Occidental Petroleum’s purchase of a Canadian direct air capture (DAC) company for US$1.1 billion will enable it to profit from tackling climate change while continuing to extract oil and gas for 60 or more years into the future, says CEO Vicki Hollub.
After acquiring British Columbia-based Carbon Engineering last week, Occidental hopes to build about 100 DAC plants that strip carbon dioxide from the atmosphere to bury underground, or for use in making products like concrete and aviation fuel.
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“The acquisition enables Occidental to catalyze broader development partnerships for DAC deployment in the most capital efficient and valuable way,” Hollub said.
Earlier this year, she said DAC will one day help Occidental bring its operations to net-zero, allowing it to continue investing in oil extraction.
“We believe that our direct capture technology is going to be the technology that helps to preserve our industry over time,” Hollub told an oil and gas conference in March. “This gives our industry a licence to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed.”
Unlike carbon capture and storage (CCS) systems that remove carbon at the point of emission, DAC is mean to suck up and store carbon that is already in the atmosphere. It is currently the most expensive application of carbon capture, says the International Energy Agency. It’s still in the early stages of commercialization, and multi-billion-dollar investments will be needed before its proponents can be sure it will deliver as promised.
But it is also among the technologies eligible for funding under the U.S. Inflation Reduction Act. Some of Occidental’s proposed DAC plants have already been selected as federal grant recipients, Reuters says. Canada, too, is trying to support DAC technology, and is currently working out the details to issue tax credits for its deployment, writes the Canadian Press.
Carbon Engineering CEO Daniel Friedmann said the deal with Occidental will dramatically enhance the company’s ability to continue developing its technology through to commercialization.
“It will enable us to accelerate our mission to lead the world in the large-scale removal of carbon dioxide from the air and help advance our shift to a sustainable, net zero society,” he said.
But CDR is not a replacement for deep emissions reductions, said climate scientist and IPCC author Zeke Hausfather. “Anyone who says differently is selling something.”
Selling carbon removal credits and “net-zero oil” will initially yield the most revenue for Occidental’s DAC ventures, Richard Jackson, Occidental’s president of U.S. onshore resources and carbon management, told the Wall Street Journal.
“We can turn carbon dioxide into value,” he said.
Eventually, Hollub said she expects Occidental’s clean energy efforts to become more lucrative than its chemicals division.
But critics have repeatedly warned that carbon offsets should be treated as a last resort, never taking the place of real emissions cuts. Otherwise, heavy polluters could use them as a “get out of jail free” card.
Others have said technologies like DAC should not be a major plank in net-zero schemes, as their potential is limited compared to the scale of the climate crisis. DAC is not a “silver bullet” that can live up to the hype of fossil fuel companies, and “capturing three-quarters of present carbon dioxide emissions [with DAC] would require half of present global electricity generation, and heat equivalent to half of final energy consumption,” Greenpeace observes.
But DAC does align with Big Oil’s plans for continuing production. Oil companies will have to find ways to remove as much carbon dioxide as they emit “if they want to be the last producer standing in the world,” Hollub told the Wall Street Journal.