Fossils Should Pay Trillions to Store Carbon through 2050, Ex-Industry Execs Say

A group of former oil and gas executives and academics is calling for the industry to pay tens of trillions of dollars through 2050 to take full responsibility for every tonne of carbon it produces.

In a paper published this morning in the journal Environmental Research Letters, the group calculates the cost and emission reduction potential of a “carbon takeback obligation” that would require fossil producers to permanently store a tonne of carbon for every tonne they take out of the ground, without expecting taxpayers to foot the bill.

Fossil producers’ responsibility under a takeback obligation would include the downstream or “Scope 3” emissions that occur after a fossil fuel shipment reaches its final user, and account for about 80% of the carbon in a barrel of oil. The paper says carbon storage under a takeback mechanism would cost about US$1 trillion in 2025, calculated in 2005 dollars, rising annually to exceed $10 trillion in 2050. (With inflation, $1 trillion in 2005 is the equivalent of $1.53 trillion today.)

“The simple expression of it is that if you take carbon out of the ground when there’s too much in the atmosphere, you don’t want to make things worse. So if you take it out, you should be responsible for permanent storage of an equivalent amount,” said study co-author Hugh Helferty, a former corporate strategic research manager at ExxonMobil now serving as co-founder and president of Houston-based Producer Accountability for Carbon Emissions.

“Companies have substantial capability to help solve the problem and can be a big part of the solution,” Helferty told The Energy Mix. “What they need is the incentive to do it.”

A ’Backstop’ for Carbon Cuts

The team of authors led by Oxford University physicist Stuart Jenkins frames carbon takeback as a “backstop”, not a replacement, for energy efficiency, renewable energy, carbon pricing, and a menu of other climate strategies that haven’t yet brought down emissions or proven themselves sufficient to hold average global warming to 1.5°C.

The paper sets 2020 as the start date for companies to have begun capturing 3.3% of the carbon dioxide produced by energy, transport, and industry, then increase that capture rate by 3.3% per year to bring emissions to net-zero in 2050. In the early years, the approach relies on nature-based climate solutions (NbS) like ecosystem restoration and better management of agricultural lands to deliver shorter-term emission savings.

But the approach includes what co-author and Oxford geosystem scientist Myles Allen called a “stylized recognition of the opportunities and limits of nature-based solutions.” Nature-based storage peaks in 2035 and then declines, with companies turning toward more expensive but essentially permanent geological carbon storage through mid-century. Over time, the rising annual price tag approaches today’s cost of direct air capture with carbon storage (DACCS)—with the expectation that the more exotic carbon storage options will become less expensive as the technologies develop.

“In the long term, the only durable way of compensating for any continued production of CO2 from fossil sources is likely to be geological storage or measures of equal permanence, such as remineralization,” the authors write.

All of that multi-trillion-dollar activity would be meant to complement existing carbon reduction and energy transition policies, “acting as a backstop to catch residual CO2 which would otherwise be emitted,” the paper states. If energy demand falls faster than forecasters often assume, or if falling costs speed up the shift to solar, wind, and energy storage, “people will need less fossil fuel and then there will be far less carbon storage required,” co-author Margriet Kuijper, a former CO2 storage manager at Shell Europe, told a media briefing Wednesday.

Carbon takeback “doesn’t lock you into a commitment,” she explained. “If you use a lot less fossil fuels, you will be storing a lot less CO2. But anything you can store is good, because 1.3°C is better than 1.5. I don’t think we should ever say no if we can easily store CO2.”

Helferty acknowledged concerns that any attention to carbon storage could create a pretext for building new fossil fuel infrastructure and locking in future emissions. He said the initial reliance on natural sequestration in a carbon takeback system would avoid overbuilding carbon storage facilities and allow time for other alternatives to show what they can do.

“The intent is to start off reasonably slowly, build up the capability, figure out how to reduce the cost, see how other things evolve, then if needed, ramp it up over time,” he said. “If it’s not needed, presumably people won’t spend money on it.”

Cleaning Up Your Own Mess

The paper casts carbon takeback as a form of extended producer responsibility, which holds businesses responsible for the downstream impacts of their products and gives them an incentive to introduce more environmentally benign designs.

Applied to fossil fuels—where the industry’s job is to extract a substance that warms the atmosphere when used as directed—a carbon takeback obligation “would require all extractors and importers of fossil fuels within a jurisdiction to dispose permanently of a progressively increasing fraction of the CO2 generated by their activities and the products they sell,” the authors state.

