Shell’s Sky Scenario: What Next for CCUS and the World?

(By the way, if this is your first time hearing about it, CCUS stands for Carbon Capture, Utilization, and Sequestration)   

     Royal Dutch Shell recently released what they’ve called their Sky Scenario that lays out a roadmap for the world to achieve its Paris Agreement climate goals. 

     It mentions a number of changes that must be made in order for this to happen. These include focusing on energy efficiency, having governments around the world put a price on CO2 emissions, a fifty-fold increase in the use of renewable energy, reforesting an area the size of Brazil, making customer decisions more climate-conscious, and building 10,000 large-scale carbon capture facilities (there are currently fewer than 50, so there’s plenty of room to grow). By the way, all of this must take place by 2070; I feel it must happen sooner than that. Would all of this guarantee we stay below a dangerous level of climate change? Probably not; but it’s a fantastic start and further shows that the world’s major fossil fuel companies are recognizing the reality of what must be done.

     Shell admits that Sky is both optimistic and challenging when they state: 

The Sky Scenario illustrates a technically possible, but challenging pathway for society to achieve the goals of the Paris Agreement. Sky builds on previous Shell scenarios publications and is our most optimistic scenario in terms of climate outcomes.

     But it is, as Shell says, “technologically, industrially, and economically possible.” That’s what really matters. We as a society can accomplish this (and more) if we choose to do so. It’s possible - especially if governments put a meaningful price on carbon. This is something Shell, as well as other major oil companies, support. But they, with their immense resources and power, must do more to make it happen.

     Oil companies like Shell are once again recognizing the promise of carbon capture after a rough decade for CCUS. Having a price on carbon would certainly speed up the development and large-scale deployment of these technologies. If there’s a price on carbon emissions, carbon-negative solutions would become much more economical. Shell should make their Sky Scenario become a reality by being more active in pushing for carbon-pricing mechanisms. They seem to have already acknowledged that the world is moving in that direction, so why not speed up the process and ensure their bets pay off? In fact, pushing for such policies would help shape the future business environment - allowing companies like Shell to move towards becoming broader energy companies.  

     Several media outlets have covered the Sky Scenario well, with The Washington Post, Forbes, and Bloomberg all publishing pieces on it. They make clear that this is just a scenario and by no means a sure thing. Popular Mechanics published a piece on the dangers of assuming that Shell’s scenario is ambitious enough to avoid dangerous climate change; and they also feel it relies too much on carbon capturing technology - which is still in its infancy. 

     What Shell put forward in their Sky Scenario already involves a complete rebuild of the global economy over a timeframe that’s nearly unprecedented; and it still probably won’t be enough to avoid dangerous climate change. However, it does show what’s possible. It shows an energy system that’s decarbonized. It shows what’s needed for us to move towards a sustainable future. More importantly, it shows the crucial importance of CCUS. Solving the climate crisis is not possible without both technological and natural methods of carbon capture being used on a large scale. 

     We have the technology to win this fight. We have what’s necessary to create jobs, improve the economy, and build a sustainable future. We also know what changes must be made in order for all this to happen and what’s preventing us from moving forward.       

     Boston University professor Peter Fox-Penner told The Washington Post, “The greatest constraint is certainly not technology, it is political and economic disruption to governments and economies who depend on the current system and who must find the funds to retire a huge capital stock early and rebuild it in place.” 

     Rebuilding the global economy in such a disruptive way is no simple task. Big surprise. But I’d argue that climate change will be more disruptive than any sort of rebuilding we have to do. Changing the status-quo fast enough to avoid catastrophe will require us to be innovative and support ideas that change the game. CCUS is nothing but pure innovation and certainly changes the game. It’s the definition of thinking big and planning ahead - something we as a society haven’t been doing well recently. Although investing in the next photo-sharing app is simpler and could offer a quicker financial return, investing in CCUS would create a huge number of jobs, transform our entire economy, and, wait for it, help save the human race. That sounds a bit more exciting to me.

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45Q: Unlocking a positive feedback loop we actually want

     In response to an article from Greentech Media (Can Updated Tax Credits Bring Carbon Capture Into the Mainstream?)

