By Robert Bradley Jr. — March 7, 2023
“ExxonMobil wants more: an ‘initial’ increase in the tax credit to around $100 per metric ton (from $85) and an extended eligibility period to 30 years (from 12 years). And ‘Provide a $10 billion grant to help develop infrastructure in Houston….’”
“Carbon capture and storage is a ‘loss leader’ for ExxonMobil to officially greenwash. For the Biden Administration, CCS is a bribe providing leverage on the biggest energy major.”
Yesterday’s post described ExxonMobil’s abandonment of its biofuels (algae) venture, wildly uneconomic after more than a decade of effort and hundreds of millions of dollars invested. But the company’s Low-Carbon Solutions division has something much bigger in process: Carbon Capture and Storage (CCS), advertised as “Providing industry solutions needed to help reduce emissions during the energy transition.” (Ouch! ExxonMobil endorsing “the energy transition” away from its major products, oil and gas.)
Background
CC&S has a free-market side, one that utilizes CO2 for enhanced oil recovery. That worked for decades, no taxpayer or U.S. Department of Energy required. But today’s initiative is not putting the CO2 to work but burying it underground for non-use with a load of taxpayer and stockholder monies. A feel-good feat of engineering that destroys value rather than creates it, from the consumer/economy viewpoint.
Subsidies for CC&S date back to the American Recovery and Reinvestment Act of 2009. [1] Different laws and IRS interpretations then created a tax credit of up to $45 per metric ton. Not enough, complained ExxonMobil and other rent-seekers. The Biden Administration stepped in with the ExxonMobil-supported Inflation Reduction Act of 2022. Wrote Tim Mullaney in ESG Impact:
The key to the sudden flurry of [CC&S] activity is the Inflation Reduction Act…. The law increased an existing tax credit for carbon capture to $85 a ton from $45, Goldman said, which will save the Exxon/CF/Enlink project as much as $80 million a year. Credits for captured carbon used underground to enhance production of more fossil fuels are lower, at $60 per ton.
But ExxonMobil now wants more: an “initial” increase in the tax credit to around $100 per metric ton (from $85) and an extended eligibility period to 30 years (from 12 years). And “Provide a $10 billion grant to help develop infrastructure in Houston by extending current U.S. Department of Energy programs beyond research, development and demonstration (RD&D).”
Here is the pitch from Erik Oswald, ExxonMobil’s vice president of strategy and advocacy, Low Carbon Solutions (created April 2022):
- Policies enacted when carbon capture and storage technology was in its infancy are now outdated and need to be adjusted. For example, the federal government has regulations in place for extracting oil and natural gas from beneath the surface, but none for injecting CO2 far below ground for safe, secure and permanent storage.
- Policies should support project development to encourage investment. Funding available under the federal carbon capture and storage tax credit should be expanded to provide support similar to what’s available to other low-carbon technologies, such as wind and solar. Rules should be adjusted to reflect the long design and construction phases of carbon capture and storage projects.
- Governments can provide financial assistance to help build the necessary shared infrastructure, such as pipelines. As with other transportation infrastructure, like highways for example, incentives such as direct loans, loan guarantees and credit assistance can provide vital support to large-scale carbon capture and storage development.
And the outlined agenda of ExxonMobil in CC&S:
Enhance the CCS Production Tax Credit (45Q) for non-EOR (enhanced oil recovery)
- Initially increase value to ~$100 per metric ton from current $85
- Extend eligibility period to 30 years from current 12 years
- Eliminate deadline for starting construction
Ensure government approval for CO2 storage
- Specifically allow offshore storage of CO2 from sources other than coal
- Authorize the Bureau of Ocean Energy Management to issue leases, rights of way and pore space
- Clarify that the U.S. Environmental Protection Agency has authority for permitting CO2 injection in subsea formations
Provide financial support for CCS infrastructure
- Provide a $10 billion grant to help develop infrastructure in Houston by extending current U.S. Department of Energy programs beyond research, development and demonstration (RD&D)
- Expand the U.S. Department of Energy Title XVII program to include the deployment of existing CCS technologies at scale
- Amend TIFIA (Transportation Infrastructure Finance and Innovation Act) to add CCS projects, or create a program dedicated to CCS
ExxonMobil states: “We have cumulatively captured more CO2 than any other company – 120 million metric tons – accounting for approximately 40 percent of all the anthropogenic CO2 that has ever been captured.” Well, a lot of this was for economic, not governmental, reasons, increasing oil recovery. It is the political stuff that is controversial to both sides of the political debate.
