Investing in Carbon Capture is Smart - Carbon Catchup with Kirsten

You might have seen the recent spending review from Rachel Reeves, Chancellor of the Exchequer, setting out funding priorities for the next parliament. Personally, I was pleased to see the government recommit to their carbon capture and nuclear investments – with over 9 billion to be spent in the next parliament alone. However, not everyone is happy with this.

What is Carbon Capture?

Carbon capture refers to a group of technologies that suck carbon dioxide out of the air. This includes Direct Air Removal (DAC) which removes it from the atmosphere with giant fans, Carbon Capture Utilisation and Storage(CCUS), which scrubs emissions from high intensity sources like factories, and various types of organic ‘sequestration’ (removal). You’ll know about a famous form of the last one already – trees!

The government’s funding of 21 billion over the next 25 years is for CCUS – removing emissions from heavy industry itself, particularly for the industrial clusters at Teesside.

Why is This Controversial?

Carbon capture comes with controversy. There’s doubts that the technology is ‘unproven’, some environmental advocates argue that it just allows fossil fuel companies to keep emitting, while others say it will never be financially viable. MPs have also objected to the cost, and the way the investments are being made, saying that taxpayers will see no benefit.

I don’t agree with this.

Carbon Capture Exists, it’s Expensive (Right Now)

Carbon capture is not like flying cars – it exists and it does actually work. There are right now, 45 commercial facilities around the world capturing carbon from air. Here’s one in Texas that captures carbon from a cement plant. And here’s one in Iceland that does direct capture. This isn’t ‘a fairytale’.

The problem is that we don’t know how to do it cheaply or at scale.

Although there are much larger ones currently in construction, that one in Iceland only has a 4000 tonne capacity per year, which is only about 2.5x Recorra’s 2023 carbon footprint. With a whopping carbon price of ~ $300+ per tonne this makes it the most expensive way to fight emissionswhen compared to other strategies like electrification, energy efficiency, and renewables.

By this doesn’t mean we should write it off!

Technologies that are essential for fighting climate change – like solar panels and batteries, were similarly experimental not that long ago. The first commercial solar panel was only invented in the 1950s, by the famous research centre Bell Labs. It produced 1 Watt of electricity for… $1,865. For reference, the average unit price for UK energy this year was around 27p for 1 kiloWatt (x1000 watts) of electricity, and a household uses a bit under 3000 kWh a year. Fighting climate change with solar panels in the ’50s would’ve bankrupted the country.

But the current price of solar power globally?… $0.20 per Watt (15p).

I find that a bit mind blowing.

How did we achieve this? Well, there’s a concept in technology innovation called ‘Wright’s Law’, or more colloquially – learning curves. This states that the more of a technology you build, the better you get at doing it, leading to a consistent, and often dramatic decrease in price. By investing in and building so many solar panels, we’ve managed to make them become 90% cheaperin the last 20 years.

If we want to have carbon capture in the future (and we will), then we have to invest in it now. It will become cheaper and more effective the more we build, – but only if we actually, you know, do it.

We Do Need Carbon Capture

Secondly, we are no longer in a position where we can keep warming at safe levels without carbon capture. The IPCC, the climate science research group of the UN makes this clear, saying that we need to aim to remove billions tonnes of CO2 over the next century.

Achieving Net Zero means an explosion of infrastructure. We need a huge expansion of renewables and nuclear reactors, a total transformation of the grid, and enormous battery plants capable of supplying energy when the sun isn’t shining and the wind isn’t blowing. We also need to invent a whole load of technologies to decarbonise extremely difficult industries like cement, fertiliser and waste incineration.

I agree that we have to provide the right incentives to fossil fuel companies, so they can’t use CCS to prevent transition. But it’s very slow to build anything in the UK, and hitting Net Zero by 2050 means doing all that building and inventing in 25 years.

Let’s cut to the chase – we’re running out of time. Carbon capture buys us more.

Carbon Capture is An Industry

The world is going to get hotter over the next few decades, and as it does, the weather is going to become more extreme. This will disrupt daily life around the globe, through flooding, crop failures, droughts, rising sea temperatures, and storms. This is going to be very expensive.

I think in the next few decades, the impacts of climate change will be all around us, and there will be far more demand to stop it getting worse. At this point, we come to a business proposition.

You – The World, (businesses and governments) want to stop the temperature from increasing by removing excess carbon dioxide from the atmosphere and critical industries. Me – A carbon capture business, can give you that technology, but at a price.

The result? Ca-Ching! Valuable business deals – between carbon capture manufacturers, and industries all over the world, leading to the growth of a massive new industry. Getting the markets right for carbon capture is challenging – we need to figure out how everyone will pay for this, and nothing is guaranteed. But if we do succeed, and British companies make and sell that technology (and we currently have a competitive advantage in CCUS innovation), then they will make a killing.

Successful Industries Pay a Lot of Tax

Successful companies pay corporation tax, and business rates and national insurance contributions, and their employees will make lots of money and pay income tax, and then they will buy lots of products and services, on which they pay sales tax, and the whole thing stimulates the economy, so that other people make more money (and pay more tax). Creating a very successful industry leads to higher tax revenues and economic growth, benefiting all.

The idea that taxpayers will not benefit from investing in carbon capture is a failure of long-term thinking. The costs of this technology right now to current taxpayers will be a fraction of the gains of getting it right later. And that’s if we ignore all the actual climate benefits of doing so.

It’s Not That Much Money

Some will argue that these future gains are not worth the current losses to their pocket. There’s grounds to question the current structureof the investment, and with tax burdens the highest they’ve been for 70 years, unnecessary costs should be scrutinised.

But the actual cost of CCS – 21 billion over 25 years, while it sounds like a lot, is a fraction of government spending. I’ve provided a variety of other spending categories to assess the breakdown, and at 0.8 billion a year, investments in carbon capture only come to;

• 0.063% of the entire budget
• 0.763% of debt interest payments
• 5.84% of the £13.7 bn budget for Science, Technology and Innovation (CCS falls within DESNZ, so the 0.8 bn is on top of that budget)
• 0.9% of Local Council spending
• And a measly 0.5% of the second largest spend in the UK budget – £150.7 billion on pensions

Investing in CCS isn’t about the price of the carbon we save now. It’s about having a stake in the essential technologies of the future.

I think that’s a good use of my taxes.

By Kirsten Zoe-Smith