Capturing carbon emissions, storing them and even using them in novel ways are getting a lot more attention now than they did a few years ago, as policymakers, business leaders, scientists and others look more urgently for ways of addressing climate change.
In this edition of Columbia Energy Exchange, host Bill Loveless catches up with Julio Friedmann, a senior research scholar at the Center on Global Energy Policy and the director of the center’s Carbon Management Research Initiative. He’s one of the most widely known and authoritative experts in the U.S. in this field with expertise in technology, policy and operations.
Julio served as a principal deputy assistant secretary for fossil energy at the U.S. Energy Department during the Obama administration and has held positions at Lawrence Livermore National Laboratory. With Bachelor and Master of Science degrees from the Massachusetts Institute of Technology and a Ph.D. in geology from the University of Southern California, he also worked for five years as a senior research scientist at ExxonMobil.
Their conversation is timely as Congress considers new legislation that would expand government incentives promoting carbon capture technologies as concerns over the risks of climate change and commitments to address the phenomenon grow. Julio also breaks down the challenges of financing these technologies.
And by the way, keep an eye out for an upcoming paper from Julio and the Center on Global Energy Policy that will examine which policies might work to stimulate investment in carbon capture technology in the U.S. power sector.
Bill Loveless: Hello and welcome to Columbia Energy Exchange a weekly podcast from the Center on Global Energy Policy at Columbia University, from Washington I am Bill Loveless. Our topic today is one that’s getting a lot more attention now than it did a few years ago as policy makers, business leaders, scientists and others look more urgently for ways of curbing the emissions that cause climate change. What we’ll be talking about is capturing carbon emissions, storing them and even using them in novel ways. Our guest is Julio Friedmann, a Senior Research Scholar at the Center on Global Energy Policy and the Director of the Center’s Carbon Management Research Initiative. He is one of the most widely known and authoritative experts in the U.S. in this field with expertise in technology, policy and operations. Julio served as a Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Energy Department during the Obama Administration and has held positions at Lawrence Livermore National Laboratory. With Bachelor and Master of Science degrees from the Massachusetts Institute of Technology and a Ph.D. in geology from the University of Southern California. He also worked for five years as a Senior Research Scientist at ExxonMobil. Our conversation is timely as Congress considers new legislation that would expand government and centers promoting carbon capture, storage and use. And just as importantly Julio does a good job explaining the prospects of financing breakthroughs in this technology. And by the way keep an eye out for an upcoming paper from Julio and the Center on Global Energy Policy that will examine which policies might work to stimulate investment in carbon capture, use and storage in the U.S. power sector. Well, here’s our conversation. I hope you enjoy it. Julio Friedmann, welcome to Columbia Energy Exchange.
Julio Friedmann: My pleasure, delighted to be here, Bill, thank you.
Bill Loveless: Well, Julio let’s start with you, yours has been a varied career in government, industry and academia, tell us a little bit about that career and how those opportunities have shaped your work today?
Julio Friedmann: Happy to, I have the good fortune of working in a field that did not exist when I graduated with a Ph.D. Nobody did carbon management, climate change with some far field thing we’d have to deal within the future. And so I was able to take my experience as a geoscientist and take the experience that I had working for an oil and gas company 25 years ago and recognized early on that I could use that knowledge to solve and address a front-tier environmental concern and I’ve been working on carbon management ever since.
Bill Loveless: Yeah, it’s somehow what you learned so many years ago, you’re a geology, you studied geology that’s where you got your Ph.D. all these years later, it’s sort of all coming together in many ways it seems.
Julio Friedmann: Very much so. And I’ve had the good fortune of working in industry, in academia and in government and each time it has been because that’s where the work was most important. When I started working at Lawrence Livermore, we needed to create knowledge that was an important undertaking and so that kind of academic research focus was very helpful. When I worked for the Department of Energy, we were trying to scale up programs, we needed to move the needle on policy, we needed to create new ways to finance projects that was a good thing to do. Now, I am spending all of my time thinking about policy and finance because that’s the thing we need, we don’t need more technology per se to make a lot of progress. We definitely need deployment and these questions are at the heart of policy and finance concerns.
