The carbon dioxide removal (CDR) technologies landscape

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.

Phil De Luna: And so right now these technologies that are using heat are around 3000 kilowatt hours per ton of CO2 removed. Our goal is to get down to around 1000 kilowatt hours per ton of CO2. So that’s a third of what current generations of direct air capture are using today. 

Tom Heintzman: Welcome to our multi-part series profiling the carbon markets. The purpose of this series is to examine some of the most significant issues facing our clients in both the voluntary and compliance markets. For this episode, we’ll examine the carbon dioxide removal or CDR technologies landscape by going deeper to answer the what, the why, who, and how, and how much behind some of the most cutting edge engineered solutions today and how these will impact the energy transition. There’s no one better that I can think of to give us this landscape tour than Phil DeLuna, a distinguished Canadian materials scientist who I’ve had the pleasure of knowing for many years. Phil’s expertise and record of accomplishments are seriously extensive. He’s currently the chief carbon scientist and head of engineering at Deep Sky, which is a carbon removals project developer in Canada, where he leads on technology development partnerships and facility build out. Phil’s expertise in sustainability and sustainable transition is rooted in a career that spans many areas, including as an entrepreneur, innovator, and business consultant. His accomplishments are too numerous to list in the short time we have here, but they include being named as a Forbes Top 30 Under 30, a Clean 50 Emerging Leader, a recipient of the Governor General Gold Medal, and a Carbon X Prize Finalist. Maybe more importantly, he’s just an all around good guy. Good morning, Phil, and thanks for joining us on today’s episode of the Sustainability Agenda.

Phil De Luna: Good morning and thank you so much for having me. I’m really excited to dive into this.

Tom Heintzman: I’d like to give our audience some context first. Most recently, there’s been a proliferation of engineered carbon removal solutions. Can you highlight what are some of the CDR tech-based solutions being deployed today? What do they do and how?

Phil De Luna: Great question Tom. When we think of carbon tech, carbon capture, utilization, storage, that is essentially the supply chain of capturing carbon and then putting it back underground or utilizing it for a product. And on the capture side of things, there’s a bifurcation. You can either capture something from its point source, or you can capture it directly from the environment. Point source capture, the analogy is like a bathtub that’s overflowing. If you think of our atmosphere as the bathtub and CO2 as water, when your bathtub starts to overflow, you can do two things. You can turn off the tap or you can pull the drain and let the water drain out. And point source capture is capturing carbon dioxide before it hits the atmosphere. That’s turning down the tap. Same thing as emission reduction. Carbon dioxide removal, CDR, is unplugging the drain, removing CO2 from the atmosphere, putting it back underground, or utilizing it into products. Now, when you think about carbon dioxide removal, there’s a spectrum of different technologies. Nature-based removals are planting trees, doing things that allow for mangrove restoration, natural ways that the Earth already in its natural carbon cycle is removing CO2 from the atmosphere or from the ocean. Tech-based carbon dioxide removal is actually using engineering and hoping to either speed up naturally occurring processes or doing things like quite literally pulling carbon dioxide from the air. So on one end of the spectrum, direct air capture is actually using engineering to take carbon dioxide from the air. What are some technologies, examples being companies like Carbon Engineering, which was recently purchased by Occidental Petroleum. What they do is they take giant fans, essentially industrial cooling tower type solutions to move the air through a sorbent, a solution which can capture the CO2. And then once that solution is captured, they need to put energy back into it, the heat that solution up a little bit in order to recover the pure CO2 out. You have sort of three steps. The first step is moving air and what we call an air contactor. The second step is once you move that air, you have to put it through some sort of solvent or sorbate or capture solution. And so the second step is the actual capturing. And then the third piece is the regeneration of that sorbent, that solvent. think of it like a sponge, once you fill up that sponge you have to recover it again. There are other technologies, for example, like direct ocean capture or ocean-enhanced alkalinity. And a way I like to describe this is the enhanced weathering or ocean-enhanced alkalinity already naturally occurs. You have these approaches where you’re essentially trying to speed up rock weathering by taking calcium or magnesium and putting it into the ocean, essentially putting an acid into the ocean so that it lowers its acidity which allows the ocean to naturally pull CO2 out of the air even more. The other side of that, there are companies out there like Running Tide that are thinking about growing algae in the middle of the ocean on a buoy so that it grows the algae as capturing CO2 from the air in the form of biomass. It becomes super heavy and then it starts to sink down to the bottom of the ocean. And so there are these other approaches where you’re engineering nature in a way to help remove carbon dioxide from the atmosphere. There are so many different kinds of approaches and that’s what’s really exciting about this space right now is that it’s a very technology nascent and fragmented space where there are new technologies being developed, new approaches, new chemistries, new ways to utilize nature. And that makes it super exciting but also difficult to navigate and it’s not quite clear yet which one is gonna scale. But we know that we’re probably going to need a combination of all of them.

