January/February 2023 Briefing to the MN State Board of Investment
This Briefing to the SBI addresses investment considerations for Carbon Capture and Sequestration (CCS) technology.
While the Inflation Reduction Act provides generous tax incentives for Carbon Capture and Sequestration (CCS), there are two types of CCS and only one of them is a genuine climate solution: direct CCS which removes CO2 from the atmosphere. The other type of CCS that captures a portion of the CO2 emitted during power production from fossil fuels, is masquerading as a climate solution. It is crucial that the SBI take steps to ensure that Minnesotans’ pension funds are not supporting carbon capture and sequestration associated with power production from fossil fuel. Using extracted carbon to extract more carbon only delays the energy transition that is urgently needed in this country.
The MN Divestment Coalition advocates dramatically reducing carbon emissions through simple and efficient means that are readily available: weatherizing every building and home, installing solar arrays on every public and privately owned building and home, greatly expanding wind energy production, replacing gas heating systems with geothermal heating and cooling infrastructure and greatly expanding electric and hybrid transportation options. But we know that the level of CO2 in the atmosphere already exceeds the amount needed for a stable climate. Thus we support carbon capture and sequestration technologies that directly reduce the amount of CO2 in the atmosphere.
The removal of CO2 from the atmosphere is referred to as Direct Air Capture (DAC) and is distinct from capturing CO2 produced while generating power from fossil fuels. The latter has been shown to generate more CO2 than simply shifting to wind and solar power generation. The fossil fuel industry continues to push this technology in order to justify continued fossil fuel investments and to profit from large government subsidies.
There are currently twelve CCS projects operating in the U.S., 90% of which are associated with fossil fuel power generation. None of these projects has been successful in achieving its targeted CO2 reductions and at least two have already been shuttered (the Kemp Power Project in Mississippi and Petronova CCS Coal plant in Texas). One of the reasons these projects failed is because “the cost of renewable electricity generation outcompetes CCS. Renewable power is now cheaper than coal-fired power without CCS. Add the cost of the energy required to couple CCS with fossil fuel power and it becomes hopelessly uncompetitive.” In addition, the CCS technologies only capture a fraction of the promised CO2 reduction.
Other concerns we have with carbon capture technology are related to the pipelines that carry the captured carbon dioxide and the sites for its sequestration. When pipelines develop leaks, as has already happened (see this link), people and wildlife are subjected to dangerous levels of carbon dioxide affecting their ability to breathe. Further, people have not been able to escape quickly because car engines don’t start when there is too much CO2 in the air. In addition, the link above details that many pipelines are built to deliver carbon dioxide to fracking sites. There it is pumped into the ground to push more methane to the surface. This increases atmospheric carbon concentrations through methane leaks and downstream use of the fracked gas.
Direct carbon capture and sequestration technology to remove CO2 from the atmosphere is promising, though several challenges remain. Investing in sources of renewable energy and the infrastructure for renewable energy distribution and storage are a much better and much less expensive solution. We urge the SBI to study the data and invest our pension funds in solutions that create both positive investment returns and a planet where future generations can survive.
Bottom Line: As part of the Roadmap to implement Meketa Report recommendations, we want to see the SBI require its managers to actively introduce and support proxy voting to prevent fossil fuel companies (like Exxon and Chevron) from investing in carbon capture associated with power generation. Best practice regarding private equity investing is to put in place a due diligence process to require the screening of companies for CCS related to power generation.
We have collected a fairly sizable bibliography about the carbon capture issue. Bill McKibben’s essay In a World on Fire, Stop Burning Things | The New Yorker details Mark Z. Jacobson’s research comparing the cost of carbon capture to using renewable energy that doesn’t generate carbon dioxide.
Dr. Jacobson discusses his research at minute 22:50 in this recording of the Science and Environmental Health Network Webinar on carbon capture
The New York Times guest editorial Every Dollar Spent on This Climate Technology Is a Waste and other sources listed below present many of the reasons to stay focused on the original purpose of carbon capture and sequestration. This information is critical to keeping our pension stable and productive along with the environment far into the future.
High Country News: Is carbon capture the solution for jobs and climate action in fossil fuel country? And Carbon capture convolution
Science and Environmental Health September 2021 newsletter: The Fossil Fuel Industry’s New Rube Goldberg Scheme
The previous Divestment Coalition Briefing to the SBI