“As the stored fraction increases, the cost of complying rises,” the paper says, and “it would be a decision for the fossil fuel industry and its owners (in many cases governments) whether to pass this cost on to consumers in full, or to defend its market share” by accepting lower profits to reflect the environmental impact of oil and gas.

But carbon takeback relies on two carbon storage approaches, NbS and carbon capture and storage (CCS), that each face challenges and limitations in their own right. NbS raises long-standing concerns about offsetting fossil fuel production with land conservation and restoration when climate science clearly calls for nature protection alongside production cuts—not one as an offset for the other.

“Everybody wants NbS to work because it’s conceptually straightforward. It doesn’t require decarbonization in the short term, and it doesn’t require the difficult political decisions to be made,” said Dr. Jessica F. Green, a political science professor at the University of Toronto. But “in the beginning they would be an important piece of companies fulfilling their takeback requirements. and we know that’s problematic.”

And even the more established technologies meant to capture carbon dioxide for geological storage are still under development, with little proof so far that they can perform as intended or on the scale carbon takeback would require.

Can Carbon Capture Deliver?

While the carbon takeback concept focuses on carbon storage, the “capture” side of CCS has faced fierce criticism, focused both on the viability of the technology and the end use of the CO2 that fossil companies have collected to date. As recently as January, 2021, 81% of the world’s captured carbon was being injected into depleted wells to extract more fossil fuel through a process called enhanced oil recovery (EOR).

More recently, in a sweeping industry assessment released last September, the Institute for Energy Economics and Financial Analysis (IEEFA) found that 10 of the world’s 13 “flagship, large-scale” CCS projects underperformed, failed outright, or had to be mothballed.

“CCS technology has been going for 50 years and many projects have failed and continued to fail, with only a handful working,” said IEEFA energy finance analyst and report co-author Bruce Robertson. Though there is “some indication it might have a role to play in hard-to-abate sectors such as cement, fertilizers, and steel, overall results indicate a financial, technical, and emissions reduction framework that continues to overstate and underperform.”

Just a few weeks later, an annual survey by the Global CCS Institute pointed to a small boom in construction activity, with 153 new projects under construction around the world. But even if all of the projects are completed—and even if they meet their targets when they go into operation—they’ll still capture just 244 million tonnes of carbon dioxide per year, less than 1% of the estimated 36 billion tonnes humanity emitted last year.

But Allen told the media briefing the biggest challenge facing CCS is scaling up storage quickly enough to gain public trust and confidence. The technology to capture carbon exists, but “what’s always been lacking is an effective policy to make people do it,” he said. When projects have fallen behind schedule or missed their capture targets, “every one of those cases has been a failure of policy, not a failure of technology. We know how to do this.”

Helferty agreed that the technology can deliver, noting that the fossil industry has solved tougher challenges—like pushing the sulphur content in diesel down below 15 parts per million—in the past.

“CCS is not as technically difficult,” he said. “You work through the bugs, improve the process, find new ways of doing it. The issue is that they’ve never had a reason to implement it at scale because there’s no charge to put the CO2 in the air.”

The industry already stores 40 million tonnes of carbon per year, Helferty added, “and if you can do that, you can do 400 million.”

But IEEFA’s director of resource planning, David Schlissel, said the shaky performance of CCS will make companies less likely to commit.

“The big flaw will be getting any producers of CO2 involved, because they know the process is not going to work very well,” he told The Mix. “Why would you want to take on the risk? Then you want the government to pay you to take it on, so if it doesn’t work out, that’s okay. So good luck to it, but we’re not the only ones who don’t think CCS works the way they claim.”

“I don’t think it’s realistic to expect that extraction or oil and gas firms are going to say, ‘yeah, we’re going to make these risky investments because that will allow us to be profitable in the long term’,” Green agreed. “There’s not a lot of empirical evidence that companies are doing that. What they’re doing is lobbying governments like crazy for things like CCS subsidies. They don’t want to pay for it.”

Hope But Verify

Allen and Kuijper said they’re satisfied that geological carbon storage can be permanent, and that the volumes that fossil producers stow away can be monitored and verified. Allen said the best evidence that geological storage works is that companies can only recover half of the carbon dioxide they inject underground for enhanced oil recovery, even when they’re trying to get it back.

