Dr. Julio Friedmann of Carbon Direct joins Tom Heintzman, Vice Chair, Energy and Climate Finance to discuss the role of carbon capture and storage (CCS) in decarbonizing power, the case for CCS deployment in natural gas-fired generation, and the opportunities and benefits for businesses deploying CCS initiatives.
Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I'm your host, Tom Heintzman. Please join me as we explore today's most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.
Pull Quote (Julio Friedmann): So the idea that CCS somehow is the thing that's keeping natural gas going, it doesn't stand up. Quite the opposite It's the thing that allows you to manage the emissions that you have created by using natural gas. So we can either just continue unabated emissions, which is what we're doing now, or we can actually reduce the emissions for climate.
Tom Heintzman: Welcome to our multi-part series on carbon capture, removal, and the carbon markets. Throughout this series, we will be examining key issues impacting compliance and voluntary markets and how participants are navigating this landscape in response to evolving policies. On today's episode, we'll take a closer look at the role of carbon capture and storage, or CCS, in decarbonizing power, the case for CCS deployment in natural gas-fired generation, and the opportunities and benefits for businesses deploying CCS initiatives. Please welcome my special guest, Dr. Julio Friedmann, Chief Scientist at Carbon Direct. Dr. Friedmann leads efforts that address complex technical challenges in carbon management and CO2 removal, and is widely recognized as a leading authority in the field. Previously, Dr. Friedmann served as Principal Deputy Assistant Secretary for the Office of Fossil Energy at the U.S. Department of Energy. There he was responsible for the DOE's R&D program in advanced fossil energy systems, carbon capture and storage, CO2 utilization and clean coal development. More recently, he was a senior research scholar at the Center on Global Energy Policy at Columbia. He also held positions at Lawrence Livermore National Laboratory, including as chief energy technologist. Welcome Julio and thanks for joining us today.
Julio Friedmann: It's a pleasure to be back. Glad to be here. Thank you, Tom.
Tom Heintzman: Julio, you've visited us a number of times and in amongst them were as keynote speaker for a few of our CIBC Carbon Summits. This year we hosted our third annual event on October 23rd. And one of the observations that I took away was a growing focus on decarbonizing natural gas and expanding the influence of blue power. This is in some degree related, I think, to the veracity for power that the data centers and hyperscalers have. I'd like to start our discussion on the carbon capture potential for natural fired generators in the US and Canada. At a very high level, can you give us an overview of how the carbon capture process works in natural gas-fired plants, what are the main infrastructure requirements?
Julio Friedmann: Happy to do so, let's start with the simple, you know, most basic representation. In order to do carbon capture, you need energy, you need equipment, and you need a place to store CO2. Those are the most important aspects of it. In terms of retrofitting an existing plant or building a post-combustion capture facility for a new plant, you need a couple of things. The most important of these is energy. It takes energy to do the separations, and in order to do that, you will probably need additional natural gas to get that done. You will also need special equipment. Basically, chemicals do the work today in most cases, but other kinds of equipment can also do the separations. You might need additional water just in order to make sure that the system runs as necessary. If you're building a new facility, you also may be able to start with an oxy fired facility, something like net power or clean energy systems or arbor, which is a somewhat different thing. In addition to these sort of energy and equipment requirements, you need places to store the CO2. If you don't have storage, you don't have a project. So you commonly need some kind of transportation infrastructure, pipelines like the Alberta trunk line or the 8,000 kilometers of CO2 pipeline in the United States. And you may also need a place to store CO2, most commonly a saline formation. These are just very deep sandstones and limestones that hold CO2 with seals and shales on top of them. And you'll need to be able to access those with wells. That's the basic recipe. You need some energy, you need some equipment, you need a place to store the CO2. And thankfully, North America's blessed with all of these things. There's quite a lot of storage potential in Canada and in the United States. There's a lot of vendors who understand how to bring this technology, and there's abundant energy to bring forward to do the work.
Tom Heintzman: Julio, quick technological check-in here. You mentioned oxy fired generation. Can you just elaborate on that? I think that may be a new term for a number of our listeners.