Conclusion
Carbon capture and storage is a “loss leader” for ExxonMobil to officially greenwash. For the Biden Administration, CCS is a bribe providing leverage on the biggest energy major. The good news is to be found elsewhere, specifically CEO Darren Woods’s announcement that ExxonMobil will increase oil and gas production for as far as the eye can see.
ExxonMobil has committed $15 billion in CCS by 2027 with the prospect of more. Some of this can be postponed due to opposition or reduced subsidies. Perhaps some revenue can be recouped if EOR can bring in oil revenue. But it is the taxpayer that is on the hook to Big Oil in this instance. And XOM investors need to be asking some hard questions at the next annual shareholders meeting May 25, 2023.
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[1] The 2009 Act subsidized CC&S as follows:
Investing in Carbon Capture and Sequestration.
One strategy for limiting greenhouse gas emissions is to prevent the carbon released by fossil fuel combustion from entering the atmosphere. The Recovery Act provided $2.1 billion to support initiatives that range from characterizing the carbon sequestration potential of geologic formations, to cost-sharing agreements to demonstrate advanced carbon capture and storage technologies for coal, including:
Petra Nova – W.A. Parish Post-Combustion CCS Sequestration project: DOE provided $163 million in financial assistance through the Clean Coal Power Initiative (CCPI) Round 3, which includes funding from the Recovery Act. The Petra Nova project, a joint venture between NRG Energy and JX Nippon Oil & Gas Exploration will be the first commercial-scale post-combustion carbon capture retrofit project in the U.S.
Once completed, the energy technology project will capture about 1.4 million metric tons of carbon dioxide (CO2) annually from an existing coal-fired power plant in Texas, and the captured CO2 will then be used to extract additional, hard-to-access oil from a previously depleted field 80 miles away. Construction is expected to be completed in early 2017, and already there are solvent tanks, absorber sections, and the cogeneration unit in place.
Archer Daniels Midland (ADM) Industrial CCS Project: DOE awarded $141 million to ADM for the Illinois Industrial Carbon Capture and Storage project, which demonstrates an integrated system for collecting carbon dioxide from an ethanol production plant and geologically sequestering it deep underground. ADM finished construction on the project and began operations in 2015. It will inject an estimated 900,000 metric tons of carbon dioxide a year into the Mt. Simon Sandstone Reservoir – one of the largest and best saline aquifers in the world.
Certainly a borrow and spend, winner picking gimme. But maybe not a “loss leader” at $85-100/ton. Why shouldn’t Exxon/Mobil and David Middleton’s employer get it while they can? Unfortunately, it’s a bipartisan scam. I wrote my woke Rep. Cori Bush about it and she demurred with soporific tones about saving the environment.
We can be 180 out on AGW and agree on this…
I’m not happy about it either, but with all the taxpayer billions hanging out there, I’m surprised it took Exxon so long to get in on it. If gov is going to burn us this way, at least we will be getting a fuel that works 24/7.
It’s a bitter laugh that fossil fuel will now be green and can blow the wimpy renewables away in a competition.
We can now put power and transportation energy contracts out to tender and fossil fuels will win every time! Next will be nuclear entering the gimme sweepstakes wanting 100s of billions for the ‘carbon’ prevented from being emitted! You gotta love ‘free enterprise’!
I have to reluctantly agree with you that “If gov is going to burn us this way, at least we will be getting a fuel that works 24/7.”
Exxon is playing the hand that has been dealt by the misguided policies enacted by the U.S. and other governments.
It has only been a matter of time that Gov policy would, without an effective opposition, eventually drift into such ridiculous horizons that a majority would build up against it in the streets.
As I mentioned to BOB long ago, the CO2 sequestration scam was and has always been about giving tax credits to oil companies to use CO2 to increase oil output from old fields.
YEARS ago.
Now, as I always ask BOB, who has spoken repeatedly about oil companies getting off without retiring their fields and remediating any “damage”.
BOB, who is going to pay to remove all the solar and wind crap built over the last 50 years, and the next 50 years, since there are NO requirements for funds to be set aside to do the remediation?
“BOB, who is going to pay to remove all the solar and wind crap built over the last 50 years, and the next 50 years, since there are NO requirements for funds to be set aside to do the remediation?”
And as I’ve told you and others over and over, it should indeed be the responsibility of the operator, and bonding/lockboxing should be just as rigorous. Too bad it’s so lax for us fossil fuelers.
