, but that it might succeed.