Julio Friedmann: Sure. So there's a couple of different ways to separate the CO2 from the fuels. One of them is afterwards. This is what we would call post combustion. So if you slap a capture device on the back end of a boiler or a gas turbine, then you would separate it, again, most commonly with chemistry, with some kind of chemical solvent or sorbent. You can also separate the carbon pre-combustion. You can basically take something like natural gas and turn it into hydrogen on one side and CO2 in the other. Use the hydrogen for the energy, store the CO2. That's what we would call pre-combustion separation. You can also do it with what's called oxy firing. And here what you do is you burn the fuel in an oxygen rich environment in a synthetic atmosphere. Basically the recipe is hydrocarbon plus O2 equals CO2 and water. And so then you can just separate the water out at the back end and what you have left is a pure stream of CO2. These are all different ways of going about the separation of carbon from fuel.
Tom Heintzman: Fascinating, thanks for that. Natural gas fired plants already supply almost half, I think about 43 % of US electricity, but they obviously have the associated emissions. What's the status of CCS in the US or in Canada? How many of these facilities are currently capturing carbon and what are the projections for how this will evolve over time?
Julio Friedmann: So this is a common misconception from many. So let me try to set the record straight. Today, worldwide, there are 77 operations that are capturing and storing CO2. And they're doing about 60 million tons a year. And we've stored over 700 million tons of CO2. So this is not some phantom technology that's been barely tested. We know a lot about these things. And there are several projects around the world which are doing capture of CO2 on power, including in Canada with the SaskPower project at Boundary Dam. It is also fair to say that the number of projects that are separating CO2 from natural gas turbines today is zero. We have done none of those so far. That is changing fast. First, people should know that in order to test any carbon capture technology, they always test on natural gas. So we know that all the technologies are out there. In fact, [Canon] will work on natural gas. We also expect two projects to turn on in the next couple of years. One of those is in the UK, Teesside project, Peterhead, in which they'll be doing, again, a retrofit for a natural gas combined cycle turbine. And this new project that Google announced a few weeks ago called Project Broadwing, it's a 400 megawatt gas plant. And again, they will be separating CO2 from that. There are other plants that have been announced. Calpine has announced two projects, one on the natural gas combined cycle turbine plant, one on a cogeneration plant. But we're seeing these things coming online fast And this is not just from data centers. They're the most urgent. I know we'll talk more about that, but we are seeing rapid electricity demand growth around the world, including in Canada and the United States. That's part of the basis by which people are so excited about CCS on these kinds of plants.
Tom Heintzman: Julio, just a plug for the home team here because CIBC was one of the financiers for Teeside. Well, let's turn to AI and data centers. That's where a lot of the demand is coming from. And you mentioned Google's recent 400 megawatt Broadwing energy deal. Historically, these facilities were relied upon renewable electricity and more recently, some nuclear contracts have been entered into, but it feels like a big change to have data centers and hyperscalers involved in the sector. What are your thoughts about the impact that they're gonna have and what's required for this to scale to the size necessary in order to manage the hyperscaler demand?