Bill Loveless: Well, carbon capture, storage and utilization is getting more attention now than ever before in the United States and around the world. What’s driving this interest, Julio?
Julio Friedmann: Two different things at the same time. One of them is our recognition of how far we have to go and how much we have failed to address the threat of climate change and growing emissions. The One and Half-Degree Report put up by the intergovernmental panel on climate change about two years ago really shook up the gumball machine. It was the first clear representation of how far our goals and ideals were from our actual progress. And so, a whole number of countries and companies and states and entities and civil society members all galvanized and recognized that you need a higher ambition and that renewed interest in carbon capture among other things. The other thing was what I was talking about we’ve begun to see some policies that create market alignment and that market alignment allows people to get a return on investment for doing carbon management. And that has suddenly now opened the flood gates and we’re seeing projects developed in the United States and elsewhere, we’re seeing new technologies getting fielded and we’re seeing whole new business models and enterprises in their very earliest stages that will have to grow to an enormous, enormous scale of what we’re going to do, what we need to do.
Bill Loveless: You know, at first, I want make sure we’re all understanding the types of technologies we’re talking about. You know, I covered years ago it seems decades ago carbon capture CCS, carbon capture and storage, and it seems like it’s a very different thing than say back in the 1990s in some ways at least in the scale than it may be today. The technologies we’re talking about seem to fall into three categories, carbon capture and sequestration being one, carbon removal from the air and the ocean and carbon conversion and use, explain what they entail and where their development stands today?
Julio Friedmann: Sure. And there’s a lot of different ways to express this. Let me just do the simple bog-standard version. Carbon capture and storage is really focused on large point source emitters. Those could be an industrial facility like a steel mill or a natural gas fire power plant, but the idea is you’re burning a fossil fuel or you’re burning biomass or you’re making byproduct CO2 from a chemical reaction, let’s just capture that and keep it from the air, that’s it. It’s trying to separate those gases out and then put them in basically a deep geological repository what I sometimes call carbon capture and return. We’re sending the carbon back where it came from. That is essentially an environmental program, it’s not an energy program. It doesn’t make energy to do this, but you’re able to use all kinds of energy in that context without emissions.
The second one is CO2 removal. This was not even a topic five years ago. People thought it was nonsense to even consider this. Now, it’s clear, again from the work of scholars around the world, that we have to do this and at an enormous scale and quickly, on the order of 10 billion tons of CO2 a year within a few decades. And just for a scale 10 billion tons is the size of the entire oil and gas industry. It is a huge, huge undertaking. And so things like direct air capture which are sort of hard to defend on a thermodynamic basis are now part of the work we have to do as well as bio energy with CCS, mineralization, soil carbon storage, all of these other things that we know we can and must do now is part of the discussion.
The third part is CO2 conversion and use. The easiest way I can say this is that we put CO2 into everything. Everything in this room that’s not made out of metal is made out of carbon dioxide. And it might be in the form of wood, or it might be in the form of plastic, or it might in the form of fibers in our clothes, but it all started as carbon. There is nothing in the physics or chemistry that says you have to make that out of a hydrocarbon. You can in fact make it out of CO2, so we’re now seeing companies startup and enterprises launch to put CO2 into cement and concrete, that make plastics out of CO2, that make fuels out of CO2. It’s hard, it’s pricy, but we can do it. So that -- that has sort of emerged as another thing, in part, I have to say, enabled by the rich abundant low carbon energy that we’ve seen from things like renewable power generation around the world. A lot of carbon conversion and use turning CO2 into stuff doesn’t make sense if you don’t have abundant low carbon energy. Now that we’re seeing that world emerge, we’re seeing this whole idea and I often pull these three different groups of technologies and pathways all of the stuff together under the framework of a circular carbon economy in which we do the same amount of sort of balancing the books. We return to the geosphere any carbon we take from the geosphere and we cycle within sort of the earth’s surface and within our own technologies and our own ecosystems what it is we need to by reusing the carbon dioxide.
Bill Loveless: Now, you mentioned before how much of your work now is concentrated on policy. We’re having this discussion here in Washington D.C. while you’re doing some work here presumably talking to folks and trying to educate them on this very topic, but you know, I’ve read what you said that deployment of these technologies is not about the cost, it’s about finance, what did you mean by that?
