switzerlanden
Carbon Capture & Storage: removing CO2 on an industrial scale

Carbon Capture & Storage: removing CO2 on an industrial scale

17-06-2019 | Insight
We produce CO2 on an industrial scale, and we need to remove it on an industrial scale. That was the key message of a Robeco roundtable on Carbon Capture and Storage (CCS), a vital means of combatting global warming.
  • Sylvia van Waveren
    Sylvia
    van Waveren
    Engagement Specialist

Speed read

  • Investors gather at roundtable to discuss carbon capture and storage
  • CCS technology is ‘critical’ to achieve Paris Agreement targets
  • Efforts could form part of impact investing, engagement can help

The event, staged by the Dutch CIO Exchange and co-hosted by APG, a pension provider, heard a number of expert speakers on how the technology can be used, what the relevance of it is in our investment portfolios and whether it presented an investment opportunity. About 50 people from different fields, from academia to investors in the oil and gas industry, took part in the forum held at Robeco’s Rotterdam head office on 8 May.

Most of the focus in recent years has been on trying to reduce the amount of CO2 added to the atmosphere to meet the Paris Agreement target of limiting global warming to well below 2 degrees Celsius above pre-industrial levels by the second half of this century. CCS prevents the release of CO2 into the atmosphere by capturing these emissions once they have been created by burning fossil fuels, and then storing them or using them (CCUS).

Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates
Subscribe

Three-step process

The delegates were welcomed by Robeco CIO Peter Ferket, who said 10 investors including Robeco now belonged to the CIO Exchange’s Energy Transition Working Group, which has seven listed European oil & gas companies in scope for engagement on this topic.

Niels Berghout, an analyst with the International Energy Agency, said one of the major challenges we are facing today is that 70% of the world’s energy still comes from fossil fuels, and will continue to do so in the decades to come, especially in China and India. CCS is one of few technologies enabling us to abate the associated emissions.

He said CCS is a three-step process of capturing CO2 from a power or industrial facility, then transporting it by pipeline or ship, and finally storing it safely underground. Most existing facilities can be retro-fitted with carbon capture technology, but it is cheaper to incorporate it in the manufacture of new plants. This stops it getting into the atmosphere in the first place.

A combination of burning a biomass fuel and then using CCS can deliver so-called ‘negative emissions’, meaning that CO2 is actually removed from the atmosphere. This technology will become increasingly important over time to meet the climate targets.

Needs ramping up

Berghout said that if the world truly wanted to achieve the well-below-2-degree scenario, then CCS needs to account for 14% of all cumulative CO2 reductions from today until 2060. If the more ambitious 1.5 degree target is to be met, then the required contribution of CCS rises to 32%. He said 23 large-scale projects were currently operating, but “the use of CCS needs to be ramped up hundreds of times to meet the climate targets”.

Explaining the science behind CCS was Professor Earl Goetheer, Principal Scientist for the Netherlands Organization for Applied Scientific Research (in Dutch, TNO: the Toegepast Natuurwetenschappelijk Onderzoek). He gave a lively presentation on the ways to capture CO2, focusing on pre-combustion and post-combustion separation, and also how to potentially use CO2 as a resource to produce chemicals and fuels with a market value.

The company perspective

John MacArthur, Vice-President of Group Carbon at Shell, highlighted that the majority of scenarios produced by organizations such as the IEA, IPCC and Shell include a large component of CCS that limits the temperature rise to below 2 degrees Celsius in line with the Paris Agreement.

He further explained that CCS was by no means new, having been proven technology in use since the 1970s. He reemphasized the critical role it has to play in the decarbonization of heavy industry if the world is to meet the goals of the Paris Agreement.

CCS is also useful from a job retention and creation perspective, with studies in the UK and Norway showing the potential for over 200,000 CCS-related jobs. He outlined the different CCS projects that Shell is involved in, including the work of the Oil and Gas Climate Initiative, a collaboration of 13 oil and gas majors that aims to leverage their collective strength to help catalyze CCS and contribute to the UN Sustainable Development Goals.

Is it investible?

Five key questions emerged from the event: is CCS a real solution for the energy transition; what is its relevance in an investment portfolio; what are key questions for engaging with companies on it; how do you engage on policy for it; and is it investible?

The majority of delegates said they believed that it was indeed part of the solution, and should form part of engagement between asset managers and the oil and gas industry. But it was not really investible unless it was included as part of impact investing, such as in buying CCS-orientated green bonds, or for supporting the Sustainable Development Goal (No. 13) on climate action. Finally, participants said carbon pricing would provide a commercial incentive to accelerate innovation and investment in CCS.

Important legal information

The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.

The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.

Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.

This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.

I Disagree