Tom Heintzman: I like your description of the continuum from nature-based to engineering and in the middle being acceleration of some of nature’s processes. Each of these stages along their continuum have some strengths and weaknesses. It would be too much to get into a lot of detail, but can you give us just some of the high points where along the continuum there are different strengths and where along the continuum there are different weaknesses?

Phil De Luna: For sure. And the way I’ll describe this is talking about how us as Deep Sky thinks about which are the technologies that we want to incorporate and help scale and pilot. Nature-based solutions like planting trees and protecting mangroves and wetlands is absolutely crucial and important, but it’s not sufficient for many different reasons. Trees take a really long time to reach maturity and therefore start removing CO2 at large amounts. They’re not necessarily all that permanent. We have experienced that in Canada this summer with all the wildfires. This non permanencymeans that there’s a risk that the carbon credit that you purchase may actually end up being invalidated because the CO2 that is captured by a nature-based solution could literally go up in smoke. So that’s some of the issues with nature-based solutions. They’re cheaper because they’re easier to deploy and they’re less complicated from a technology perspective.On the tech-based side of things, we have to think about energy consumption. So some technologies have really high energy consumption. And on the direct air capture side of things, you can even go into sub technologies there. There are things that use solid sorbents and heat which is very energy intensive. There are other technologies, like for example, a company called Mission Zero, which we just announced as being our first air capture partner, that is using electrochemistry and liquid sorbents instead. And so, if something can be completely electrified where you don’t necessarily need to use heat, that’s a strong advantage because it increases the deployability. Lots of these technologies that need heat are thinking about, well, how can we co-locate this on other industrial places or parks where industrial waste heat already exists? But then by doing that, you’re limiting the amount of places that you can deploy this to areas that already have industrial heat. So that’s one consideration. Another could be the supply chain. Some of the technologies that we’re looking at will produce byproducts of their process. They capture CO2 and they’ll also produce water or they’ll capture CO2 and they’ll produce hydrochloric acid or they may produce other byproducts like hydrogen. On one hand, yes, it’s great that you’re producing another product that you can diversify your revenue stream and therefore lower the cost of capture. But at the same time, you have to think about how do you get that product to market? Are you producing enough hydrogen that it’s meaningful? Does it make sense to actually monetize that hydrogen with all of the capex that you have to include for safety, for purification, for transporting the hydrogen from your site? And the same thing with all of the other byproducts that are happening. 

Tom Heintzman: I’d like to go a little deeper into cost, if I could.Direct air capture could be as much as $1,000 to $2,000 per ton. And certainly those are prices that I’ve heard that Microsoft and other leading purchasers are paying. What will it take to get the DAC prices down? And is it realistic to expect that they can eventually get to, let’s just say, the $100 target where Biochar is roughly these days?

Phil De Luna: So first I’ll throw out a few definitions for your listeners. Biochar is essentially taking organic matter like waste byproducts of the forestry sector or the agricultural sector, and then burning it essentially without the presence of oxygen in what’s called pyrolysis.It condenses it to just pure carbon, which then you can either use to bury underground, you can spread it onto land. And the reason why the cost for biochar is so low compared to something like direct air capture is because it’s relatively simple and technologically not complex process. The second question about direct air capture and these more complicated engineering processes are around 1000, even $2,000 per ton, there’s a lot of debate right now of what is the actual cost that we should be thinking of? A lot of people put out $100 per ton, but that was, you know, straight from Shopify, that was an arbitrary number that they had put out when they first started purchasing carbon dioxide removal credits. And if you look into it, there are very few things in the world that actually cost $100 per tonne or less. So I actually think that $100 per tonne isn’t the right number that we should be thinking about. We should be thinking about what is the either regulated cost of carbon. And that could be either through a carbon price, a carbon tax or a cap and trade system, or what is the social cost of carbon in that region? And that really sets the floor for what carbon dioxide removal should be priced at when it’s mature. And right now that’s anywhere from 100 to 150 to 200, to even $300 per ton. What makes CDR economic isn’t some arbitrary flat $100 per ton that is going to remain consistent, but rather it’s a dynamic number that we need to consider all of the different alternatives for decarbonization against. Now, the question you asked was, what will it take for these prices to go down? If we look at the history and the cost curves of solar, of wind, the first initial deployments were always more expensive. Solar is a perfect example. 100X decrease over how many years? And the reason that it decreased wasn’t because of just time, but it was because of a number of deployments. People understood how to make these better. They learned from their mistakes, they shared knowledge, and then they were able to mass produce and mass manufacture. Right now in the CDR space for direct air capture and other engineered removals, they’re very much first of a kind prototypes. They haven’t reached the mass manufacturing scale yet. There isn’t a supply chain. And so there’s a lot of just manufacturing and economies of scale cost reductions that have yet to be baked into these prices. So that $1,000 to $2,000 per ton is what they cost today because you have to do your engineering for the first time. So what will it take to bring these prices down? First is we need to start getting more deployments so that we learn and we can improve upon the designs that we currently have. We need to start developing a supply chain that can mass manufacture these machines in a way that we’ve seen in other examples. And then the third is we have to start thinking about policies and regulations that help to support the early stages of this industry. There’s no doubt in my mind that these prices will decrease. They’re not going to increase. This is the ceiling that we’re seeing today. The question becomes how fast can they decrease? And the answer is how fast can you deploy?

