In the UK we have the phrase “all mouth and no trousers”. When moving to Texas I was delighted to find their own phrase “big hat – no cattle”. They mean the same thing – all talk and no action. The chart in the Exhibit below is supposed to be about carbon capture, but it is a much better illustration of “big hat – no cattle”, and we think that it is very relevant today, not just for carbon capture but for many of the other energy transition announcements that we see – especially for hydrogen. In the chart, the carbon capture projects announced by 2020 called for 200 million tons of sequestered carbon, while less than 40 million tons have been implemented (20%), and almost all of that in enhanced oil recovery (EOR).
Source: IOPScience, April 2021
The study talks about the failures – all of which will be economic. Companies have announced intent with the hope that economics will move in their favor and they have not – so far. The jump in announcements and acceleration post-2009 was likely driven by the price of oil and the hope for more EOR. Today we see some incomplete announcements still happening in carbon capture in that we have seen the announcement of carbon capture plans – like this Honeywell headline, which does not discuss where/how the CO2 will be sequestered, just how it will be captured. There is also an assumption that there will be a market for blue hydrogen – something we expect, but something that still carries uncertainty.
We see the picture above developing much more aggressively with green hydrogen – dozens of projects announced – all on the hope that the economics will move quickly in their direction – which we are certain they will not on the timeline expected. See our ESG and Climate report from yesterday for estimates of just how much renewable power capacity is needed to fix and decarbonize the power grids in California and Texas alone before we can start using renewable power for anything else.
As a direct follow-on, the ethylene using hydrogen as a fuel article is completely off-base and very misleading. Could the industry have a pilot (proof of concept) project in 5 years? – certainly, and possibly sooner, but the idea that we might have meaningful volumes of ethylene produced economically from hydrogen-fueled furnaces in 5 years is pure fantasy. The ethylene producers would be far better served to capture and sequester the carbon from their existing units – something they could do on large scale within 5 years, and improvements in carbon capture and separation technologies are being announced daily including another one linked here. Capturing the CO2 is also likely far more economic than the proposed electric furnaces – at least until the electric power is in real surplus – likely 25-35 years from now. It is time for some common sense rather than projects that sound good but are commercially unsound and will likely be so for decades