Carbon capture is expected to play a pivotal role in the race to net zero emissions. But not everyone agrees

Published

3 years ago

July 20, 2021

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A detail of the pilot carbon dioxide (CO2) capture plant is pictured at Amager Bakke waste incinerator in Copenhagen on June 24, 2021.

IDA GULDBAEK ARENTSEN | AFP | Getty Images

LONDON — Carbon capture technology is often held up as a source of hope in reducing global greenhouse gas emissions, featuring prominently in countries’ climate plans as well as the net-zero strategies of some of the world’s largest oil and gas companies.

The topic is divisive, however, with climate researchers, campaigners and environmental advocacy groups arguing that carbon capture technology is not a solution.

The world is confronting a climate emergency, and policymakers and chief executives are under intensifying pressure to deliver on promises made as part of the landmark Paris Agreement. The accord, ratified by nearly 200 countries in 2015, is seen as critically important in averting the worst effects of climate change.

Carbon capture, utilization and storage — often shortened to carbon capture technology or CCUS — refers to a suite of technologies designed to capture carbon dioxide from high-emitting activities such as power generation or industrial facilities, that use either fossil fuels or biomass for fuel.

The captured carbon dioxide, which can also be captured directly from the atmosphere, is then compressed and transported via pipeline, ship, rail or truck to be used in a range of applications or permanently stored underground.

There are a number of reasons why carbon capture is a false climate solution. The first and most fundamental of those reasons is that it is not necessary.

Carroll Muffett

Chief executive at the Center for International Environmental Law

Proponents of these technologies believe they can play an important and diverse role in meeting global energy and climate goals.

Carroll Muffett, chief executive at the non-profit Center for International Environmental Law (CIEL), is not one of them. “There are a number of reasons why carbon capture is a false climate solution. The first and most fundamental of those reasons is that it is not necessary,” he told CNBC via telephone.

“If you look at the history of carbon capture and storage, what you see is nearly two decades of a solution in search of a cure.”

‘Unproven scalability’

Some CCS and CCUS facilities have been operating since the 1970s and 1980s when natural gas processing plants in south Texas began capturing carbon dioxide and supplying the emissions to local oil producers for enhanced oil recovery operations. The first one was set up in 1972.

It wasn’t until several years later that carbon capture technology would be studied for climate mitigation purposes. Now, there are 21 large-scale CCUS commercial projects in operation worldwide and plans for at least 40 new commercial facilities have been announced in recent years.

A report published by CIEL earlier this month concluded that these technologies are not only “ineffective, uneconomic and unsafe,” but they also prolong reliance on the fossil fuel industry and distract from a much-needed pivot to renewable alternatives.

Employees near the CO2 compressor site at the Hawiyah Natural Gas Liquids Recovery Plant, operated by Saudi Aramco, in Hawiyah, Saudi Arabia, on Monday, June 28, 2021. The Hawiyah Natural Gas Liquids Recovery Plant is designed to process 4.0 billion standard cubic feet per day of sweet gas as pilot project for Carbon Capture Technology (CCUS) to prove the possibility of capturing C02 and lowering emissions from such facilities.

Maya Siddiqui | Bloomberg | Getty Images

“The unproven scalability of CCS technologies and their prohibitive costs mean they cannot play any significant role in the rapid reduction of global emissions necessary to limit warming to 1.5°C,” the CIEL said, referring to a key aim of the Paris Agreement to limit a rise in the earth’s temperature to 1.5 degrees Celsius above pre-industrial levels.

“Despite the existence of the technology for decades and billions of dollars in government subsidies to date, deployment of CCS at scale still faces insurmountable challenges of feasibility, effectiveness, and expense,” the CIEL added.

Earlier this year, campaigners at Global Witness and Friends of the Earth Scotland commissioned climate scientists at the Tyndall Centre in Manchester, U.K. to assess the role fossil fuel-related CCS plays in the energy system.

The peer-reviewed study found that carbon capture and storage technologies still face numerous barriers to short-term deployment and, even if these could be overcome, the technology “would only start to deliver too late.” Researchers also found that it was incapable of operating with zero emissions, constituted a distraction from the rapid growth of renewable energy “and has a history of over-promising and under-delivering.”

In short, the study said reliance on CCS is “not a solution” to confronting the world’s climate challenge.

