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Speaker 1: Hi, everyone, So cc S taking c O two out

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Speaker 1: of the air and pumping in underground to stay forever.

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Speaker 1: It was wont to be a way to keep burning

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Speaker 1: coal but still reduce emissions, and a way to squeeze

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Speaker 1: more oil out of old wells. To be fair, these

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Speaker 1: things are happening. Projects got built big ones, but it

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Speaker 1: didn't scale as people who once thought it might. What

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Speaker 1: happened well the shale revolution. Coal got nudged out by

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Speaker 1: less emissions intensive gas fired power. So we stopped hearing

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Speaker 1: about CCI yes for a while, at least for power.

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Speaker 1: But it seems like CCS is making a comeback, especially

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Speaker 1: in steel and cement production. The production processes release a

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Speaker 1: lot of c O two that can be captured and

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Speaker 1: stored and even used in making concrete. This week on

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Speaker 1: the show, we've got Julia Atwood, head of Advanced Materials

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Speaker 1: Research for bn F, and Advanced Materials analyst Ryan Anderson,

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Speaker 1: who actually has his pH d in carrying cement with

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Speaker 1: c O two instead of water. They'll walk us through

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Speaker 1: the basics of CCS, where it's at now and what

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Speaker 1: it would take for it to grow. Our discussion is

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Speaker 1: based on a report titled c c U S applications

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Speaker 1: in oil and gas, power and industry. Beanof users can

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Speaker 1: get this report on dot com, beanf mobile app and

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Speaker 1: the Bloomberg terminal. As a reminder, if it's not provide

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Speaker 1: investment or strategy advice, and you can hear the full

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Speaker 1: disclaimer at the end of the show. I'm Mark Taylor,

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Speaker 1: you're Dana Perkins, and you're listening to switch on bean

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Speaker 1: podcast today. On switched On, there are four of us.

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Speaker 1: We've got Mark, Ryan and Julia. Hey Dana, So we're

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Speaker 1: here today to talk about carbon capture and storage, or

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Speaker 1: rather carbon capture utilization and storage, which are really I

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Speaker 1: guess two concepts that are put together. Ryan, as we

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Speaker 1: dig in, can you explain to all of us what

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Speaker 1: CCS is, and then a little bit more into what

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Speaker 1: the utilization part is as the add on, certainly CCS

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Speaker 1: carbon capture and storage. This is where you're taking the

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Speaker 1: CEO two that's coming out of a point source such

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Speaker 1: as a power plant. Oh, that CEO two is compressed,

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Speaker 1: transported to a site where you's injected underground hundreds or

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Speaker 1: thousands of meters into most often a saline aquifer. The

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Speaker 1: CEO two hopefully on every leak so it's supposed to

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Speaker 1: just stay there forever, right, and it kind of turns

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Speaker 1: to rock I think, is that right? In some cases? Yeah,

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Speaker 1: So theoretically you're paying for this land in order to

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Speaker 1: just capture something, well, to capture the emissions, because you

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Speaker 1: don't want emissions in the air, so we're putting them

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Speaker 1: in the ground exactly. And then the U part because

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Speaker 1: storing CEO two underground is just a cost, there's no

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Speaker 1: revenue that included. The U part is where your c

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Speaker 1: U two is sold or used to create products they

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Speaker 1: generate revenue. Most typically this is currently for enhanced oil recovery.

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Speaker 1: This is where c U two is pumped into an

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Speaker 1: oil well that's kind of been depleted, it's in its

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Speaker 1: last legs of production, and the CEO two changes the oil.

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Speaker 1: Especially it enhances production. It can takes well, it's producing

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Speaker 1: five barrels per day to five thousand barrels per day.

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Speaker 1: The companies that are interested in CCS as a technology

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Speaker 1: and in developing it um what industries and what sorts

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Speaker 1: of companies are we really looking at here. So most

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Speaker 1: of the CCS or CCUS being performed currently is coming

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Speaker 1: from the high concentration industries. Because they can produce the

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Speaker 1: cheapest c O two. The cheap CEO two is important

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Speaker 1: because they're supplying it to someone who's most likely buying it.