Julio Friedmann: Excellent questions. Let me start by acknowledging that Google is doing something remarkable here. Google is known globally and certainly within the industry as a leader on clean electricity procurement. Until last year, I think they were the number three renewable power purchaser, now they're the number four, but they purchased, I think, 11 gigawatts of solar and wind with batteries just last year. They are a very large purchaser of renewable power. They've also made some sensational deals around geothermal offtake, around investing in nuclear plants. They have been the most transparent about sharing their emissions data and their electricity purchase data of any of the big tech firms. And so the fact that they are doing this on natural gas with CCS says a lot, actually. Among other things, it says that their need for electricity is growing beyond what other kinds of energy can be supplied. It's not that they don't know what solar and wind and batteries are. They can't build them fast enough. And because of supply chains, because of interconnects, because of labor, like they just can't get it done quickly enough. In contrast, they can build natural gas plants today. And this is the, if there's nothing else that your listeners take home today, I want them to understand the five most important things for any tech firm when they are commissioning electricity for data centers. The top five things are speed, speed, speed, cost, and carbon in that order. They care about speed much more than anything else. And because of that, there's a few things that they can do around natural gas that get them power very quickly that give them access to market at incredible speed. One of those is they can go to existing natural gas plants and ramp them up. You can go to an existing turbine, move it from a 60 % capacity factor to a 80 % capacity factor. That gets you more electricity pretty fast. They can, in the case of something like Project Broadwing, bring in a big new turbine. Here they're using Mitsubishi turbines. GE will tell you they don't have any more. Hey, guess what? The rest of the world does. Siemens has some. Mitsubishi has some. So they can get big turbines in and build them fast. The third thing that they can do, and we're starting to see more companies do this, is buy a lot of little turbines. So you want 600 megawatts? Well, maybe you build one big H-frame turbine, or maybe you buy 30, 20 megawatt turbines from a company like Rolls-Royce or Solar. And if you do that, you get the just as fast as you can to market. The natural gas hookups are already there. If they're doing it behind the meter, they don't need to go through the interconnect queue. So they're able to do these things in a remarkably fast way to get the power online. What do we need to scale? We actually still need two things. One of them is the infrastructure I talked about before. We need places to store CO2. We need the pipelines. We probably need new transmission upgrades. That would help. We also need political clarity. We need clarity on the 45Q tax credits, on how these things get reported under the greenhouse gas protocol and around SBTI. Thankfully, we have some news on all of those things. In particular, the greenhouse gas protocol has updated their process by doing these things. They have an open solicitation. Same thing for SBTI, the Science-Based Targets Initiative. They are asking for inputs. Importantly, what the product is here is not just electricity, it's also the environmental attributes. These things are not RECs. They're not renewable energy credits, but they're like them. And Northbridge, in partnership with Google, laid out the terms in which one can report these environmental attributes. And so that kind of clarity is really important for investors. And again, a very important thing for Google to have done.
Tom Heintzman: So Julio, I do want to address one of the philosophical questions regarding CCS, particularly for natural gas. Some would take the position that CCS perpetuates the use of gas, delaying decarbonization of the economy. Others, however, would say that decarbonizing natural gas is both necessary and also maybe what allows CCS to scale, making it affordable and a viable solution for other industries. Do you have a perspective on this question?
Julio Friedmann: Yeah, so I don't think either of those perspectives is quite right. Let's start by the idea that CCS somehow would perpetuate the natural gas industry. Last time I checked, the natural gas industry is doing just fine, actually. Demand for natural gas and natural gas power is growing. Governor Hochschul in New York just approved a pipeline. We have a bunch of LNG exports. Everyone around the world is buying that LNG, including Europe, including China, including Japan. So the idea that CCS somehow is the thing that's keeping natural gas going, it doesn't stand up. Quite the opposite. It's the thing that allows you to manage the emissions that you have created by using natural gas. So we can either just continue unabated emissions, which is what we're doing now, or we can actually reduce the emissions for climate. I will say that the hyperscalers are willing to try it, and that's good, but this is not free or easy either. There is money to be made in CCS and, you know, Carbon Direct’s team is very busy these days. And there will be significant climate benefits, but this is difficult. And it takes capital. It takes expertise. The idea that somehow this will be the automatic thing that allows CCS to scale. The thing that you really need to do that is off take. So what's most remarkable actually about the Google announcement is they said that they're going to do a, I think a 15 year off take. Like that's amazing. But that's the kind of thing you need to get the finances lined up so that you can do more and more of these things.
Tom Heintzman: Got it. Well, we've spent a fair bit of time now talking about CCS for natural gas. I'm also interested in how it relates to other industrial sectors. What trends are you seeing globally and where do you see the biggest opportunity and benefit for deploying CCS to decarbonize other industries?
