DIRECT AIR CAPTURE IS A SUBSIDY PLAY
November 12, 2023 § 2 Comments
A recent story in the New York Times describes what the author refers to as the first commercial plant in the US that captures CO2 from the air. This is the class of operations known as Direct Air Capture (DAC). Costs are not disclosed except for noting that similar technologies elsewhere cost up to USD 600 per tonne CO2 removed, and that this company intends to bring costs down to USD 100 per tonne. Corporations are buying carbon credits from the DAC operator and offsetting against their own generation. The federal 45Q legislation will also pay a subsidy which is as much as USD 85 per tonne, the amount depending on the permanence of the sequestration.
Clearly, therefore, declaring victory in the US in this atmospheric carbon mitigation sector involves some sort of subsidy, from a private or public source. In Europe, cap and trade legislation sets a penalty for emission, the avoidance of which would pay for the capture. That price has ranged from € 80 to 100 per tonne in 2023. In both cases, some sort of government legislation is defraying the cost of capture, and the business is not inherently profitable.
In contrast, many of the other carbon mitigation means are profitable in their own right. This certainly includes renewable electricity production by solar and wind, which are the lowest cost providers, at a profit, in many jurisdictions. Electric vehicles, with zero tailpipe emissions, are also profitable. These two examples fall in the category of process change to minimize CO2 emissions. Changing the process is the most effective, and usually involves using a fuel other than hydrocarbons (yes, we consider sunlight and wind as “fuels” in context). But displacing incumbents is hard, in part because the capital being replaced may be far from being amortized. This is the future facing those other two major emitters after transportation, steel, and cement.
The two principal approaches to preventing emissions are changing the process or capturing in the output. The latter is alluded to as point source capture, and while still in commercialization infancy, CO2 could be captured at source for under USD 40 per tonne. That figure could be expected to go down further, to about USD 30. Once captured, it must be stored or put to beneficial use. The highest value beneficial use in practice today is tertiary recovery of oil. Oil left behind after conventional recovery is swept with CO2, which mixes with the oil, thus reducing viscosity and increasing mobility. Much of the gas is recovered on the surface and reused. Many efforts are also under way to mix the CO2 with concrete. The most promising may be the mineralization of igneous rocks to form a stable carbonate, for use or disposal.
Carbon Capture
Capture is accomplished in one of two ways. In the most common process, a liquid such as an amine absorbs the CO2 and the amine is regenerated by releasing the CO2 in concentrated form, which is then disposed of. The other class of processes uses a solid to adsorb the CO2, which is later released by pressure or temperature change, and the solid reused. Once again, the CO2 is in concentrated form. Most DAC processes, including the one cited in the linked story, are some variants of the solid adsorbent method.
In either of the methods, the process is more efficient if the CO2 concentration is higher. Accordingly, capture costs are roughly inversely proportional to the concentration. The cost per tonne captured will be lower for cement kilns, with CO2 concentrations north of 25%, than for iron blast furnaces, with concentrations in the mid-teens. Costlier yet is capture from natural gas power plants, with concentrations in mid-single digits. And then we have DAC. The concentration of CO2 in air is 0.04% (and rising!). There you have it, no wonder then that USD 100 per tonne is seen as a win.
Why DAC?
Why go after the costliest capture, and why not just double down on point source capture, low C electricity production and electric transportation? Many argue that capturing from the air gives a free pass for business as usual. But that argument could also be made for point source capture, albeit not as strongly.
The answer lies in how far behind we are in carbon mitigation. Point source capture will certainly involve retiring of assets, some of which may not be fully amortized. Acceleration of retirements may require policy support (read subsidies). Electric vehicles are being subsidized now. The key point is that even with an all of the above approach with emission prevention, we may fall short of reasonable 2050 atmospheric CO2 targets unless we do something about the CO2 already in the air.
So, yes, we need DAC. But it is indeed a subsidy play, and subsidies come and go, subject to the whims of the folks in power (look no further than the history of subsidies related to wind power) *.
*Drove my Chevy to the levy, but the levy was dry, from American Pie, written and performed by Don McLean (1971)
Vikram Rao
November 12, 2023
Research Triangle Energy Consortium 
Vik
good to hear from you after a long summer. DAC does make a lot of sense, but the cost must come down. If CO2 is captured at the source for significant emitters intuitively sounds like will make more sense.
Thanks
Abe
Vik
I would like to know your thinking on gold H2? Is it a real thing or another hype? Thanks