Julio Friedmann: Right. So, I’ve had this discussion with many people over the years and the terrible framing that I’ve lived in for a lot of my career is you take an existing facility and then you add cost. You do something additional to it that costs money and so people are like, it doesn’t generate revenues, it doesn’t create products, why would I want to do this, it’s more expensive. And so, people have said to be CO2 capture and storage cost too much, to which I would respond compared to what? Like we don’t really know. What really distilled and it took a long time to distil is this question it’s not about cost it’s about finance. So, we pay for all kinds of things that are very expensive now. We subsidized electric vehicles, we subsidized solar power and offshore wind and there’s very good reasons to do all that. I am not hating on those like we need them and we need a whole lot more of all of those, but the amount of cost to those things is actually much higher per ton of carbon reduction than is carbon capture and storage. The challenge is that there are policies and those other things that allow financing. There are things like the renewable portfolio standard or an investment tax credit or production tax credit or a feed-in tariff or a mandate by a country like China that says we’re just going to build a bunch of a stuff. That gets financing in place and until recently there was no way to finance a CCS project, you just couldn’t make it. In a couple of niche markets you could basically finance it through enhanced oil recovery --
Bill Loveless: Which has been around for decades?
Julio Friedmann: Since 1972.
Bill Loveless: Right.
Julio Friedmann: We’ve been injecting CO2 underground, but that’s not really necessarily best for the climate. There’s a lot of value to CO2 enhanced oil recovery from a climate perspective, but in order to get wide deployment you just can’t balance the books on that, you just can’t. So the question is then how do you finance this stuff? And so, a couple of recent big policy shifts have helped that, none more important than the national U.S. policy of the 45Q Tax Credit Amendments. And that basically created something like a production tax credit and --
Bill Loveless: This was a law by the way that was passed by Congress in 2018 --
Julio Friedmann: Yes, this was passed in February 2018 by a Republican House and a Republican Senate and signed into law by a Republican Administration, but it essentially is a social cost to carbon. It says we will pay you 50 bucks a ton not to emit CO2. And this is something that is lost often in the discussion, this is not a subsidy to anybody who doesn’t store a CO2. It’s not about anything, but reducing emissions. And so it is the purest representation actually of climate policy out there because it says this is what we think it’s worth today and it has launched projects around the country and companies around the country to go out and bend rebar and pour concrete and start the work of putting CO2 underground.
Bill Loveless: What are some of those projects, Julio?
Julio Friedmann: So, one of the more interesting ones that’s been around for a while as an example is in Archer Daniels Midland Plant in Central Illinois in Decatur and these guys have been taking the byproduct pure stream of CO2 that comes from ethanol fermentation and storing that underground and when you do that you cut the footprint of the biofuel by about 50%. You go from 80 grams per megajoule to about 40 grams per megajoule for comparison gasoline is a 100 grams per megajoule, easy numbers. That project was supported with a federal grant which my office gave when I was at the DOE. You can do that for about 20 bucks a ton. So if you get paid 50 bucks a ton to do the same thing suddenly now we’re seeing LNG export terminals, other ethanol plants, hydrogen plants, fertilizer plants, natural gas processing facilities, we’re seeing all of these companies go hey we can do the same thing, we can reduce our emissions and get a revenue stream and we’re starting to see this rolling forward. And already one of the projects that’s been announced almost immediately was an ethanol project in Texas called White Energy and they partnered with Occidental Petroleum and said, hey we’ll consider venting our byproduct CO2 why don’t we do it and it’s financed on 45Q.
Bill Loveless: So, that’s a good start, I take it that so-called Future Act Back in 2018. I think the Treasury Department just recently released the regulations that help spell out how this works, correct?
Julio Friedmann: Yes, actually just recently the IRS finally gave guidance after two long years as to what this means and it’s actually pretty good. They defined for example what Start of Construction means in the 45Q Amendments. It says you have to start construction by 2024, well you need to know what that means and they spell that out. It’s a similar kind of thing, we began to notice that once that 50 dollars a ton is not enough to deploy in a bunch of markets, most notably in the power market and in lot of heavy industry. There the cost of carbon capture is more than 50 bucks say 60 to 100 dollars and so it’s not enough to do the finance. So, recently we have completed our own analysis at Columbia on what policies would get deployment in the power sector in the U.S. and we’ll be releasing that actually very shortly.