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Speaker 1: No one wants to pay for expensive c O two

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Speaker 1: when they can pay for cheap c O two. This

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Speaker 1: means that the most high concentration sources of c O two,

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Speaker 1: such as after gas bussing, hydrogen production, in ammoni production,

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Speaker 1: ethanol production, all all these create cheap c O two

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Speaker 1: that can be sold for e er. So they want

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Speaker 1: it for advanced oil recovery. Who are they, I mean,

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Speaker 1: who are the other buyers? Then? Yeah, so there's not

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Speaker 1: a ton of other applications that were the c O

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Speaker 1: two is being stored for the long term. You're probably

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Speaker 1: familiar with C two being used in your beverages to

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Speaker 1: make carbonated soda, but those are all kind of temporary

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Speaker 1: storage of CEO two and it's released later. Industrial carbonates

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Speaker 1: such as you know, sodium bike carbonate, baking soda, and

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Speaker 1: fertilizers such as urea it also temporarily store the CEO two,

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Speaker 1: but it depends on what happens later on in that

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Speaker 1: product's lifetime, when that CEO two will inevitably be released.

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Speaker 1: There's a few applications except for underground storage where the

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Speaker 1: CEO two will be stored for a long time. So

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Speaker 1: I am not a chemist, and I apologize to anybody

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Speaker 1: who is listening that is because my question is going

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Speaker 1: to be pretty basic here in that so cement companies,

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Speaker 1: iron and steel companies, and then chemical companies are all

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Speaker 1: interested in this. Why are they interested in cc US?

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Speaker 1: So these giant industries steal cement. They have some of

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Speaker 1: the largest corporate emissions of all the industries, right, so

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Speaker 1: they have a handful of things they can do to

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Speaker 1: reduce their emissions. C c US is in a lot

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Speaker 1: of their eyes, the last level they're going to be

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Speaker 1: able to pull to actually get to net zero if

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Speaker 1: that's their goal. So Cement companies in general, they produce

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Speaker 1: CEO two through a lot of different processes in their

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Speaker 1: at their facilities, and they don't really have a ton

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Speaker 1: of options to reduce the emissions from cement. And the

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Speaker 1: industry is not going anywhere you need it. It's for

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Speaker 1: basic infrastructure development. So in any kind of corporate emissions

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Speaker 1: targets or global sustainability goals, CCUS is expected to step

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Speaker 1: in to capture some fraction potentially very large fract of

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Speaker 1: the industry CEO two. So here it's cement and concrete

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Speaker 1: actually kind of represents a bit of a Goldilocks problem

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Speaker 1: in terms of utilization. You have a lot of materials

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Speaker 1: and industries that are huge, like aggregates that could soak

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Speaker 1: up a lot of c O two as a really

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Speaker 1: useful additive, but because they're so cheap and CO two

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Speaker 1: is not, that doesn't really work. Then you also have

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Speaker 1: the super specialized things like carbon nanotubes that sell for

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Speaker 1: hundreds of thousands of dollars a kilogram. They're totally happy

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Speaker 1: to pay a higher price for CEO two, but we're

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Speaker 1: not selling very many of them right now. So concrete

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Speaker 1: really represents this space where they're generating a lot of

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Speaker 1: c O two, they want to get rid of it.

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Speaker 1: They're going to be incentivized to get rid of it

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Speaker 1: by policy and happy days, they can actually use it

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Speaker 1: at a reasonable cost that fits with what they sell

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Speaker 1: their product for. So that's why there's so much attention

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Speaker 1: being focused on concrete at the moment. It's because they

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Speaker 1: generate it, they use it, and it's gonna help make

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Speaker 1: some greener, which is what a lot of people are

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Speaker 1: starting to ask for Julia, I love that you brought

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Speaker 1: up policy, because my understanding is that CCS is expensive.

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Speaker 1: This is an expensive technology that's still in development, and

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Speaker 1: we need to see some pretty massive cost declines to

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Speaker 1: see wide scale adoption. So there are places where policies

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Speaker 1: pushing this forward. Ryan, can you give us a little

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Speaker 1: bit more ordinally, I, can you give us a little

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Speaker 1: bit more clarity on where this is thriving from a

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Speaker 1: policy incentive standpoint. Yeah. So in the United States there's

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Speaker 1: a policy called the fort Q Tax Credit. This policy

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Speaker 1: pretty much offsets the cost of capturing CEO two for

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Speaker 1: many industries by providing them with tax credit for all

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Speaker 1: the CEO two that capture. The European Union has their

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Speaker 1: Emission Trading scheme, the EU e t S, which is

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Speaker 1: practically a cap and trade program where each industry has

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Speaker 1: a certain amount of emissions that they can release and

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Speaker 1: they have to pay for the difference. These prices on

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Speaker 1: emissions are guess fees are being put back into research

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Speaker 1: for things like cc US fit are spurring its development.

