Where’s the Value in Carbon Management?

Financial incentives are emerging that make the value proposition for carbon management appealing plus what are its parallels to the shale gas revolution.

Ethanol production requires large amounts of energy, resulting in large amount of CO₂ emissions. Analysts believe facilities such as this ethanol plant can generate strong economics in CCS through carbon markets or 45Q tax credits for sequestration. (Source: Shutterstock.com)

Setting out on a net-zero path means energy companies committing to a carbon management strategy since there is no pathway to net-zero without substantial carbon emissions reductions.

While managing carbon emissions provides energy companies with a social license to operate—while also appeasing environmentally conscious capital investors—there is an economic case to be made for carbon management operations. Between the federal 45Q tax credit, and both voluntary and regulated carbon markets, enough financial incentives have emerged to make the value proposition for carbon management appealing.

“There is a growing number of projects that actually do produce a very respectful return, in the context of the carbon capture challenge,” said Nick Fulford, senior director, gas/LNG, carbon management, energy transition, Americas, for GaffneyCline.

“We’re talking about absolutely the tip of the iceberg at the moment,” Fulford continued. “In volumetric terms, we’re talking about a handful of tons per annum of carbon in a challenge which lowers hundreds or thousands of times that, which will ultimately have to be addressed. But that’s really where the investment case is coming from.”

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Brian Walzel

Brian Walzel is senior editor for Hart Energy’s E&P Plus.