Bill Loveless: Well, I am not going to force you to preview that here, but I do want to ask you as we sit here the Congress is considering, the U.S. Senate is considering a broad energy bill that has provisions in it for carbon capture sequestration technologies and maybe that’s a step in the right direction I am not sure but, how -- you’ve talked a bit about how far that U.S. policy has come on this matter, but what more needs to be done?
Julio Friedmann: There’s actually a lot of policies percolating in Congress right now. Some of those are in the most recently released sort of Omnibus Energy Bill that’s come out of both Senator Murkowski and Senator Manchin’s office as well as from the House of Leader, Kevin McCarthy. They include things like making the 45Q Tax Credits permanent and increasing the amount of incentive in tax credit that’s given to direct air capture, so CO2 removal technology. Other bills include things like the Effect Act which reauthorizes the Department of Energy to do a lot more in this space. A bill called the Invest CO2 Act which gives the Department of Transportation the authority to fund CO2 pipelines which makes sense because they already have the regulatory authority over CO2 pipelines. There’s things like in the reauthorization of the Highway Bill provisions to do low carbon CO2 concrete. So again, CO2 utilization technology, but giving the government special authorities to procure those as part of their procurement pathways. And of course, an innovation agenda, a lot of the bills that are out there stimulate innovation and give the Department of Energy and other agencies more funding to help develop these technologies to get them ready for market.
Bill Loveless: It’s a topic that you mentioned these bills the Republican leadership in the House the Republican Chairman of this Energy Committee, but the Democratic Leader of the Senate Energy Committee it’s a topic that seems to draw bipartisan support?
Julio Friedmann: Bipartisan and bicameral, I am very pleased to say. The 45Q Tax Credit which we talked about was championed by Senator Sheldon Whitehouse sort of the deepest blue climate hawk in the senate. And at the same time John Barrasso from you know, bright red coal heavy Wyoming and they both were in it for different reasons, but they both were in it to reduce CO2 emissions and that’s good. And we’re seeing that kind of sensibility matched everywhere, where say Congressmen like Representative Conaway from Texas from the House Ways and Means Committee can find a partner on the democratic side and say this is a good idea let’s do it. And they make it into for it for different reasons, but they all like the outcome and the outcome is something that reduces CO2 emissions broadly in the country and that creates a path to reduce the carbon intensity for industries that have a hard time doing otherwise.
Bill Loveless: You know, to the extent that there’s been progress I guess there is a greater interest and understanding of this technology, but you know, you’ve written that the lack of policy mechanisms to the extent that there is that lack reflects in large part an inability of scientists, engineers and practitioners to frame policy support in a context that politicians can use. Suppose you could say that about many things, but what did you mean here?
Julio Friedmann: Indeed, one of the analogies that I hear people frequently talk about in terms of the climate response is something like the Manhattan Project or the Apollo Project and this appeals to a lot of scientists. They’re like I am going to be the big brain that goes out to the desert and I invite the thing and it just deploys automatically because I am smart. And that’s actually completely the wrong metaphor all together, completely wrong.
Bill Loveless: Why is that?
Julio Friedmann: Two reasons why, first of all the only customer for the Manhattan Project was the U.S. Government. That’s not what we’re talking about here, we’re talking about a rich complex industry with many, many different parts that’s already heavily regulated with trillions of dollars of capital working through it already, it’s not like that, it’s just a different thing. My bias is actually that perhaps a better metaphor is something like the Marshall Plan, which worked within existing industries where money flowed to many, many small options where there was a real attempt to stimulate many sectors all at the same time and which was fundamentally born out of generosity as opposed to -- we got to beat the Russians in the space race, instead it’s like we have to rebuild democracy in shattered economies. And I think it’s a more interesting metaphor, but it’s one where the science is like helpful and important, but it’s not the ball game. You actually have to think about how economics work, you have to think about how markets work, you have to think about what’s politically actionable for a politician, you can’t just run into their office and scream louder. You actually have to provide a pathway that a policy maker or an investor or an economist or a banker can actually do something.
