Occidental, an American oil major, recently agreed to buy Carbon Engineering, a Canadian carbon-removal company, for $1.6bn. The deal underlines big oil’s growing interest in carbon-capture technologies, which suck carbon dioxide from the air. What does it mean for the climate?
Suppose a trucker dumped a load of manure on your front lawn and then demanded a fee to haul it away. Big oil made the fuel that is cooking our planet, so the idea that it might profit from cleaning it up strikes many people as obscene.
Critics argue that big oil is using carbon removal as a tool to protect its core business. As Occidental’s chief executive, Vicki Hollub, sees it, carbon removal means “we don’t need to ever stop oil.” Defenders argue that big oil can help meet social demands for decarbonisation by pivoting to carbon neutrality while bringing technical expertise to new low-carbon markets.
Occidental, an American oil major, recently agreed to buy Carbon Engineering, a Canadian carbon-removal company, for $1.6bn. The deal underlines big oil’s growing interest in carbon-capture technologies, which suck carbon dioxide from the air. What does it mean for the climate?
Suppose a trucker dumped a load of manure on your front lawn and then demanded a fee to haul it away. Big oil made the fuel that is cooking our planet, so the idea that it might profit from cleaning it up strikes many people as obscene.
Critics argue that big oil is using carbon removal as a tool to protect its core business. As Occidental’s chief executive, Vicki Hollub, sees it, carbon removal means “we don’t need to ever stop oil.” Defenders argue that big oil can help meet social demands for decarbonisation by pivoting to carbon neutrality while bringing technical expertise to new low-carbon markets.
Greenwash or swords-to-ploughshares? My guess—informed by my experience as a climate-focused academic and as the founder of Carbon Engineering (on whose board I still sit)—is that the oil majors will be unsuccessful at both. Greenwashing will not protect them; nor will they smoothly pivot from being oil suppliers to carbon removers. Yet big oil’s carbon-removal play may nevertheless yield substantial climate benefits, in part because it is unlikely to play out as well as the companies hope.
Big oil will trumpet its green achievements, both real and imaginary. This will dampen public disapproval and help recruit talent, but it is hard to see how it reduces the threat to the core business, which is driven by accelerating climate policies and the decreasing cost of electric vehicles.
A world with large-scale carbon removal is a world with carbon prices high enough and decarbonisation policies strong enough to drive oil demand down sharply. Permanent carbon removal is likely to cost over $150 per tonne of carbon dioxide for at least a decade or two. That is equivalent to a penalty of almost $70 per barrel of oil. Though it may provide a green aura, an oil company’s carbon-removal business, however successful, will not protect its legacy oil business from strong carbon prices and policies. Neither greenwashing nor green reality changes the fundamentals.
The feasibility of a swords-to-ploughshares pivot rests on the premise that expertise transfers from oil and gas to carbon removal—or even beyond to solar power and other clean technologies. Although engineering skills are transferable, the business pivot is less plausible. A management culture built to succeed at making risky bets on big hydrocarbon plays such as ultra-deep offshore oil is different from the management culture needed to succeed in clean energy or carbon removal.