Ulrik Fugmann, co-head of the Environmental Strategies Group, BNP Paribas Asset Management:
There are few places to invest in public markets and BNP Paribas Asset Management supports some key movers in this nascent technology through its BNP Paribas Energy Transition Fund.
One obvious element with carbon capture is cost, but as adoption increases, this should come down as we have seen – and will see – with other equipment such as solar panels, batteries, electrolysers etc.
Another more philosophical question mark is if CCUS will in fact increase oil production. This argument is slightly misguided as CCUS can scale quicker than we can eliminate the need for oil throughout society and there is not one, but many solutions needed for decarbonisation.
One challenge can be scale – the capacity of CO2 transport and storage is often larger than what the emitting asset needs. The solution and opportunity for this is to pool or collaborate around the emitting assets, which means a sharing of transportation and storage costs.
The second challenge is somewhat related to the philosophical question mark above: if it is possible to replace an emitting asset or activity with a greener alternative, surely that is preferable to CCUS, which will not be able to capture the full scale of CO2 emissions. In other words, considerations need to be taken around where there are alternatives, and whether you retrofit with CCUS applied or construct an entirely new asset/process. In addition, how much of the CO2 are you able to capture across different industries?
Carbon capture is also likely to suffer from the same challenges we have seen with onshore wind, namely the ‘not in my backyard’ problem, despite limited risks around leakage. In that regard, how is the potentially leakage risk and can it be insured – who has the liability? More regulation will be needed in this area. Solutions for this has been storage in salt caverns where the carbon becomes mineralised.
All this said, we need technologies like CCUS as the world is running out of time to reach net zero and the world – whether we like it or not – will still be rather fossil fuel dependent in the decades to come.