Bill Loveless: And you think that message is beginning to get through?
Julio Friedmann: I think it is. And I think in part it’s starting to get through because of the sense of urgency that people feel. One of the things that the sense of urgency on climate has delivered or demonstrated is that the old playbook isn’t sufficient. The real limit here is the amount of CO2 we can put in the atmosphere, that’s the hard limit. And the other hard limit that we have is time to deploy this stuff. If we don’t deploy quickly sort of what’s the point? And whether we’re in a four-degree world or a two-degree world or a one-and-a-half-degree world is a function of time as much as anything else. And so, if you look it through the lens of ambition and speed, you can’t just wait for people to understand your position and you can’t just try the thing you’ve done before again. You really have to broaden your understanding of other people’s perspective and you have to broaden the coalition that it takes to pass laws otherwise we just don’t get there.
Bill Loveless: Is a carbon tax necessary to bring about the sorts of advances in this technology that you think are necessary?
Julio Friedmann: There are certainly a lot of benefits that would come from an economy wide carbon tax. And I think that you know, the again simplest and cleanest way to do a lot of this stuff is by internalizing that externality that way. I also can’t wait for a carbon tax, I am on the clock. And there’s many, many policies that are doable while we sort that other stuff out. I don’t think these are substitutes for each other, but stuff like a procurement law or an investment tax credit or a green bank or building hubs in clusters as infrastructure investments would greatly accelerate deployment of carbon management to market and you can do that now. You don’t need to build a grand coalition across multiple nations, you can kind of do that. And at the same time, you can be flexible in the way this is done. Some policies like clean power standards which now nine states have say, hey the target is net zero, that’s it. However, you want to get there, go about it, it’s technology agnostic, that’s fine, it doesn’t talk about price at all. It’s essentially a regulatory framework which says after this date you can’t emit anymore, that’s fine. That gives everybody enough time to get their act together to figure out what works well in their own markets and what investments they can make for their companies. All that stuff sort of gets moved down the line and it is internalizing the cost, it is providing a market signal in terms of a phantom price associated with the cost of non compliance, but it’s not carbon price overtly, it’s just saying you can’t do that anymore.
Bill Loveless: Right, right.
Julio Friedmann: And we never did a carbon price -- let me say it this way. We never put a price on sulfur, we just said you can’t emit it anymore. We never put a price on leaded gasoline. There’s like there’s lots of ways to go about this. And that’s okay, the fact that we have so many options gives me optimism. It means that we can actually move the ball forward more quickly.
Bill Loveless: That’s good. You mentioned optimism I mean to what extent you get do you fixate, I am not sure that’s a right word in this sense, but that that you focus on goals that are set by year, for example the big one out there is a goal of Net Zero Carbon Emissions by 2050 it’s something you’ve said would require extraordinary and unprecedented actions. I mean do you think much in terms of that that you know, some 30 years from now we need to be at this point?
Julio Friedmann: So, one of the nice things about being a geoscientist is you zoom in small details and you zoom out to whole mountains and you zoom in to very short time scales like chemical reactions and very long time scales like geological history. So, I certainly think about the 2050 focus because we got to get to zero by 2050, but I also think about what can we do by 2025. How long does it take to build a facility? Well, if it takes five years to build a facility then 2025 is the soonest we can get it going, right? And so, you have to sort of think about these things all together. It is a good and appropriate for people to set long-term goals and targets and to stick to them, but that is not the same thing as a substitute for acting in the near term. And I’ve watched say a company like Xcel Energy which to say they’re going to be net zero by 2050. They are doing some things immediately, some other things will take longer and they know that and some other things they don’t have answers for, but they are committed to those targets and they are actively seeking ways to hit that instead. And I think that’s a good sort of way to think about it. When you think about the carbon budget we have left, just do this. Take a white sheet of paper, say that’s today’s carbon budget, eight and half by eleven paper, that’s it, that’s the size of the carbon budget. Fold it in half that’s where we got to be by 2030, fold it in half again that’s where we got to be by 2040, and hold it in half again that’s where we got to be by 2050. And a lot of people have ideas about what to do for that first fold, after that it just gets a lot harder and so that’s part of the reason why like we can’t wait and it’s also part of the reason why carbon capture and storage keeps coming back because it’s one of those things you can do.
