As part of the green transition, governments worldwide are calling on companies to decarbonise their operations. This has led to a wave of investment in carbon offset schemes, carbon capture and storage (CCS) technologies and other “climate solutions” that have not yet been proven to work. Over the past half a decade, there has been great enthusiasm for the mid-term mitigation of greenhouse gas emissions, until we can achieve a global shift away from fossil fuels to renewable alternatives. However, several recent studies suggest that many of these climate solutions have been overhyped and have a limited impact on the greenhouse gas emissions being produced by some of the worst culprits.
In the U.S., the Biden administration has been clear in its support for CCS technology, and other “climate solutions”, by offering billions in investment from its Inflation Reduction Act (IRA) and other policies to companies investing in CCS. A recent analysis based on two OCI databases suggests that the White House has provided $12 billion in subsidies to technologies, such as CCS, that experts call a ‘colossal waste of money’. The worst offenders – the EU plus the U.S., Norway, and Canada, account for an estimated 95 percent of the public subsidies on CCS and fossil fuel hydrogen.
Several studies of CCS technologies have repeatedly found that they fail, go over cost or underperform. Despite decades of failures, energy companies are still pushing for the use of CCS technologies to decarbonise operations and prolong fossil fuel production. Meanwhile, several governments have touted blue or green hydrogen, derived from natural gas, as a transition fuel, despite the high level of emissions generated during hydrogen production.
Robert Howarth, a professor of ecology and environmental biology at Cornell University, stated “The United States and other governments have little to show for these massive investments in carbon capture – none of the demonstration projects have lived up to their initial hype.” Howarth added, “It is instructive that industry itself invests very little in carbon capture. This whole enterprise is dependent on government handouts.”
The oil major ExxonMobil has pursued billions in subsidies from the White House for “climate solutions” that allow it to continue drilling for more oil and gas. Exxon regularly calls itself a “global leader” in CCS, saying it is driving “meaningful change” in the battle against climate change. However, approximately two-thirds to three-quarters of the carbon being captured in the U.S. is used for enhanced oil recovery, not to mention all the carbon that CCS technologies fail to capture.
Exxon’s staunch support for CCS tech and combatting climate change is perhaps surprising, given that the company denied the threat of climate change and opposed efforts to shift to clean energy just a few years ago. While some believe this change of opinion responds to increasing government and consumer pressure to decarbonise, sceptics believe that Exxon is supporting unproven “climate solutions” rather than investing in renewable energy as a means of maintaining its oil and gas output for years to come. Reports from Exxon’s exploration into CCS from the previous decade suggest that internally, Exxon foresaw CCS having only a limited role. One ex-company scientist saw “CCS to be a mediocre-at-best contributor to carbon sequestration”. Yet, as government subsidies for CCS and other carbon-cutting initiatives increased, so too did Exxon’s interest in the schemes.
While Exxon and other oil majors around the globe are investing in CCS, with government support, other companies are funding carbon offset schemes, in an equally tragic vein. Several hard-to-abate industries, particularly aviation, are investing in carbon offsetting initiatives in a bid to take carbon out of the atmosphere, even if they cannot decarbonise their operations directly. These schemes include forestry schemes, hydroelectric dams, and solar and wind farms.
However, a 2023 analysis showed that most of the environmental projects used as part of offsetting schemes have fundamental failings and cannot be relied upon to cut emissions. The analysis demonstrated that 39 of the top 50 emission offset projects, or 78 percent of them, were categorised as likely junk – meaning that they cannot guarantee additional, permanent greenhouse gas cuts.
In May this year, the Biden administration released a Joint Statement of Policy and new Principles for Responsible Participation in Voluntary Carbon Markets (VCMs) that codify the U.S. government’s approach to advancing high-integrity VCMs. This was aimed at strengthening the market to ensure that VCMs deliver on what they promise. This move was driven by the publishing of analyses, like the one above, which demonstrated the failings of several existing carbon offset schemes.
While the publishing of new guidelines for VCMs is a step in the right direction, the U.S. government, like several others worldwide, continue to support and fund a wide range of unproven “climate solutions”. This government backing is allowing fossil fuel companies to continue drilling for oil and gas, when they should, instead, be investing in alternative energy sources and supporting a green transition. It is also allowing hard-to-abate industries to shirk their responsibilities by funding carbon offset schemes that repeatedly underperform.
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By Felicity Bradstock for Oilprice.com
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