The CCS spending chart below is quite detailed, but shows the limited amount of spending in 2021 and 2022 and may underestimate the amount of seismic spending needed, especially in the US, as companies prepare permit applications. We do not expect to see much spending in the US before mid-decade beyond permit applications. However, as we discuss in today’s ESG and Climate report, should the API proposed carbon tax, or something similar, be additive to the 45Q tax credit, we could see a step-change in CCS when/if the tax is approved. The tax on its own is likely not enough to drive decarbonizing investment, but when added to 45Q it could be a specific trigger for CCS investment, and we could see a step-change in the second half of the decade. This might involve large-scale blue hydrogen production, especially on the Gulf Coast to decarbonize the refining and chemical industries.
Source: Rystad Energy, NGI, April 2022
The advanced clean energy project highlighted below is, like many others, highly dependent on abundant free power, and is banking on surplus renewable energy during periods of low consumption and high production. This may work eventually, but we believe that renewable power is quickly becoming a scarce resource – see our focus on the wind industry in today’s ESG and Climate report. Every emission reduction plan we see from companies in all industries relies on using renewable power and the wind and solar companies have neither the capacity nor the materials to keep pace with demand.
Source: Aces-Delta.com, April 2022
In last week’s ESG and Climate report, we focused on SAF and noted that potential demand would likely outstrip the ability to supply for decades. The Aemetis deal (see link) is another indication of how keen airlines are to sign up for future supply, but like some of the other potential suppliers, we would want to handicap the likelihood of success from Aemetis, as the proposed route is waste gasification. This would be similar to what Fulcrum Bioenergy is attempting outside Reno, Nevada. The plant has been complete for almost a year and is yet to operate properly. Any sort of gasification has proven problematic at scale and the heterogeneous nature of a municipal waste-based stream makes controlling the reactor environment very challenging – the trick is to build several smaller units rather than one or two large ones – the investment cost is higher, but Fulcrum will never get close to the ROI expected on the facility give the year of no income.