Bill Loveless: You know, one area you’ve talked a lot about lately is emissions from heavy industries cement, glass, steel making, you say that sector has received short shrift in these sorts of conversations, what do you mean by that?
Julio Friedmann: So, people see fuels in their day-to-day life. They go to the store the corner market and they buy gasoline. People experience electricity every day. So, they plug in something to the wall and they know they’re taking electricity and they know they have to pay for it. People don’t go out to the corner store and buy 10000 tons of concrete. They just don’t do that. And so, it hasn’t been the focus for a number of reasons that’s one, another reason is properly hard. So, here’s some numbers just burning rocks to melt rocks, just the heat that you use to make steel and cement and glass and petrochemicals, just the heat emits more that all the cars and planes in the world. It’s 10% of global emissions is just the heat from heavy industry.
Bill Loveless: Wow!
Julio Friedmann: And the other half of that about another 10% is the byproduct process emissions. Stuff like the chemical reduction of coke to make steel or the byproduct release of CO2 to make concrete. We don’t have any solutions to that stuff today, and we just don’t have good options. There’s stuff that might come along, there’s some stuff you can do, but for those process emissions you kind of got to go straight to carbon capture as a way to handle that stuff and we already have plants around the world that have done that. There’s a steel mill in the United Arab Emirates the Al Riyadh Project and they have Zero-Carbon Steel. They are using direct reduction of iron and they’ve captured the byproduct CO2 and they’re storing it underground. And right now they did that as sort of a long arc thing, but eventually they’ll be able to sell that steel at premium in the carbon constraint global market.
Bill Loveless: You’ve talked too about the opportunities long range, but opportunities in hydrogen for example in some of these very industries and so called blue and green hydrogen especially in the refining and petrochemical sectors, first explain those technologies blue and green hydrogen for anyone who may not understand them and what sort of promise portents there?
Julio Friedmann: Sure. So, the way we make hydrogen today almost entirely is by reforming fossil fuels and then venting the byproduct CO2 something like steam methane reforming or gasifying coal and doing a water gas shift, those things are called basically gray hydrogen or brown hydrogen depending on the stores and those are actually heavy emitters today. You can capture the CO2 from those things and avoid those emissions, just keep it out of the air, that’s what we call blue hydrogen and blue hydrogen already exist today. I’d mentioned this place in Abu Dhabi that does that, but there’s one right in the United States Lake Charles Project that’s run by Air Products there -- I am sorry not Lake Charles, Port Arthur. They are capturing the byproduct CO2 and storing it underground today. And they are doing that at about a buck 50 per kilogram which is a really good price for decarbonized hydrogen. The other way that you can make hydrogen is basically by electrolyzing water you can get that of the grid today that is also high carbon content it’s not low carbon, but if you fed it entirely with low carbon electrons say from renewables or from hydro or from nuclear, then that would be what’s called green hydrogen in which you’re basically making hydrogen from water without upstream emissions. And as far as I am concerned this blue versus green debate is already stupid, like it’s just the wrong thing to be talking about. We can’t -- we can’t be this selective we just don’t have the time as far as I am concerned as long as it’s low carbon hydrogen it’s good. It can be blue, it can be green, it can aqua, I don’t care and frankly we should develop that kind of aqua culture if we’re going to get that going.
Bill Loveless: And then so you mentioned before the tremendous amounts of heat that you need for many of these industries refining and glass and cement and all. I mean you could get this sort of heat that you require from this hydrogen technology?
Julio Friedmann: So, when you burn hydrogen it burns very hot. 2000 degree Celsius which is about 2100 degree Celsius which is about 4000 Fahrenheit. It’s hot enough for pretty much anything. That’s great and when you burn hydrogen there is no CO2 emitted from that. Great. Already we’ve begun to see some of this where hydrogen is being recycled inside of certain chemical plants or there are pilots where hydrogen is being used to make steel in an existing blast furnace or as an alternative to a blast furnace. We’re starting to see these technologies and applications emerge. We could decarbonize them awful lot of heavy industrial emissions just by fuel switching to hydrogen. We can’t get to zero that way, but we could get 20% pretty easily and maybe 30% in order to that, you need very large volumes, so you can start with blue hydrogen you can make millions of tons of blue hydrogen today. And over time as green hydrogen becomes cheaper, you can start thinking about blending that in or ramping that up and potentially in the future displacing that.