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Speaker 1: But these policies, they're really not as simple as like

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Speaker 1: the production tax credits that we're used to seeing in

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Speaker 1: the energy industry the four five Q and Ryan correct

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Speaker 1: me here if I if I'm wrong, But it's a

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Speaker 1: tax liability. And Ryan and I were actually talking the

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Speaker 1: other day that's with the oil price shocks, so many

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Speaker 1: of these companies are not doing that well. So how

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Speaker 1: do you claim a tax liability if you know you're

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Speaker 1: not looking at your usual year of revenues. We also

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Speaker 1: mentioned the California standard. That one is tough because that

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Speaker 1: one is specifically saying you have to make me a

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Speaker 1: fuel that is going to be lower carbon than what

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Speaker 1: you were selling before. So you have to go through

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Speaker 1: life cycle analyses and you and that two dollars a ton.

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Speaker 1: That's hard to access because that's like the maximum you

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Speaker 1: can get. You have to have a really low carbon

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Speaker 1: fuel in order to get there. So it's these policies

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Speaker 1: they're they're inching their way bit by bit towards supporting

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Speaker 1: the industry, but there are a lot of technical hurdles

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Speaker 1: and a long way to go. Um. But what's really

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Speaker 1: interesting is what California has said about direct air capture.

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Speaker 1: And I'm gonna let Ryan explain that because it's really interesting.

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Speaker 1: So director capture is a little bit like magic. You're

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Speaker 1: taking CEO two from the air and pulling it up

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Speaker 1: just the air your breathing is now CEO two free.

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Speaker 1: You know, it's it's more complety in that, but it's uh,

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Speaker 1: it doesn't use a point source emission. It literally is

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Speaker 1: just reducing the atmosphere concentration at CEO two. Where the

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Speaker 1: California Low Carbon Fuel Standard will pay you to reduce

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Speaker 1: the carbon intensity of your fuels that you're producing for

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Speaker 1: their market. If you are anywhere in the world and

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Speaker 1: you're performing director capture and storing that CEO two underground,

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Speaker 1: they will pay you. They'll pay for that entire cost.

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Speaker 1: So this is the sort of thing where people talk about, Okay, well,

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Speaker 1: maybe we'll just start scrubbing our air if we're really

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Speaker 1: concerned about emissions and climate change, and you know the

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Speaker 1: one point five degree scenario. We just stick these things

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Speaker 1: all over the world and we start scrubbing the air,

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Speaker 1: and suddenly problem solved. Yes, over simplification, but it isn't

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Speaker 1: it comforting to know that if we truly truly screw up,

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Speaker 1: there's still director capture. Well okay, so let's say there

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Speaker 1: is still direct air capture and we want to see

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Speaker 1: this kind defruition, Uh, the economics are going to have

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Speaker 1: to be behind it. How do we get there? How

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Speaker 1: do we drive down the cost of CCS or c

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Speaker 1: c U s or whatever you want to call it.

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Speaker 1: How do we make magic happen policy? Honestly so, the

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Speaker 1: current plans for the largest direct air capture facility in

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Speaker 1: the world are being spurred that this is through carbon

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Speaker 1: Engineering partnered with oxy Low Carbon Ventures, the venture arm

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Speaker 1: of Oxidantal Petrileium to build a one million metric ton

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Speaker 1: per year c R two director capture plant, and that

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Speaker 1: CR two will be used for e o R enhanced

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Speaker 1: oil recovery. And that means they're going to get the

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Speaker 1: US forty f Q tax credit, they're going to get

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Speaker 1: the most likely the California Low Carbon Fuel Standard credit

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Speaker 1: for reducing the corbonency the fuels. All these policies are

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Speaker 1: going to pay for direct their capture in voila invola,

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Speaker 1: simple as that. One fact that I read in the

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Speaker 1: report that I thought was really interesting is that c

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Speaker 1: O two emissions are actually coming from just four percent

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Speaker 1: of companies, So we actually know, oh who the stakeholders

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Speaker 1: are that are going to care pretty deeply about this

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Speaker 1: are those companies. Are you seeing signs that pretty much

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Speaker 1: of that four percent of companies? Are they looking at

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Speaker 1: this pretty closely right now or is it something just

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Speaker 1: kind of they're keeping tabs on. Maybe they're listening to

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Speaker 1: this podcast right now, trying to decide. The major emitters

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Speaker 1: all have plans for CEO two reductions. For power companies,

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Speaker 1: a lot of them are hoping to move to renewables,

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Speaker 1: but then we get into dispatchability issues. So power with

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Speaker 1: gas rocal power with ccs may make sense if the

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Speaker 1: policies drive them to needing baseload power source that is

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Speaker 1: a low carbon stealing Cement industries both emit enormous amounts

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Speaker 1: CEO two, and those companies have emissions diductions plan. Each

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Speaker 1: of these is also going to rely on cc US

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Speaker 1: to some extent. Which applications do you think are most promising?

