CARBON CRUSADER | Geoff Holmes, business development manager at Carbon Engineering, stands at the Squamish facility that collects CO2
A new carbon-capture facility in Squamish holds great promise, but with cheap oil and low carbon taxes, it’s a long way from being economically viable
Carbon Engineering Ltd.’s facility doesn’t look much different from the handful of other industrial buildings scattered along Squamish’s waterfront. The company’s 80-metre-long blue warehouse sits alongside two white silos and a giant metal crate that resembles an oversized air conditioner. But while other industrial operations spew greenhouse gases out their smokestacks, Carbon Engineering’s plant does just the opposite—it sucks CO2 out of the air and distills it into pure carbon. The company aims to convert that carbon into a renewable—and profitable—liquid fuel.
With backing from Microsoft co-founder Bill Gates and oil sands billionaire Murray Edwards, among others, the $8.5-million plant began operating last summer. It is the largest demonstration plant of its kind in the world, with capacity to produce more than 50,000 litres of synthetic fuel a year. It’s also a finalist for Richard Branson’s Virgin Earth Challenge, a $25-million prize awarded to an economically viable technology that’s capable of dramatically cutting greenhouse gas levels.
So why all the hype? Unlike other carbon capture systems that collect CO2 from the top of smokestacks, Carbon Engineering’s is meant to vacuum up greenhouse gases emitted from smaller, more dispersed sources such as cars, ships and airplanes, which add up to about one-third of global emissions. Carbon Engineering’s plants can be located virtually anywhere (atmospheric CO2 levels are the same around the world), while the carbon-neutral fuel that comes out the other end will be compatible with today’s combustion engines, making it an easy switch from fossil fuels. If the technology works—and that’s still a big if—it could be a global warming game-changer.
The Squamish facility is meant to test and refine the Calgary-based company’s carbon capture process, says Geoff Holmes, Carbon Engineering’s business development manager. The plant employs 15 full-time staff and collects about one tonne of CO2 a day, roughly equivalent to the emissions from 100 cars. Founded in 2009, the company spent six years developing its capture process in a lab. If the pilot plant performs as well as its research suggests, the company’s next step will be to expand to an industrial-scale operation that could be “upwards of a thousand times larger than the pilot,” Holmes says.
The plant works by drawing large volumes of air into a filter system—the oversized air conditioner unit in the middle of its site—where CO2 is absorbed onto a liquid solution of potassium hydroxide. The solution is distilled down to sand-grain-sized pellets of calcium carbonate, which are then superheated to 900 C to produce pure carbon dioxide gas. Carbon Engineering’s next step is to install a system to convert the captured carbon into synthetic fuel, which the company is aiming to provide to the District of Squamish to help power its bus fleet.
“It would basically be a closed circle,” Holmes says. “You’re capturing CO2 from the air, turning it into fuel, the car burns it, and it goes back into the air.” One catch, of course, is that the carbon capture process itself requires a lot of energy. For the synthetic fuel to be truly low carbon, the plant needs be powered by a renewable energy source—solar, wind or hydroelectricity. British Columbia’s abundance of hydro is a big reason why the company chose to set up shop here, Holmes says.
The idea of collecting carbon from the air has been around for decades; the challenge has always been one of economics. Sequestering carbon is expensive, and the market value of CO2—it’s used by oil companies to improve well extraction rates, as well as by greenhouses and beverage makers—has been relatively low (around $20 per tonne of CO2). Carbon Engineering expects its capture cost in a commercial-sized plant to be between $100 and $120 per tonne of CO2. Its production cost for the synthetic fuel will likely be somewhere between $1 and $1.50 per litre (depending on electricity costs), Holmes says—still well above today’s wholesale price for diesel of about 50 cents a litre. The company is banking that buyers will be willing to pay a premium in order to meet ever more stringent fuel standards. “Places like B.C. and California are increasingly going to be demanding low-carbon fuels,” Holmes says. The airplane and shipping industries are obvious targets, he adds, as their vehicles can’t easily switch to electric-powered engines.
Carbon Engineering isn’t the only company gambling on a new business model emerging for carbon capture. German startup Sunfire, which is partnered with carmaker Audi, is developing a similar renewable fuel—dubbed “e-diesel”—but hasn’t advanced to the pilot-plant scale yet. Zurich-based Climeworks is aiming to build its first commercial plant later this year, providing 900 tonnes of CO2 gas per year to a local greenhouse to stimulate plant growth. Closer to home, Burnaby-based Inventys Thermal Technologies Inc. is planning to capture emissions from a natural-gas-powered steam boiler in Joffre, Alberta, and sell the collected CO2 gas to oil company PennWest. A new carbon capture and conversion testing lab is also being built on Mitchell Island in Richmond to support the development of local technologies. The facility, funded in part by UBC and BC Research Inc., is expected to open in 2017.
There’s clearly growing interest in finding profitable ways to soak up greenhouse gases. But Werner Antweiler, a professor at UBC’s Sauder School of Business who studies energy markets, argues that the economics don’t make sense yet. The biggest hurdle, he says, is the high operating cost of the capture process. “Burning carbon is very easy—you just need oxygen,” Antweiler says. “Reversing the process—collecting the CO2 and breaking it apart into carbon and oxygen—requires, of course, much more energy.”
The process is particularly expensive when capturing carbon from ambient air versus at the top of a smokestack, where emissions are concentrated. Antweiler says that without a higher carbon tax—it’s currently $30 per tonne of CO2 in B.C., or nearly seven cents per litre of gas—or a steep increase in the price of oil, it’s virtually impossible for carbon-capture-based fuel to compete with fossil fuels. For example, if Carbon Engineering produces its synthetic fuel for $1 per litre—the low end of its estimate—and the wholesale price of diesel remains at 50 cents a litre, the carbon tax in B.C. would need to increase sevenfold to equalize the prices of the two fuels at the pump. And the company would still only be breaking even. “It’s on the horizon,” Antweiler says, “but right now, it’s mostly about the technological concept than making it an economically viable proposition.”
Meghan Harris-Ngae, an energy markets leader with EY, agrees that carbon capture projects to date haven’t made financial sense; most, like Shell Canada’s $1.35-billion Quest project that came online near Edmonton last fall, rely heavily on government subsidies. But she’s optimistic that the business case for companies like Carbon Engineering is improving. Technologies are advancing, and governments are increasingly steering toward renewable energy using policies like carbon pricing and low-carbon fuel requirements. “There are still significant challenges with carbon capture and the jury is still out,” Harris-Ngae says, “but the needle is slowly moving.”