Bill Loveless: Are you talking to these -- these -- this sector, these companies you know steel, glass refining?
Julio Friedmann: I am very interest to say I am and they are not only interested, many of them are doing it. So, for example, there’s an interesting little company I shouldn’t say company there’s an interesting little project in Northern Germany. ThyssenKrupp a steel maker is partnered with Air Liquide to do hydrogen retrofits to a blast furnace. Equinor, a company that produces oil and gas from Norway has begun an experiment where they’re swapping out their shipping instead of using a bunker fuel or a diesel fuel they’re putting in ammonia instead which is basically hydrogen with a nitrogen carrier, and those are ways for them to try to decarbonize these very hard to decarbonize sectors. Our own analysis shows that this looks kind of interesting from a cost perspective. It also shows that in some cases just putting a big bag over the entire plant and doing carbon capture is cheaper and faster. One of the things that’s different about industry as opposed to say a power sector is that these are often globally traded commodities, so it’s not just your local power supply or at local power plant. A U.S. Steel Plant is absolutely competing with the Japanese Steel Plant or a Korean Steel Plant or a Germany Steel Plant or a Chinese Steel Plant. So, you can’t just force the U.S. Steel Plant to double its cost like that’s not going to work.
Bill Loveless: Right.
Julio Friedmann: So, again that becomes a policy question what are the appropriate policies to put in place to incent a good outcome for a domestic industry or to balance the interest to cross a competing market? And I see anything on one side you know, maybe a border tariff which is really problematic --
Bill Loveless: Right.
Julio Friedmann: Potentially very damaging or scary, but could do the job. On the other hand, a domestic procurement authority where you’re just saying we’re going to pay for clean and we’re going to buy U.S. and we’re going to pay for buying clean U.S. and so if that cost you more that’s okay we’ll pay for it and we’ll create contracts and supply chains to get that done. And there’s other options in between but you got to start thinking these things through you can’t just hammer an industry that will then offshore, once you lose the jobs, you lose the revenues and you lose the carbon with it and the carbon just comes back from another company.
Bill Loveless: Right. You know, Julio some argue that the approach to decarbonization is about green washing fossil fuels, is that a -- what do you think of that characterization?
Julio Friedmann: I just can’t agree with that all. I strenuously disagree and you know, I started this whole career working in this space for one and only reason, to reduce CO2 emissions. And carbon capture and storage is not an oil technology or a coal technology or a gas technology, it’s a CO2 reduction technology. You can apply it to biomass and get CO2 removal from doing that. You can apply it to a bio refinery, you can use it to decarbonize heavy industry, it’s not about fuel. I also think that to deploy carbon capture and storage widely you will need the skills of industry. For sure the oil and gas industry knows more about managing fluids in the subsurface than anybody. So, if we’re going to return carbon to the geosphere if we’re going to put it back to where it came from deep, deep underground, the capabilities of oil and gas companies are essential to success. Same thing with large project management. If you’re going to build a big hydrogen plant and run it for 30 years like oil and gas companies know a lot about that. So, I cannot make any case to demonize oil and gas companies that are interested in this. I also think you know, they have to come from Missouri like they got to show me on some level or another that they are committed and that they are spending the money and making the investments that actually lead to CO2 emissions reductions.
Bill Loveless: And a number of companies have stepped forward, a number of the majors have stepped forward in this area. Are they showing the money, are they showing the sufficient commitment so far that you think might be necessary?