Julio Friedmann: Excellent question and one of my favorites. In fact, the killer app for CCS is heavy industry. It's in things like cement and steel and fuels. In the nearest term, we see the biggest appetite for carbon capture storage in fuels. These are things like sustainable aviation fuels, biomethanol for shipping, e-fuels, all these sorts of things are places where CCS is actually very active. We see a lot of this starting to happen. We're starting to also see CCS around more traditional fuels like hydrogen or ammonia or LNG. So as nations around the world begin tightening their emission standards, as they begin tightening their climate goals, these fuels are one of the things we know we will need. And CCS is just about the fastest and cheapest way to reduce the emissions from those fuels. Cement is the next one behind it. We've started to see capturing cement now in Europe being driven by their own Fit for 55 climate goals and supported by things like the carbon border adjustment mechanism. But the first big CCS plant on cement is now operating in Breivik, Norway. And they're capturing, I think, if I recall correctly, 800,000 tons a year of CO2, and they're storing it under the North Sea. It's a thing. I would add one more to that, which is carbon dioxide removal. It is its own industry and it follows its own logic. So we're starting to see some fuel producers make a zero carbon fuel, but also capture and store additional CO2 as removal and selling those as credits. We're seeing bioenergy with CCS projects spring up around the Nordics and elsewhere around the world in places like the Middle East. I would add in fact, that the geography of these things has shifted quite a bit. I remain enthusiastic about North America. I think there are great projects and great prospects here, but we're seeing Brazil in fuels. We're seeing the Middle East in fuels and heavy industry. They are stepping up and deploying CCS as a way to make low carbon goods for sale in a global market.
Tom Heintzman: Julio, It's been a fascinating discussion. At Carbon Direct, you're working with leaders across industries to identify strategies to fulfill their demand for decarbonized power. What advice would you give to business leaders who are looking to evaluate CCS for decarbonized power solutions or decarbonization of their industrial processes?
Julio Friedmann: So let me say like how completely, you know, honored we are to be able to help our customers and clients as they explore this space. It's really a privilege to be able to help reduce these people's emissions in service of global climate and in service of their corporate needs and goals. So when we advise people, when we advise anybody, first thing we would say is, hey, do your homework. This is a complex landscape. CCS isn't one thing. There's lots of technologies. It varies by geography and there's real market competition for solutions. In some markets, natural gas with CCS is the right answer, but by no means in all markets. You need to get the best analysis possible to really figure out what makes sense for you. We would also make sure people understand we are in dynamic times. You got to think hard about any purchase or construction of any project because things change. The economics change, the technologies change, the politics change, the workforce changes. So you need to be aware of these things so that when you place a bet, you're doing so with your eyes open and that you make the best possible investment you can with the lowest risk. In that context, again, the US is not the only geography. It strikes me that Canada seems pretty interesting these days and that you have a little more clarity and surety in Canada in some cases around these questions around CCS. You have the infrastructure, you have durable policy, you have a good workforce. Maybe as you're thinking through your option set, thinking outside the United States makes sense.
Tom Heintzman: Julio, that was gonna be my last question, but you raised one that I can't let go. Here in Canada, we have a perception that there are at least CDR companies, carbon dioxide removal companies that are moving north of the border because of things like [core] space, government support, stable policies, et cetera. And I'd point to a few of the companies in Deep Sky’s cluster, but there are others as well. Do you see any of that move north of the border or is that just something that the home team sees but maybe doesn't register down in the US?
Julio Friedmann: I think it's real, actually, in part because of all the things I've said. You have the energy you need. You have durable infrastructure and policy. You have a quite attractive investment tax credit. You have feedstocks and low-cost energy. So you've got a lot of things that you would want to have to do this. I would add that it may not be the case that the United States is no longer of interest to people. I think there's lots of good projects in the United States. But I do believe that companies are thinking about moving north. The unveiling of Deep Sky’s facilities recently, in fact, we had representatives at Deep Sky’s ribbon cutting just last week. I think that that shows that Canada still harnesses innovation and innovation, not just in technology, but in business model, in trade, in partnerships, in policy and all these things. That's an attractive package. So I expect that hopefully more people will be knocking on your door trying to figure out what makes the most sense for them.
Tom Heintzman: Fantastic. Well, Julio, thank you so much for your assistance in years past at the Carbon Summit and thanks for taking the time to join the show today.
Julio Friedmann: I'm sorry that I missed it this year, but I look forward to coming a future year. Thank you again, Tom.
Tom Heintzman: You're always welcome, Julio. And thanks to our listeners for tuning in. Please join us next time as we tackle some of sustainability's biggest questions, providing you different perspectives to help you move forward. I'm your host, Tom Heintzman, and this is The Sustainability Agenda.
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