Energy

Exxon-Led Carbon Capture Project Is Key To Sustained U.S. Economic Growth


ExxonMobil

XOM
has always been a company that does things in a big way. As I detailed back in April when the company announced its plan for a $100 billion project centered on the Houston area, its venture into the carbon capture, utilization and storage (CCUS) space would be no exception. As one Exxon executive involved in the company’s CCUS business unit told me then, “It’s going to be a big undertaking, but that’s kind of what we do.”

On Thursday, Exxon and 10 other Houston-area companies announced plans to work cooperatively on the massive project, which would when completed play a significant role in helping each of them achieve their ESG-related goals in the coming decades. Those companies include some of the biggest names in the energy, refining, chemicals and power business: Calpine

CPN
, Chevron

CVX
, Dow, ExxonMobil, INEOS, Linde, LyondellBasell

LYB
, Marathon Petroleu

MPC
m, NRG Energ

NRG
y, Phillips 66

PSX
and Valero.

“It’s exciting to see so many companies have already come together to talk about making Houston the world leader in carbon capture and storage,” Houston Mayor Sylvester Turner said in a statement. “We’re reimagining what it means to be the energy capital of the world.”

The plan as laid out by Exxon in April would involve capturing carbon emissions from the Houston region’s 50 largest industrial emitters and target the storage to underground caverns, depleted oil reservoirs and other open pore space in the Gulf of Mexico off the Texas and Louisiana coasts. Exxon, which has since 1970 accounted for approximately 40% of all the carbon captured and stored on earth, set an initial target for the project to be capturing and storing 50 million tons of carbon annually by 2030, gradually raising that target to 100 million tons per year by 2040.

Exxon estimates that the Gulf Coast endowment of potential underground storage space from Corpus Christi around to New Orleans could provide a total available capacity is roughly 500 billion tons. At 50 to 100 million tons per year, that provides centuries of space available for use by this project.

In a press release, the group of 11 companies estimates that their facilities alone could allow for the project to account for 75 million tons of captured and stored carbon by 2040. Anyone familiar with the Houston region knows that it is likely the country’s most target-rich environment for this sort of industrial-focused CCUS project, and contains plenty of additional sites whose ultimate participation could quickly enable the plan to achieve its 100 million tons per year goal.

For large industrial sites like these, CCUS can serve as something of a lifeline enabling them to continue to exist and thrive in a climate-focused regulatory environment. Industries like cement, refining, steel, chemicals and other manufacturing operations that exist in abundance along Houston’s Ship Channel and dot the landscape along Interstate-10 all the way across to Port Arthur, Beaumont, Orange and into Louisiana require power 24/7 and are difficult to decarbonize.

CCS hubs like the one envisioned in this Houston-centered project can dramatically reduce the carbon footprint of industrial clusters by taking advantage of existing infrastructure and economies of scale. No region in the U.S. presents these factors in such concentrated abundance the way Houston does. To understand the scale of the impact this project would create at its full realization, 100 million tons of carbon emissions equates to about 20 million cars, which is essentially the number of cars on the road in Texas today. It’s a big deal.

The politics of all of this won’t be easy despite Mayor Turner’s expressed support. The climate alarm community opposes CCUS in general and will oppose this project specifically despite its clear benefits to the community and the environment, precisely because it would also benefit these 11 industrial emitters and make it easier for them to remain in business. Environmental groups and sympathetic media will no doubt latch onto the fact that Exxon and its potential partners are proposing that the federal government raise its tax credit for every ton of carbon captured and stored from its current $50 to $85 per ton, saying that this is crucial for a final investment decision to be made.

The companies involved would no doubt argue that this proposal is not at all out of line given all of the new and increased subsidies congress is currently targeting at the various renewables industries and electric vehicles. The $3.5 trillion “budget reconciliation” bill the Democrats are currently rushing through congress is loaded up with such provisions, but the expanded carbon capture credit currently contained in that bill would apply only to CO2 removed directly from the atmosphere.

That bit of politically-motivated discrimination makes no environmental sense when you think about it. Why wait for the carbon to make its way into the air we all breathe when it can be so easily and efficiently captured at the tailgate of the plant that is emitting it? This is the sort of irrational thought process that makes achieving these emissions goals so much more difficult than they would otherwise be.

As Joe Blommaert, President of ExxonMobil Low Carbon Solutions, said in April, “This is not a question of ‘or’. Society needs all available solutions to meet the Paris goals. There is no technology readily available at scale that can decarbonize those activities, which are fundamental.”

In a net-zero carbon world, you either want these particular industries to be able to get to net zero or you don’t. If you don’t, the inescapable conclusion is that you want them to die instead. But if these industries, which employ tens of millions in the U.S., enable food production and distribution, heat and power our homes and schools, create raw materials for our roads and other infrastructure and manufacture so many of the products we use in our every day lives die, then economic growth dies with them.

As the “negative economic growth” narrative typified by a recent University of Leeds study gains traction in the climate alarmist community, it is becoming increasingly obvious that the real “or” society will be forced to face in the not-too-distant future is whether we can continue to have economic growth and live a 21st-century existence, or we can’t.

If we want to land on the latter option, then big, bold CCUS projects like the one Exxon is driving for the Houston region will be a key factor in allowing us to get there.



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