Julio Friedmann: So, it’s early days, but the short answer is yes. And there’s a handful companies that have shown this kind of extraordinary leadership. Occidental Petroleum has been the most forward of these. They were the first company to say not only are we going to decarbonize our operations, but we’re going to decarbonize our product lines, take care of all our scope through emissions through carbon management and they are doing not only CO2-EOR, but they’ve created a low carbon ventures business unit to do this kind of service work that I was talking about and they’ve invested in a whole bunch of interesting technologies including ones that do zero emission power from natural gas, ones that remove CO2 from the air and that kind of investment portfolio I think also is the right kind of mix. Shortly, after them Shell made a similar announcement. Just recently BP has made a similar announcement, Equinor has been a world leader in this technology for a long time, Total has made announcements along those lines. And they’ve put money into say infrastructure projects in Europe which will help create the kind of system that you need to actually transport and store the CO2 in the North Sea and they’re putting a lot of their money upfront to do it. Shell is spending about two billion dollars a year if not just on CCS, but on a wide range of projects and they have committed to decarbonize their scope three emissions which means their product emissions very quickly and that’s exactly the kind of action you need. I think it’s appropriate for some groups to want to hold their feet to the fire. That’s fine I also think it’s appropriate to separate these kinds of actors from other companies that are perhaps not being as proactive or are just trying to have it both ways where they say they’re doing something in this space and then also actively fight against it in another dimension. I think it’s important to have a rich and nuanced understanding of it, to reward and incent good behavior for emissions reductions and similarly to continue to scrutinize this industry while they reformat themselves completely.
Bill Loveless: Julio, before we go, I wanted to talk about what we’re seeing happening in other parts of world, you do travel a lot. What are we seeing in this regard for this technology in China, the Middle East, India, wherever?
Julio Friedmann: Right. So, one of the more exciting and interesting parts of the world doing this stuff is the Middle East and again this question of green washing is one that is appropriate if you think about Kuwait or Saudi Arabia reducing their emissions through this approach. I think there’s grounds to be skeptical. By the same token they have actually built projects, there are about a million tons a year each project and they were emitting and now they’re not. And okay well that looks interesting and we’re starting to see the ministries and the large national oil companies start to make investments and commitments along these lines. So I suggest that people go to that part of the world, listen closely to what those people are saying and draw from that experience. China has finally done their first large scale CCS project, that’s in Xiling in northern China and that’s associated with natural gas refining and cleaning, but it’s a million ton a year project. That’s good and there’s three or four more behind it. The government of China has been an active partner in this area for a long time. They’re starting to get serious about this, we’ll see what appears in the 14th five-year plan, but it may end up looking something like blue hydrogen. That might be the way that they enter this space and if so, that would be very welcome. For many other countries, they just can’t do this right now. And India is a good example. Their government is rightly focused on things like energy access for the 300 million people who still don’t have electricity. They’re doing a terrific job building up solar in particular in India and that’s a massive, massive accomplishment. They’ve built out a lot of hydro that’s good too. They’ve also been building out a bunch of coal plants. And eventually they will have to do carbon capture and storage on a lot of those plants. So, that government though cannot make it a priority, it’s just not where they’re at right now and I understand that. This is where actually clubs of nations, meetings like the G20 meeting coming up in November can play an important role in terms of helping them with capacity building, helping them assess and sort where they could do CCS in India, think about alternatives to emitting technologies, again perhaps blue hydrogen as part of their estate, to help them consider things like biomass which they have in abundance and can they use that for power generation or fuels with CCS, and to think about it from a technology perspective, are there countries like the United States or Germany or Japan who would like to bring technology to India and work with those governments to produce a zero carbon product of some kind. And we’re starting to see that happening. Again, it’s early days, but we cannot take, what’s the best way to say this, we can’t foist our philosophy on to other countries. I learned working in government that the U.S. government does not make policy in other countries, we don’t do that. And if the United States walks away, Russia still exists, China still exits like we can’t elide them by fiat. At the end of the day, we need to have as a nation and as a group of nation a strategy to engage with many, many countries that are grappling with the complex issues associated with carbon management that we have also dealt with.
Bill Loveless: Well, so much to watch here and so much is happening so much more as we move ahead on this very timely topic. Julio Friedmann thanks for joining us on Columbia Energy Exchange.
Julio Friedmann: It’s a sincere pleasure thank you so much for having me, Bill.
Bill Loveless: Well, that’s our conversation. I hope you enjoyed it. For more on Columbia Energy Exchange and the Center on Global Energy Policy find us online at energeypolicy.columbia.edu and on social media @ColumbiaUEnergy. For Columbia Energy Exchange, I am Bill Loveless we’ll be back again next week with another conversation.