While the UN was Talking About Climate Change Mitigation Oil Companies Were Launching a Kickstarter Campaign

September 27, 2019 – This was the week that the United Nations asked signatories to the Paris Climate Agreement to up their game. Yesterday I wrote about some of the initiatives promised in my posting about how poor countries are the first suffering from anthropogenic climate change. A day before the Climate Summit, the head honchos of the biggest fossil fuel companies gathered in New York to announce a series of new initiatives focused on mitigating climate change but not at the expense of their bottom lines.

They announced a Kickstarter campaign to raise money for future carbon capture use and storage (CCUS) projects to facilitate the development of decarbonizing industrial hubs in the United States, United Kingdom, Norway, the Netherlands, and China. Now Kickstarter, a crowdfunding online site, usually helps to fund business startups. One wouldn’t normally think about raising the hundreds of millions to billions of dollars needed to build a CCUS infrastructure designed to capture CO2 from multiple industrial sites using a central hub strategy (an idea previously described on a number of occasions back in 2016 on this blog site).

I paid a quick visit to the Kickstarter site to see how much money the oil and gas industry had already raised in less than 5 days since their announcement? Couldn’t find any mention of the CCUS initiative and contacted a spokesperson for the companies to find out what was happening with the campaign. It turns out that the campaign is a small “k,” kickstarter, not affiliated with the crowdfunding site. The spokesperson stated, “The Kickstarter initiative does not relate to the crowdfunding platform. It is an initiative designed to facilitate large-scale commercial investment in CCUS, by enabling multiple low-carbon industrial hubs.” Instead, it appears that the investment will come from “joining forces with national and regional authorities, other industrial emitters and a range of organizations…to reduce costs by leveraging shared infrastructure.” In this way, the oil executives hope to “create the necessary commercial and market conditions for a CCUS industry to expand at the scale required.” Behind the CCUS hub initiative are BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental, Pemex, Petrobras, Repsol, Saudi Aramco, Shell, and Total.

It should be noted, in the past, most oil and gas companies have bailed on CCS and CCUS projects often leaving government investors holding an empty bag and having absorbed significant financial loss at taxpayers’ expense. This, hopefully, will not become a repeat performance.

Hub and cluster CCS and CCUS represent a large-scale approach to CO2 capture from multiple emitters in areas where there are high concentrations of these types of industries such as cement factories, thermal power plants, oil refineries, and raw and semi-finished materials manufacturers, all high emitters. The original idea for a hub and cluster focused on CCS with captured CO2 permanently sequestered underground. In CCUS the idea would be to repurpose the captured CO2 to turn it into zero-carbon or low-carbon fuels and materials.

One hub and cluster project that I am aware of is the European Union pilot project called GATEWAY, which when announced in 2016 was scheduled to be in operation in 2020. GATEWAY is located in Rotterdam where the plan was to serve industries in Belgium, The Netherlands, Northern France, the United Kingdom, and Germany. Feeder pipelines, rail, and trucks would bring the captured gas to the Rotterdam facility. The CO2 would then be processed and pumped through pipelines for storage in natural carbon sinks under the North Sea. The status of the GATEWAY project remains unclear with nothing added to the site since 2017. I have written to the project to find out if indeed it will be operational next year.

What the New York meeting was referring to in the CCUS hub and cluster initiative are five emerging hubs already in development as well as potential for future hubs to scale the technology to become a global solution. The press release references the initiative under a category called Nature-Based Solutions (NBS). But this isn’t an NBS initiative because when you visit one of the partner’s websites, in this case, Shell, a 2018 report devotes a page to NBS describing it as one of the company’s tools to reduce its net carbon footprint 50% by mid-century. Shell describes NBS in terms of forest, and wetlands protection, in other words, natural carbon sinks. Investing in them gives the company the ability to claim carbon offsets against the CO2 and methane (CH4) produced from oil and gas operations. The Shell NBS makes no mention of CCS or CCUS hub and cluster technology because there is nothing natural about these technologies. There is, however, a necessity to proceed with investment as a way of reducing the industry’s overall carbon footprint.

In a Financial Times article this week Shell, who is the prime builder and a partner in a  CCS project in Northern Alberta,  describes how the company is wrestling with its identity.  What should be the company’s long-term business model be? The company, currently, is investing in wind, solar, hydrogen, electric vehicles, vehicle charging infrastructure, and home energy storage. But these investments represent an infinitesimally small amount compared to capital being spent on oil and gas exploration and production. Shell remains tied to fossil fuels and admits that oil demand in emerging economies will be a prime source of new revenue opportunity in the decade to come, and not low-carbon and zero-carbon energy investments.

I picked Shell out of the bunch, but it isn’t alone in seeking to become cleaner and more carbon-conscious. The motivation, however, remains unclear. Are these companies doing this for the public relations and image-making as good, environmentally-conscious corporate citizens? Or are they seeing a future when they no longer will be in the oil and gas business because of its impact on the planet’s health?

Today these companies that met in New York are primarily oil and gas operations generating billions in profits. A low-carbon future doesn’t seem to be a fit for them for the short and medium-term. Shell and its partners have the cash from oil and gas operations to spend $1  to 2 billion a year on building new CCUS hub and cluster projects. But it seems it’s beyond them to consider doing this on their own despite the potential for positive public reception, and for the good it will do for the planet.