Compass Money: Carbon Capturing as a Viable Solution to Climate Change?

The Port of Houston, the site of a proposal by ExxonMobil to capture and store excess CO2. (Flickr Commons)

President Joe Biden announced on April 22 during a two-day virtual climate summit that, in addition to rejoining the Paris Climate Agreement, by 2050 U.S. carbon emissions would be cut in half (from 2005 levels). While the U.S. is on the right path, dropping 13 percent of emissions from 2005 to 2019, according to the EPA the U.S. still produced more than six and a half billion metric tons of carbon dioxide equivalents in 2019. Even though numbers vary, the U.S. produced about 15 percent of carbon emissions in 2015. That year, the Environmental and Energy Study Institute (EESI) estimated that approximately $5.3 trillion in negative externalities were introduced globally due to the extraction and burning of fossil fuels (one of the main contributors to carbon emissions). These externalities include decreased food security, coastal vulnerabilities, and public health costs. These consequences have been modeled by the EPA using a score called the Social Cost of Carbon (SCC), and in 2016 it predicted that by 2020, each ton of carbon would cost about $42. 

A 2020 Pew Research poll showed that approximately 65 percent of American adults believe that the federal government is doing “too little” to combat climate change, and about 84 percent were in favor of a solution that is gaining traction among businesses: carbon capturing. On the same day that Biden announced his climate push, Elon Musk announced a $100 million contest for groups to come up with “pragmatic” solutions for capturing carbon that can start small but eventually scale up. While Musk is searching for new proposals, carbon capturing is already extant and working—but on a smaller scale. Currently, there are about 80 plants worldwide dedicated to capturing carbon and storing it through different methods. However, these plants are only able to remove about 40 million tons of carbon each year, a far cry from the nearly 40 billion produced annually. This small dent is shortened when taken into account that often carbon capture is built near factories, and is often not even enough to fully remove the carbon from their factory.

While these methods are cost-inefficient (as relating to the overall negative externality of emissions), it hasn’t stopped companies, mainly those that profit from emissions, from investing in carbon capturing. One of the larger examples is ExxonMobil, which recently announced a $100 billion plan—create a carbon sink (that would store carbon under the Gulf Coast) of 30 million tons annually by 2030 around the Port of Houston. Another company, CarbonCure, has a plan to create concrete with excess CO2, which would turn carbon collecting into a profitable industry that could result in around 500 million tons sunk annually throughout the industry. 

These carbon sinks have the potential to help cut down on the larger externalities, but their costs do have some hesitating to fully invest. The U.S. has a tax credit of $50 per ton of carbon captured, however, Exxon has argued that this is not enough. In fact, their CEO has stated that in order for their $100 billion plan for Houston, the government should further incentivize Exxon, and one of these incentives could be doubling that tax credit. Even though $50 is still less than the predicted SCC by 2020 according to the EPA, estimates for 2030 already have the SCC reaching $50. 

Propping up this developing industry may seem like it will not pay off in the short term, but achieving close to zero or even negative emissions could help push back at the current externalities, providing companies with a safer, more secure world for business.