Carbon capture is ‘a rarity’ in Washington

Not everyone is convinced by these arguments, however. The International Energy Agency, an influential intergovernmental group, says that while carbon capture technology has not yet lived up to its promise, it can still offer “significant strategic value” in the transition to net zero.

“CCUS is a really important part of this portfolio of technologies that we consider,” Samantha McCulloch, head of CCUS technology at the IEA, told CNBC via video call.

The IEA has identified four key strategic roles for the technologies: Addressing emissions from energy infrastructure, tackling hard-to-abate emissions from heavy industry (cement, steel and chemicals, among others), natural gas-based hydrogen production and carbon removal.

For these four reasons, McCulloch said it would be fair to describe CCUS as a climate solution.

At present, CCUS facilities around the world have the capacity to capture more than 40 million metric tons of carbon dioxide each year. The IEA believes plans to build many more facilities could double the level of CO2 captured globally.

“It is contributing but not to a scale that we envisage will be needed in terms of a net-zero pathway,” McCulloch said. “The encouraging news, I think, is that there has been very significant momentum behind the technology in recent years and this is really reflecting that without CCUS it will be very difficult — if not impossible — to meet net-zero goals.”

Electricity pylons are seen in front of the cooling towers of the coal-fired power station of German energy giant RWE in Weisweiler, western Germany, on January 26, 2021.

INA FASSBENDER | AFP | Getty Images

Meanwhile, the American Petroleum Institute, the largest U.S. oil and gas trade lobby group, believes the future looks bright for carbon capture and utilization storage.

The group noted in a blog post on July 2 that CCUS was a rare example of something that is liked by “just about everyone” in Washington – Democrats, Republicans and Independents alike.

Where do we go from here?

“Frankly, tackling climate change is not the same as trying to bring the fossil fuel industry to its knees,” Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change at the London School of Economics, told CNBC via telephone.

“If the fossil fuel companies can help us get to net zero then why wouldn’t we want them to do that? I think too many environmental groups have conflated their dislike of oil and gas companies with the challenge of tackling climate change.”

When asked why carbon capture and storage schemes should be in countries’ climate plans given the criticism they receive, Ward replied: “Because if we are going to get to net zero by 2050, we have to throw every technology at this problem … People who argue that you can start ruling out technologies because you don’t like them are those who, I think, haven’t understood the scale of the challenge we face.”

The CIEL’s Muffett rejected this suggestion, saying proponents of carbon capture technologies are increasingly reliant on this kind of “all of the above” argument. “The answer to it is surprisingly easy: It is that we have a decade to cut global emissions in half and we have just a few decades to eliminate them entirely,” Muffett said.

“If on any reasonable examination of CCS, it costs massive amounts of money but doesn’t actually reduce emissions in any meaningful way, and further entrenches fossil fuel infrastructure, the question is: In what way is that contributing to the solution as opposed to diverting time and energy and resources away from the solutions that will work?”

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Ford’s EV unit weighs on Q1 2024 earnings as Pro remains the dark horse

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17 mins ago

April 25, 2024

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Ford's EV unit weighs on Q1 2024 earnings as Pro remains the dark horse

Amid a shifting strategy, Ford (F) reported first-quarter earnings Wednesday, beating analyst expectations. However, due to fierce pricing pressure, Ford’s EV revenue fell 84% in Q1 2024.

Ford shifts EV strategy amid sales upswing

Despite EV sales surging 86% to 20,233 in the first three months of 2024, Ford is pulling back. All Ford electric models saw double (or triple) digit sales growth.

The F-150 Lightning remained the top-selling electric pickup in the US, with 7,743 models sold, up 80% over last year. Ford’s Mustang Mach-E was the second best-selling electric SUV in the US, with 9,589 vehicles delivered, up 77% over Q1 2023.

Meanwhile, Ford’s commercial Pro unit continues to appear as a dark horse for the automaker, with EV adoption rising 40%. Ford E-Transit sales were up 148% in Q1, with 2,891 units sold.

Ford’s growth propelled it to second in the US EV market (if you don’t include combined Hyundai and Kia sales).

The sales surge comes after Ford introduced significant price cuts and savings on the Mach-E and Lightning earlier this year.

