Image Source: Bloomberg
Occidental Petroleum has long been known as one of the U.S.’s largest oil and gas producers, rivaling massive companies such as Chevron and ConocoPhillips. Recently, high energy prices have driven the company to record profits; its stock was the S&P 500's top performer last year. However, with decarbonization sweeping across the country (and the world in general), the company is currently seeking ways that it can appear to have climate change goals in mind, without decreasing its investment in fossil fuel technologies.
Enter direct-air carbon capture. To offset emissions, the company is planning on investing billions into the technology over the coming decades, pulling CO2 from the atmosphere and turning a profit from carbon-dioxide removal credits, as well as products produced from CO2. Its first plant is scheduled to begin operations in 2024, annually removing around 500,000 metric tons of CO2 from the atmosphere.
There are many logistical issues with this plan, however, in order to grow the technology, someone will eventually need to take the initiative to address them. It might as well be one of the largest oil producers in the world. The growth of carbon capture technology is essential to meet the world’s net zero emissions goal, according to the IEA.
Image Source: IEA
Most notably, the technology is essentially in its infancy, and the amount of energy required to operate these plants is enormous. If this energy isn’t emissions-free itself, the operation of a carbon capture plant is completely pointless. On top of this, the economics of running the plants get “fuzzy,” with a mess of tax incentives, carbon credit sales, and the production of CO2-based products muddying the waters of the company’s revenue stream.
For a startup looking to break into the industry, these would be almost unsurmountable challenges*. However, for Occidental, a Fortune 500 company that made $2.3 Billion in profit in 2022, these hurdles just might be scalable. Sure, the company is only looking into the technology so that it can avoid long-term transitioning away from fossil fuel investment, but does it matter? Let’s let the big players tackle the hard problems first, and allow them to figure out solutions that smaller companies don’t have the resources to address. In the short term, the benefits that will come from the advancement of the technology will greatly outweigh the company’s long-term reliance on carbon-rich investments. Market drivers and other incentives will take care of that.
Without the advancement of carbon capture technology, the world has no hope of reaching the net-zero energy goal. Steps such as these are essential to making progress on this. While Occidental may not be the symbol of a carbon-free society that many activists are hoping for, its expansion into carbon capture technology will eventually lead to progress in the space that is desired. In the meantime, all activists can do is support them in their endeavors.
*Of the 18 operating carbon capture sites worldwide, many are operated by the well-established Swiss startup, Climeworks, which is dedicated to the growth of the technology.
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