     More great analysis of the 45Q tax credits. It’s hard to overstate how important this tax credit is for the CCUS community. We’ve been stuck in what Jesse Jenkins of MIT describes as a negative feedback loop - where “high cost barriers to entry prevented companies from pushing forward on innovation, which in turn prevented the technology from getting cheaper.” 

     This is spot on. Innovation and the wider adoption of a technology makes it cheaper. Think about the first computer; it was the size of a large room, only performed the most basic tasks, and was incredibly expensive (only governments and large companies could afford them). Now, we have computers in our back pockets that are millions of times faster than the total computing power of NASA in the 1960s. Your smartphone is even more powerful than IBM’s 1997 supercomputer, Deep Blue, that beat Garry Kasparov at chess. This pace of innovation was driven by investment in research and development - which led to a decrease in price - which led to the technology becoming more accessible and used - which led to more research - which led to a further drop in price…and so on. 

     Many carbon capture technologies are at the stage where computers were 40 years ago. Now that investing in carbon capture won’t be as risky for companies, these technologies can begin to take off. We must do everything in our power to make sure it doesn’t take 30-40 years though!

     Remember, investment and research -> drop in price -> wider use of a technology -> more research and development into that technology -> further drop in price -> even wider use of the technology. A positive feedback loop we actually want!*

     *As opposed to the positive feedback loop where climate change causes the tundra to thaw, which releases more methane and CO2, which speeds up climate change, which causes more methane and CO2 to be released.....and so on.

Exciting news out of Washington: The passage of the FUTURE Act

          On Friday, February 9th, President Donald Trump signed the Bipartisan Budget Act of 2018 - H.R. 1892. This bill, the result of both parties compromising to reach a deal and avoid yet another government shutdown, included a wide range of extra spending to gain enough support to pass - including the extension and expansion of the 45Q tax credit. This is particularly important for the development and wider use of CCUS technologies. The 45Q tax credit provides a financial incentive for sequestering CO2 by storing it underground, using it in enhanced oil recovery (EOR) operations, or by recycling it to make products we use every day.

          Senators Heidi Heitkamp (D-ND), Shelley Moore Capito (R-WV), Sheldon Whitehouse (D-RI) and John Barrasso (R-WY), along with the bill’s 24 original cosponsors, had been attempting to pass S. 1535 - the Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions (FUTURE) Act - to improve on the original 45Q credits that were passed in 2008 as part of the Energy Improvement and Extension Act. 

          This credit, which is available to taxpayers that capture and sequester (or utilize) CO2 emissions, is a rare example of bipartisan cooperation on energy and the climate. It also corrects a problem with the original 45Q which had a cap on the amount of carbon dioxide that could be sequestered. The removal of the cap will not only allow for more CO2 to be captured and sequestered, but makes the incentive more attractive financially. 

          All of this will help the economic case for using CCUS technologies. Just as with the take-off of wind and solar, two industries that now create tens of thousands of jobs for the US economy, the government is providing an extra “kick-start” to help these important technologies stand on their own faster. This tax credit is a big step in the right direction in bringing down the cost of CCUS tech - which is still too expensive in its current forms for many actors to use. As CCUS tech is more widely used and researched, its cost will come down - allowing it to be used economically on a large scale. As Barbara Waltz of the Carbon Utilization Resource Council said, “This bill provides the critical federal government support necessary to bring costs down and spur the development and deployment of CCUS projects.”

          The bill is also a win for other forms of renewable energy and for nuclear power. There’s little doubt it will allow for more CO2 to be captured and for US greenhouse gas emissions to drop - which, as we know, is not a priority of the Trump administration.

          The FUTURE Act shows us that CCUS has backers on both sides of the aisle. It’s a tool in the arsenal in the fight against climate change that we can all agree benefits the country and the planet. The United States should be at the forefront of this exciting technology; and policies like the 45Q will help us get there. As dysfunctional as Washington has been lately, its support is needed in this fight. Hopefully, supporting CCUS can help serve as a way for our government to function properly again. We look forward to seeing what comes next.