Ford-Mach-E — Ford Mustang Mach-E (Source: Ford)

Despite rising EV sales, Ford announced it is pushing back EV production at its BlueOval City facility to 2026. It is also delaying the launch of its three-row electric SUV to focus on smaller, more affordable EVs.

In the meantime, Ford said it would introduce more hybrids to the mix as it develops its next-gen electric models.

Ford’s Model e EV unit had a net loss of around $4.7 billion last year with “extremely competitive pricing” and new investments. Meanwhile, EBIT loss slipped to $1.6 billion in Q4.

Analysts expect Ford to report $40.10 billion in revenue in its Q1 2024 earnings report. Ford’s Model e, EV unit, is expected to generate around $24.5 billion in revenue with an EBIT loss of $1.65.

Ford Q1 2024 earnings results

Ford reported first-quarter 2024 revenue rose 3% to $42.8 billion, topping estimates of around $40.10 billion. Ford also topped adjusted EPS estimates with $0.49 per share in Q1 vs $0.42 expected.

The automaker posted net income of $1.3 billion, down from $1.8 billion last year. Adjusted EBIT fell 18% to $2.8 billion due to lower prices and the timing of the F-150 launch.

Ford Blue, the company’s ICE business, saw revenue fall 13%, again due to the new F-150 launch.

Ford Pro was the growth driver, with volume and revenue up 21% and 36%, respectively. The commercial and software business had an EBIT margin of nearly 17%, with first-quarter revenue of $18 billion.

Meanwhile, Ford Model e revenue slipped 84% due to “industry-wide” pricing pressure. With lower prices, the unit’s EBIT loss increased YOY to $1.3 billion. That’s about a $64,000 loss for every EV sold in Q1. However, this is still down from the $1.6 billion EBIT loss in Q4 2023.

Ford expects EV costs to improve going forward, but it will be offset by top-line pressure.

The automaker is maintaining full-year EBIT guidance, expecting to hit the higher end of the $10 billion to $12 billion range. The company now expects to generate between $6.5 billion and $7.5 billion in adjusted free cash flow, up from the previous $6 billion to $7 billion.

According to Ford, the updates reflect recent cost-cutting actions, like the delayed EV investments. Ford’s update comes after rival GM also raised full-year guidance this week.

Meanwhile, Ford is releasing a new brand campaign called “Freedom of Choice” to promote its gas, hybrid, and EV lineup amid the strategy shift.

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Tesla (TSLA) surges on Elon Musk trying to ride AI wave

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3 hours ago

April 24, 2024

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Tesla (TSLA) surges on Elon Musk trying to ride AI wave

Tesla’s stock (TSLA) surged 12% today, one of its best days in a long time, as Elon Musk tries to position Tesla to ride the artificial intelligence wave.

In a rare occurrence, Tesla had a pretty bad miss on expectations for both revenue and earnings with its financial results in Q1 2024.

Despite the miss, Tesla’s stock surged 12% today. That’s quite the anomaly. So, what gave investors more confidence in Tesla?

There were a few important positive points in Tesla’s results.

First off, Tesla’s automotive gross margins virtually stayed the same despite further price costs, the Cybertruck ramp, and the Model 3 Highland ramp in Fremont. The company confirmed that if you remove those, margins did improve in Q1.

There’s also Tesla’s announcement that it changed its plans about how to bring cheaper vehicles to market. As we previously reported, Tesla postponed NV9, a new “$25,000 Tesla” based on the automaker’s new “unboxed” manufacturing technology.

Many investors and analysts were concerned about this, as a large percentage of Trsla’s expected growth over the second half of the decade was based on this model.

Now, Tesla has confirmed that its change in strategy still involves cheaper model, albeit likely not a $25,000 one, but they will be built on existing manufacturing lines. This was a big positive for investors – although the plan is currently light on details.

The third factor that is likely greatly contributing to Tesla’s stock having one of its best days in a while is the AI wave.

As we previously reported, Musk is virtually putting Tesla all-in on Robotaxi. The CEO again reiterated that if you don’t believe that Tesla can solve autonomy, you shouldn’t own the stock.

Musk is trying to position Tesla to ride the AI wave that is currently taking over the tech industry.

An interesting new thing that the company did with these earnings is that it released its AI training compute capacity:

This is truly impressive and still growing. As we previously reported, Tesla is currently building a massive 100 MW data center with NVIDIA hardware at Gigafactory Texas, which the company is hoping to bring online this August.