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Speaker 1: So let's look at this from an emissions lens. Is

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Speaker 1: it sement, is it the iron and steel side? Is

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Speaker 1: there something else that I'm missing? I think the industry

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Speaker 1: that has the most likely chance of standing on its

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Speaker 1: own is the cement and concrete industry. They can use

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Speaker 1: c O two at pretty much any cost of capture.

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Speaker 1: They can use CEO two in their products on a

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Speaker 1: potentially very large scale. I'm just kind of sitting here

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Speaker 1: and I'm just thinking back to my old CCS coverage

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Speaker 1: stays and my conclusion when I stopped covering it was Okay,

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Speaker 1: i'll see you later. I don't think this is ever

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Speaker 1: gonna work. But having been away from it, people keep

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Speaker 1: coming up to me and saying, hey, we're gonna start

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Speaker 1: covering CCS again because it's it's back. CCS is back,

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Speaker 1: and friends from oil companies they'll call me and say, hey,

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Speaker 1: guess what we're doing e O R CCS. It's back.

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Speaker 1: So what I want to get from you guys is

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Speaker 1: whether or not like is CCS back? What drove the

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Speaker 1: initial development of solar projects. Solar power was not competitive

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Speaker 1: early on, but it was driven by subsidies and incentives. Right,

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Speaker 1: the same thing is currently driving all carbon capture and

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Speaker 1: the current pipeline carbon capture projects. Everyone who's going to

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Speaker 1: be capturing CO two and receiving some kind of benefit

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Speaker 1: from the governments or policies, those will most likely continue

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Speaker 1: to develop for as long as the incentives make the

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Speaker 1: projects economical. But costs are coming down. Every project that

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Speaker 1: builds carbon capture. Let's say the Petronova coal fired power

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Speaker 1: plant in Texas. They've sayd that next time they built

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Speaker 1: it, it it will be cheaper on the CAPEX front. The

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Speaker 1: same thing was said for a project in Canada. There's

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Speaker 1: a startup called Sponting that's using a kind of a

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Speaker 1: new capture technique that says they can cut capics in half,

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Speaker 1: so costs a coming down. There will always be some

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Speaker 1: parasitic load on power production, and so it's always going

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Speaker 1: to be more expensive to capture CEO two from power

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Speaker 1: than just generating power without emissions capture. I think the

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Speaker 1: big thing here is CCS always comes up when a

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Speaker 1: very polluting industry is kind of sensing its death. You know.

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Speaker 1: We saw that with a lot of coal. So coal

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Speaker 1: plants were like, oh no, I'm gonna get shut down.

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Speaker 1: How do we keep operating ccs. We're sort of at

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Speaker 1: that point now with a lot of industrial emissions. We're

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Speaker 1: talking more and more about industrial decarbonization, and those industries

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Speaker 1: that will be very difficult to bait are like, oh no,

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Speaker 1: I'm about to get regulated CCS. So that's partly why

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Speaker 1: this is coming up again. I think the reason why

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Speaker 1: it feels like we're sort of two groups of people

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Speaker 1: standing on either side of a chasm. It's like one

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Speaker 1: person is in the present and they're like, I don't

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Speaker 1: know what to do. The others on the other side

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Speaker 1: and they're like, it's great, this is a low carbon future,

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Speaker 1: and I got here with CCS. And the reason why

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Speaker 1: we can't figure out what that bridge is and how

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Speaker 1: you get there is about costs in order to cross that.

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Speaker 1: In order to build that bridge, you need to know

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Speaker 1: how much does this cost. There are very very few

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Speaker 1: large scale CCS projects, so we don't know what it costs.

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Speaker 1: When we talk about what it will cost, we're talking

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Speaker 1: about what cost you get to after you've built a

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Speaker 1: ton of plants. So the reason why we don't have

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Speaker 1: a solid like, yes, CCS is the answer right now

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Speaker 1: for you, is because we need a lot of people

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Speaker 1: to take the leap. Every CCS project is different. It's

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Speaker 1: not like turning out hundreds and thousands of giga watts

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Speaker 1: of solar panels from China. It's very bespoke, and we

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Speaker 1: need a lot of people to jump over the chasm

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Speaker 1: before they can tell us how to build a bridge back.

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Speaker 1: Consider me interested. Once again, They are coming in guys, pleasure,

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Speaker 1: no problem, I'm glad to hear it. Bloomberginny F is

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Speaker 1: a service provided by Bloomberg Finance LP and its affiliates.

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Speaker 1: an investment or other strategy. Bloomberg An e F should

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