“Over the decades there will be leaks, just as occasionally in Britain we have a perennial problem of sewage leaks in very old Victorian sewers,” he said. “That’s not great, but it doesn’t mean they don’t bother with a sewage system. The fact that there will be leaks makes it all the more important to get daring on this, to develop the monitoring and reporting and verification systems that will be needed to minimize those leaks, then deal with them when they occur.”

Kuiper said most countries planning for geological storage intend to monitor their first projects more rigorously, “to make sure they can reassure the public and everyone else that indeed the CO2 is staying where it should be staying.” As confidence builds over time, some of the monitoring will be scaled back.

“In the beginning, it’s like what we did with the first offshore wind farm, a lot of environmental monitoring to make sure that what you thought would happen really happened,” she said. “Once it’s confirmed, you can have your monitoring far more focused for the next project.”

But Green cautioned against getting too confident, too soon. “The track record shows that when companies can greenwash, hedge, or cheat, they will,” she said. While it’s useful to introduce a carbon takeback obligation that makes downstream emission reductions mandatory, rather than voluntary, “it solves one accounting problem but creates another one. It solves the exclusion of Scope 3, but then it creates another one, which is that you actually have to measure a lot more emissions.”

Jason MacLean, assistant professor of law at the University of New Brunswick, said the ultimate question is whether carbon takeback will speed up decarbonization. “To me, it looks like it’ll do the opposite,” he said. “It will help strengthen the social licence of fossil fuel producers, and it will take away emphasis and attention that needs to be placed on the speed of the transition, the transformation, and ultimately the phaseout of the industry that’s required.”

With oil and gas companies still committed to massive investments in new infrastructure, “we’re really laying the foundation for a much slower transformation and phaseout of the fossil fuel industry than climate science unequivocally tells us we have to achieve.”

‘Shunned and Ex-Communicated’

The other big question is what would motivate fossil companies to accept a carbon takeback obligation, with full responsibility for Scope 3 emissions and no taxpayer subsidies to fall back on.

“They must sit alone at industry conferences,” IEEFA’s David Schlissel said of the carbon takeback proponents. “I think ‘shunned, ex-communicated’ are the first two words that come to my mind.”

But Kuijper said she’s spent the last three years discussing the ins and outs of carbon takeback with industry and non-government organization contacts in The Netherlands, and has seen growing interest in the concept. Allen said oil and gas executives may be more open to a concept like carbon takeback than they appear to be in public.

“When I talk to people in the fossil fuel industry off the record, they all say of course, in the end, this will be part of their cost of doing business,” he told The Mix. “They see this as almost an inevitable future.”

“Clearly, it’s more profitable for the industry not to have to dispose of its CO2 than to dispose of it,” he added. “So if you were being cynical, you’d say they just want to keep the party going as long as possible before they have to start tidying up. Or perhaps on a more charitable level, you might say they just want more certainty about the technology before they start committing to actually doing it.”

But many in the industry “would actually be quite happy for this to be regulated,” he said. The condition is that “the same rules need to apply to everybody. That doesn’t necessarily mean everybody in the world, but everybody in the economy which you’re selling into.”

Helferty cited sulphur reductions in fuels and the shift to unleaded gasoline as instances where fossils initially dug in their heels and resisted environmental regulations. “They would say it couldn’t be done, that it was too expensive,” he recalled. “But once it was mandated and phased in over time, they found the cheapest way to meet the objective, and as long as everyone has to do it, those who figure out the best way will be the most successful and those who don’t will be less so and may fail.

“That’s the way the system is supposed to work,” he added. “But no company will do it on their own without it being required, because that would put them at a competitive disadvantage.”

By that mechanism, Allen said carbon takeback should push companies to compete and do better.

“What they want to be is a swashbuckling, super-profit-making, go-getting kind of industry, and if you introduced a carbon takeback obligation as a strict licencing condition on everybody, they would be looking for storage as a way of making higher profits,” he explained. “It would go from being a mundane service activity to where prospecting the CO2 storage opportunities became like prospecting for oil. And that’s the way we need them to think about it. We need them to get out there and apply the same level of ingenuity and general get up and go that they apply to finding new fossil fuel reserves.”

The swashbuckling media relations offices at Cenovus Energy and Suncor Energy didn’t respond to requests to comment for this story. The Canadian Association of Petroleum Producers responded with a September, 2022, submission to Finance Canada that called for more generous tax subsidies for CCS and greater flexibility to use captured CO2 for enhanced oil recovery. A spokesperson said the group had nothing more to say on the topic.