Tom Heintzman: I’m going to open up another Pandora’s box, and this one’s not cost but closely related, energy. The world is trying to go through an energy transition. Direct air capture, however, is very energy intensive, at least today, and would dramatically increase the amount of renewable energy that would be required if DAC, direct air capture, is part of the ultimate solution. How do you think about energy use and adding that additional challenge on top of what is already a daunting challenge of decarbonizing our electricity grid? 

Phil De Luna: I’ll first start off by saying that you cannot do CDR unless you already have the renewable supply. And that’s actually one of the biggest challenges. It’s not the technology of capture. Fundamental constraints in CDR are electricity, renewable electricity, and storage capacity. Where can you actually put the CO2 once you’ve captured it? The question then becomes, exactly to your point, one, how do we either lower the energy intensity of the technologies that we have today so that we’re using less of it, or two, how do we build out the electricity grid so that it can meet the future demand. The answer is we have to do both. We have to build out as much and as rapidly as possible our renewable energy capacity. And that doesn’t just mean solar and wind, it also means nuclear, geothermal, as much as we can get our hands on. A lot of people are thinking about and talking about the energy intensity that DAC uses, where they’re really talking about these sort of first generation of DAC or direct air capture technologies, like Carbon Engineering, which need immense amount of heat, which actually today is provided by burning of natural gas. What we’re looking at are technologies that don’t need heat at all, and therefore could potentially have lower energy costs because they can just be electrified. There are companies that are using electrodialysis to separate the different ions of carbon dioxide in a capture solution rather than having to use heat. They can just use electricity. And so right now these technologies that are using heat are at around 3000 kilowatt hours per ton of CO2 removed. Our goal is to get down to around 1000 kilowatt hours per ton of CO2. So that’s a third of what current generations of direct air capture are using today. If we can reduce the amount of energy needed by a third, and if we can continue to scale out all of the renewables capacity that we need, not only for DAC, but for the complete transformation of our economy, then we’ll be able to get there.

Tom Heintzman: Phil, thank you for the overview. So my last question, and I’d like you to put on your long range glasses for this one. It’s a two parter. It’s look out 10 years and where do you think we are from a technology perspective in terms of engineered solutions. But the second part is, if you’re a CEO of a Canadian company and you’ve made decarbonization commitments and you have to figure out how to manage going forward, what would you recommend to that CEO given the trajectory over the next 10 years of the science?

Phil De Luna: It’s a great question. So it is my belief that in 10 years, we will be at megatons scale, hundreds of millions of tons of CO2 being removed every year with engineered solutions. we’re just at the very forefront of this industry. And what is needed and is required and what we currently have, the gap is so large that it has to grow exponentially. And this dovetails a little bit into your question about CEOs. When people think about CDR, they’ll always say, what is the business model? Ultimately, you’re asking people to pay you to remove CO2. What is the impetus to do that? The impetus is when you think about CDR as the backstop for decarbonization. If we are not reaching our climate goals fast enough, as we continue to miss these goals, CDR is a way for us to catch up.If you’re a company and you started making Net Zero pledges a couple of years ago, and you’re only now starting to realize what those emissions look like, then you realize that the levers that you have to actually impact emissions reduction are very, very limited. You’re starting to realize that it’s becoming very difficult to reach the commitment without some form of carbon dioxide removal and offset. You’re also starting to realize that there are regulations, public acceptance and sophistication within the market that are pushing people to become and be held more accountable. So what do I say to a CEO that is thinking about carbon removal technologies is start thinking about them now because one, the supply is extremely limited. There is not enough carbon dioxide removal to meet the demands, that supply is going to increase as more companies come online, as more project developers like Deep Sky start to mature. But if you’re a CEO and you’re worried about what this liability means, how are you going to get to net zero when you don’t have the control over the levers to decarbonize, you need to start getting involved and thinking about how do you secure that supply today? How do you be involved in these CDR projects? How do you look at the prices of what these are and maybe you pay a little bit more today or maybe you pay a little bit more in a basket approach. But that’s not going to happen unless you and the CEO startinvesting and thinking about how you can procure and secure your supply now because there’s not going to be enough.

Tom Heintzman: Phil, I could keep talking about this for hours, and I think that’s a testimony to both how interesting it is and also your vast knowledge in the space. Thanks for taking the time to join us today, and thanks to our listeners for tuning in. If you’d like to learn more about how your business can navigate the carbon markets, join us for CIBC’s Carbon Summit on October 26th, 2023 in Toronto. The Summit will bring together experts in carbon market structure, project development, and policy. To register, please contact your CIBC Relationship Manager. 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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