But in the real world, the renewablers should accept parity here freely. Since the value is in the resource, and the availability of that resource to those sites will endure into almost perpetuity, the name of the game will be to remove all of the “crap” as needed, to replace it with new and improved, No biggee – no naturally occurring radioactive materials, lithium will be robotically recycled soon, no high angle, hard to re-enter, long, hydraulically incompetent shale multilaterals to plug – at 5-6 $ figures per, no poisonous site cleanups, turbine blades made of silica (i.e., sand) and recyclable metal, and most important. long, enduring, mutually beneficial rental agreements with landowners
I’m happy to throw that into the mix. The truth is that the fossil fuel producers and their apologia don’t bring this up. Any real comparison is their worst nightmare….
Recyclable blades, NO. They bury the unrecyclable blades.
Solar, they will bury that too since those panels are not recyclable.
From the EPA:
The industry is new and still growing, with researchers examining how to commercialize recycling to economically recover most of the components of a solar panel. Elements of this recycling process can be found in the United States, but it is not yet happening on a large scale.
“Researches” examining commercialization? Not entrepreneurs?
Then there is no economical way to recycle the actual solar cells NOW, after pushing to install that crap for 30 years.
And the next link is to an article claiming to use blades in concrete, but it speaks of “just starting”, etc. So not a ready for prime time “sustainable” industry.
https://cen.acs.org/environment/recycling/companies-recycle-wind-turbine-blades/100/i27
IF the “renewable” supporters were truly “environmentalists”, they never would have supported these industries 30 years ago, and would especially not supporting the offshore wind plans off of the US east coast currently killing hundreds if not thousands of whales and dolphins and who knows how many other ocean creatures.
BUT OIL BAD! You know, an ORGANIC natural occurring resource that time and weather will take care of.
“Recyclable blades, NO. They bury the unrecyclable blades.
Solar, they will bury that too since those panels are not recyclable.”
Ok. Both are inert.
“IF the “renewable” supporters were truly “environmentalists”, they never would have supported these industries 30 years ago,”
Why? The processes even now, to keep renewable facilities up are still much less hazardous than those for fossil fuel sites. Certainly less onerous than that for most other factory type processes.
“…. currently killing hundreds if not thousands of whales and dolphins and who knows how many other ocean creatures.”
Link to actual evidence of this, please? The current data gravitates against this. But since this is your assertion, it’s up to you to back it up. That’s how it works above ground.
“BUT OIL BAD! You know, an ORGANIC natural occurring resource that time and weather will take care of.”
Since I’ve worked in the field since pulling slips over the Sooner Trend at 14 – illegally – I’m a poor choice for that fact free charge. What is bad
are the poor drilling and production practices than prevail all too often.
BTW, are you seriously trying to say that oil cleanup is unnecessary for site restorations? No oil industry group agrees with that.
Instead of sequestering the CO2 underground,at great expense, why not surround all coal-fired power plants with greenhouses, and pump the CO2 into the greenhouses to increase the food production.
The cheap electricity produced by the coal plants could be used to recharge the millions of BEVs that will eventually replace ICE vehicles as the future developments of Sodium-Ion batteries make EVs more affordable. Problem solved.
That has been done in the Netherlands for decades.
The CO2 is kept at well over 1000 ppm, which is not harmful to workers
There are hundreds of square miles of greenhouses with apple, pear and peach trees, and all kinds of vegetables and flowers.
A lot of the production is for export
The harvesting is highly automated
Why not plant a a few billion trees and let nature do the CO2 work for free?
I was unaware that the sodium-ion battery is now in commercial production. I cannot buy a cell yet for testing but the Chinese have a car available with sodium-ion battery.
This could very well be the development needed to electrify the world. Forecast manufacturing cost for sodium-ion battery systems is USD16/kWh. That will make electric vehicles viable as a second car.
Looks as though (Wiki) the system will have much lower volumetric and gravimetric energy density than Li-ion. Ok for urban runabouts by not for serious motoring.
So the Magic Battery has finally arrived? I didn’t get the memo…
Again? Advertisement?
Human CO2 is 5% of the carbon cycle. Nature is the other 95%. We are engaged in a long history of human sacrifice to control the weather. Be it an Aztec Priest tearing the heart out of a captive, or a Climate Czar tearing the heart out of the economy.
and, just like today, most of those Aztec Priests new that tearing the heart out of the innocents was more for their personal gain than the public good.
Best ever analogy of what wind, solar and BEV’s are doing for the international economy.
Meanwhile….
story tip
https://energyandcleanair.org/publication/china-permits-two-new-coal-power-plants-per-week-in-2022/
Just remember. The Chinese are building those plants using the excess capacity of their steel industry provided due to the economic downturn from the China virus.
