Two years ago, oil and gas company Occidental bought carbon capture startup Carbon Engineering. The transaction was hailed as a win-win: A climate tech company scored a significant exit, and a fossil fuel company gained a foothold in a sector that could be worth up to $150 billion by 2050.
Now we have a better idea why Occidental was keen to pick up the pricey technology: They want to use it to pump more oil.
Previously, the company had said it would use the technology to zero out its climate impact. Yet on Occidental’s earnings call this week, CEO Vicki Hollub changed the tune, saying that injecting CO2 into wells to force out more oil was imperative to boosting oil production.
“Taking CO2 out of the atmosphere is a technology that needs to work for the United States, and President Trump knows the business case for this,” Hollub said. The Verge was the first to report on the comments.
Hollub compared using CO2 in enhanced oil recovery to fracking, the technology that sent U.S. oil and gas production skyrocketing.
But direct air capture, the technique used by Carbon Engineering to draw CO2 out of the atmosphere, remains expensive at $600 to $1,000 per metric ton. The Inflation Reduction Act, though, provides some significant incentives for using captured CO2 in enhanced oil recovery, up to $130 per metric ton in 2026 if the gas remains permanently stored underground. That’s not enough to make the practice attractive on its own, but coupled with carbon credit sales, Occidental expects it can turn a profit by the end of the decade.
The Trump administration has been working to dismantle climate-related government incentives, especially the Inflation Reduction Act. But with support from companies like Occidental and ExxonMobil it’s possible that the tax credits could survive.
Carbon capture has a long and tangled history with fossil fuel companies. They first started pumping oil into dwindling wells in the 1970s, though the CO2 came from underground deposits. In the early 1980s, pipelines started stretching out from Texas, but low oil prices prevented the technique from being widely used.
About a decade ago, NRG Energy took advantage of rising oil prices to build the country’s first carbon capture facility attached to a coal-fired power plant. Called Petra Nova, the small installation was designed to capture about a third of one boiler’s carbon dioxide and use that CO2 to boost production at a flagging oilfield southwest of Houston.
It worked, though not as well as expected. Production rose from around 300 barrels per day to 6,000 barrels, a significant bump but half of what had been forecasted. NRG shut down Petra Nova in 2020 as oil prices cratered early in the pandemic and sold it to JX Nippon three years later.
Oil prices have since recovered, but enhanced oil recovery using CO2 remains unattractive in part because there isn’t enough of the gas readily available — at least, not enough to raise production by the 50 billion to 70 billion barrels that Hollub predicts the technology will unlock.
Direct air capture could easily provide enough CO2. Humans have been pumping gigatons’ worth of the gas into the air by burning fossil fuels over the last century and a half. It’s possible that carbon captured from the air could be used to make oil carbon negative, meaning the process of drilling the oil stores more carbon than burning it releases, though the concept needs to be studied further.
It’s hard to know whether federal incentives for direct air capture will survive the next four years. But of all the tax credits in the Inflation Reduction Act, they might have the best chance thanks to oil companies’ desire to continue business as usual.
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The U.S. invested a record-breaking $338 billion in the energy transition last year, according to a new report, but it wasn’t quite enough to lessen the country’s overall carbon emissions.
Solar took the lead, adding 49 gigawatts of new electrical generating capacity in 2024, far more than any other technology. Solar and wind together now represent nearly a quarter of electricity demand and nearly 10% of all energy consumption in the U.S., said the report, released Thursday by the BloombergNEF and the Business Council for Sustainable Energy.
At the same time, demand for natural gas was up 1.3%, enough to nudge U.S. carbon emissions higher by half a percent. The uptick was driven primarily by industrial users and power plants that burn natural gas, primarily to generate power or heat.
The new report lands at a time when the U.S. is at a crossroads. The country’s carbon emissions are down nearly 16% since 2005, with power-related emissions down over 40% over the same period. The U.S. has also gotten more productive with the energy it uses, generating 2.3% more economic output last year for a given amount of energy consumed.
At the same time, electricity demand is forecast to rise sharply in the coming years. According to a report from Grid Strategies, the U.S. could use 15.8% more electricity by 2029. Which technology supplies that electricity could determine the country’s impact on climate change for decades to come.
Skyrocketing demand from data centers is the single biggest driver of new electricity demand. Tech companies have been investing in massive new data centers to power cloud operations and fuel their AI ambitions. The pace of additions has quickened to the point that half of all new AI servers could be underpowered by 2027.
Such forecasts have nudged tech companies to secure power sources for the coming years. Microsoft, Google, and Amazon have all announced significant investments in nuclear power, backing startups like Kairos and X-Energy while simultaneously reviving old nuclear reactors given they do not directly release carbon dioxide or other greenhouse gas emissions.
They are also continuing to add renewable power to their portfolios. This year alone, to meet the growing demands of its power-hungry data centers, Amazon has entered into agreements with energy producers to add 476 megawatts, while Meta bought 200 megawatts in one deal and 595 megawatts in another. The deals have been dominated by solar, mirroring the trend nationwide. That’s in part because the technology is inexpensive, and new solar farms are fast to bring online. For power-crunched tech companies, cost and speed matter.
Efficiency-minded consumption might further help tech giants by wringing more power out of the grid without needing dramatically more capacity. A study published last week suggests that subtle tweaks — like scheduling computing tasks at times of lower power demand or shifting them to regions with more capacity — could unlock 76 gigawatts of headroom in the U.S. That’s as much as 10% of peak power demand nationwide.
Clever adaptations like those might be required if the U.S. is to keep pace with global competitors. Despite record outlays on the energy transition, the U.S. still lags China in deploying capital. Where the U.S. spent 1.3% of GDP on the transition last year, China spent 4.4%.
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