Tesla plans to use this AI training capacity to train its Full Self-Driving system with the millions of miles being driven with the “supervised” version of the system:

The data is also accelerating on that front with the release of v12 and the FSD one-month free trial.

While many people remain skeptical, it does appear that Tesla is gaining credibility regarding AI and its self-driving effort, which is contributing to the stock surge.

Electrek’s Take

If you have been following my pieces, you know that I haven’t been the biggest fan of FSD, but I’ve been impressed with v12 so far.

Things could get interesting fast.

Tesla now has the AI training capacity to compete with the biggest AI players and it is growing fast. The automaker is taking a similar approach as it did with battery cells: buying everything you can get your hands on from suppliers and building your own.

For batteries, that means buying from Panasonic, LG, CATL, etc, and building 4680 cells itself.

For AI training compute, it means buying servers from NVIDIA and building Dojo.

It worked for batteries and it could work for AI training also. I think Tesla deserves a meaningful credibility bump in the self-driving space with v12.

Honestly, if I see decent improvements over the next few updates, I might become a true believer. I had FSD Beta on my car for the better part of 2 years and saw very few improvements. v12 alone felt like a 20-30% overall improvement and I’m now way more confident when using FSD.

With that said, it’s important to remain extremely vigilant when using FSD. You need to be ready to take control at all times.

And at the risk of repeating myself for a thousand time, Tesla should release FSD disengagement data.

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Ford tops Q1 2024 earnings despite pricing pressure weighing on its EV unit

Published

4 hours ago

April 24, 2024

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Amid a shifting strategy, Ford (F) reported first-quarter earnings Wednesday, beating analyst expectations. However, due to fierce pricing pressure, Ford’s EV revenue fell 84% in Q1 2024.

Ford shifts EV strategy amid sales upswing

Despite EV sales surging 86% to 20,233 in the first three months of 2024, Ford is pulling back. All Ford electric models saw double (or triple) digit sales growth.

Meanwhile, Ford’s commercial Pro unit continues to appear as a dark horse for the automaker, with EV adoption rising 40%. Ford E-Transit sales were up 148% in Q1, with 2,891 units sold.

Ford’s growth propelled it to second in the US EV market (if you don’t include combined Hyundai and Kia sales).

The sales surge comes after Ford introduced significant price cuts and savings on the Mach-E and Lightning earlier this year.

In the meantime, Ford said it would introduce more hybrids to the mix as it develops its next-gen electric models.

Ford’s Model e EV unit had a net loss of around $4.7 billion last year with “extremely competitive pricing” and new investments. Meanwhile, EBIT loss slipped to $1.6 billion in Q4.

Analysts expect Ford to report $40.10 billion in revenue in its Q1 2024 earnings report. Ford’s Model e, EV unit, is expected to generate around $24.5 billion in revenue with an EBIT loss of $1.65.

Ford Q1 2024 earnings results

Ford reported first-quarter 2024 revenue rose 3% to $42.8 billion, topping estimates of around $40.10 billion. Ford also topped adjusted EPS estimates with $0.49 per share in Q1 vs $0.42 expected.

The automaker posted net income of $1.3 billion, down from $1.8 billion last year. Adjusted EBIT fell 18% to $2.8 billion due to lower prices and the timing of the F-150 launch.

Ford Blue, the company’s ICE business, saw revenue fall 13%, again due to the new F-150 launch.

Ford Pro was the growth driver, with volume and revenue up 21% and 36%, respectively. The commercial and software business had an EBIT margin of nearly 17%, with first-quarter revenue of $18 billion.

Meanwhile, Ford Model e revenue slipped 84% due to “industry-wide” pricing pressure. With lower prices, the unit’s EBIT loss increased YOY to $1.3 billion. However, this is still down from the $1.6 billion EBIT loss in Q4 2023.

Ford expects EV costs to improve going forward, but it will be offset by top-line pressure.

According to Ford, the updates reflect recent cost-cutting actions, like the delayed EV investments. Ford’s update comes after rival GM also raised full-year guidance this week.

Meanwhile, Ford is releasing a new brand campaign called “Freedom of Choice” to promote its gas, hybrid, and EV lineup amid the strategy shift.

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