They are waste not want not people. Better to keep their smelters and supply chain operating efficiently than let any of them shut down due to lack of customers.
When you are a top down command economy you can hit the EASY button and just make it happen.
Funny thing is to see the whole cities they built years ago for the same purpose, to keep the factories running, but now they have a population problem. That is a lack of population INCREASE problem.
https://allthatsinteresting.com/chinese-ghost-cities
My inner cynic says this will never fly as the climate change activists don’t care about “carbon” emissions or other greenhouse gasses.
Carbon capture enables the continued use of fossil fuels while pursuing NET Zero. The hard-core activists want no fossil fuels. Period.
The real goal isn’t stopping or reducing climate change.
Ultimately, who pays? The taxpayer and the consumer. And for what benefit that can ever be isolated to confirm that the cost was worth it?
Green plants on land capture upwards of 440 billion metric tons of CO2 annually by photosynthesis. Who is keeping good track of this uptake? How accurate is the accounting? Exxon’s Houston CCS project is intended to capture 100 million metric tons per year. 1 part in 4,400.
Even if CO2 emissions produce a climate response as claimed, the benefit of CCS projects like this can never be confirmed to have produced a benefit. Scale it up a hundred-fold. It’s still one part in 44 of what is happening naturally on land. And at what cost? The cost goal is $100 per metric ton. Suppose this goal is achieved, and the removal ends up at 20 billion metric tons per year (i.e. 200 of the Houston-level projects.) That works out to $2 trillion per year. Don’t we have better things to do with that kind of money?!?
The better plan is to JUST STOP PRETENDING that CO2 emissions have much if anything at all to do with climate trends. There. Let’s just carry on and adapt as necessary to whatever climate outcome we get.
“The better plan is to JUST STOP PRETENDING …”
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Yes, telling the truth rather than a tangled web of lies is always the best policy.
From the Exxon point of view it increases methane sales by 30%. They don’t care that the extra is a deadweight cost for consumers.
There is another potential reason for the push into CCS. Methane production. Those microbes know exactly what to do.
“We conclude that although methanogenesis is not the dominant CO2 sink, it can represent a substantial process within both natural and perturbed CO2 fields and may be significantly more prevalent than previously considered. Even with the most conservative estimates of CO2 conversion by methanogenesis in the Olla Oil Field, we find that, so far, as much as 13% to 19% of the emplaced CO2 in sampled sections of the field has been consumed by methanogens.”
https://www.nature.com/articles/s41586-021-04153-3
Interesting.
“as much as 13% to 19%”
“as much as”
the range includes zero.
You miss the point from the government perspective. This is all about Crony Capitalism.
Transferring wealth from the lower castes to the chosen few.
“One strategy for limiting greenhouse gas emissions is to prevent the carbon released by fossil fuel combustion from entering the atmosphere.“
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It’s not carbon, it’s carbon dioxide. Buying into the big lie that carbon dioxide is a problem is counter productive.
HS science project – pouring food coloring dyed tap water into a fish tank filled with clean sand and getting clean drinking water out. If CCS removes particulates it might keep people busy while we automate robot production.
ExxonMobil states: “We have cumulatively captured more CO2 than any other company – 120 million metric tons – accounting for approximately 40 percent of all the anthropogenic CO2 that has ever been captured.”
Exxon-Mobil claims they have captured 120 million metric tons of CO2 over an unspecified period of years, while global CO2 emissions in 2021 were about 36 billion metric tons. So, Exxon-Mobil over many years captured about 0.33% of the annual emissions, or about 1.2 days’ worth of emissions. But Exxon-Mobil controls about 3% of the world’s recoverable oil reserves, so they’re really not doing their share.
The main problem is that carbon (dioxide) capture and storage is expensive–particularly the storage part. The easiest “capturable” CO2 is that emitted by large power plants, either coal-fired or gas-fired, whose flue gases contain about 10 to 15 volume percent CO2. This can be separated from the nitrogen and water vapor using solvents, which preferentially absorb CO2, which can then be regenerated (with addition of heat) to produce a nearly pure CO2 stream.
But in order to store CO2 underground, it must be compressed to at least 1,100 psi of pressure (above the critical pressure), to reduce its volume, and avoid sudden, explosive expansion around the critical temperature (about 81 F). Since flue gas from power plants is usually at low pressure (< 5 psig), the power required to compress the CO2 to 1,100 psi can consume about 20 to 30% of the power produced by the power plant (lower for gas-fired, higher for coal-fired).
This means that for a power plant equipped with CO2 capture and storage, more fuel must be burned to produce the same net power than a plant without CCS, and the CCS plant is less efficient, and some of the fuel is wasted in compressing CO2 instead of producing useful power.
Carbon dioxide can be liquefied at pressures below 1100 psi and temperatures below the critical temperature of 81 F, but not at temperatures above 81 F. For underground storage, where the surrounding temperatures could exceed 81 F, it is necessary to compress (or pump, as a liquid) CO2 to above the critical pressure, since any heating of the CO2 underground could otherwise cause a violent expansion, possibly resulting in man-made earthquakes. Some of the compression energy could be saved by liquefying the CO2 at an intermediate pressure, then pumping to a high pressure, but this would require refrigeration, which also requires compression of the refrigerant.
Bottom line: CO2 capture and storage is very energy-intensive, and the energy used to regenerate the solvent and compress the CO2 makes a power plant with CCS uncompetitive relative to a non-CCS plant using the same fuel.
I just can’t believe that CO2 put into the ground is going to stay there- whether it’s as a liquid or a gas. Sooner or later it will work it’s way back up, no? It’s one thing to engineer putting it down there but what’s going to ensure it would stay there? Of course I don’t think there is even a need for such an expensive, difficult task- just curious about this concept. Seems to me it wouldn’t stay down for long. It’s one thing to store oil in a salt dome- that seems to be a proven technology- but CO2? Seems crazy to me- even if we really wanted to do it.
The CO2 under Lake Nyos didn’t stay there. I would not mind living near a nuclear power station. I most certainly would mind living near a CCS facility.
Indeed. We are often told by some that we cannot reliably bury solid or liquid nuclear waste yet we can reliably bury a gas. It doesn’t make sense.
Imagine an earth belch!
CCS doesn’t need government funding. Nature has its own cheap solution – more CO2 – more plant growth – more CO2 captured and stored. But I would be very happy to receive some government subsidies with which I can guaranteed even more of the same in future years.
Individual trees don’t live and grow forever. You would need to remove old plants/wood to be preserved indefinitely while new plants/wood were grown in the same place.
Yep, we call those Carbon sinks Wood Framed Houses.
Every building built of wood that is kept dry will sequester the carbon forever.
SO we must build more and bigger houses worldwide. Use MORE wood in the houses, like log cabins and such.
Use cellulose sprayed in insulation in the walls and attics, even more wood in the house.
Use 2 X 8 or 2 X10 framing instead of 2 X 4, even more wood, and the spray applied cellulose insulation will be even MORE carbon sequestered. AND a more energy efficient house.
Of course, you MUST keep water out, i.e. maintain the roof and don’t build in a flood plain or near the ocean where storm surge can get to the building if you use cellulose insulation. In those location’s LOG construction without stud spaces would be best for carbon sequestration. BIG logs!! Many BIG logs!! The bigger the log, the better insulation value.
So, let’s say you’re Exxon and you’ve done the ‘Carbon Capture’ thing with umpteen-million tons of CO2 in various holes here and there. What happens when one, or more, of these holes, somehow burps out a cloud of, ground hugging, CO2 that then suffocates the countryside for miles in all directions?
MaxP
So, nothing more than multi-billion-dollar rip-off. Got it.
Building a pipeline into the U.S. Treasury—must be jealous of Pfizer’s pipeline.
Give us the money or we won’t waste it.
Time to buy Exxonmobil shares, they have just discovered a highly profitable subsidy mine.
I hope it works. It very quickly will capture UK’s one percent which is kind but will have difficulty with Chinese 31%
I have a couple questions. Exxon claimed they spent $350 million on the algae to fuel project plus $60 million on advertising it and then basically walked away from it. Did Exxon receive tax benefits, subsidies or other forms of government support for that project? If they did I want that money back. No more pissing my money away on feel good projects with a get out of jail free card.
I see the same thing happening with CC&S except this program would seem to be a lot easier to milk. With the algae project you had to at least produce something, fuel, and it had to work. CC&S you are wanting to get paid for hiding something. Who’s to know if you are even doing it and if you are that it is a success? To my mind this is the equivalent of asking for help to create fertilizer and then turning around and asking for help to bury the product we just paid you to produce. It doesn’t get any dumber than this. Then whether it is a success or not you figure you can walk away. This insanity needs to stop.
Chemical Engineering degrees were not free.
“Provide a $10 billion grant to help develop”
Um… no?