Capture

Carbon dioxide, the main greenhouse gas, has been commodified as simply carbon. It’s being measured and traded in units called carbon credits. While there are incentives to reduce carbon emissions, there's also growing interest in methods of carbon capture and storage (CCS). 

CCS covers a range of technologies that aim to capture carbon dioxide. They’re often deployed near emissions-heavy cement, iron and steel plants. Carbon particles can also be directly or indirectly removed from the atmosphere, with these methods attracting investment from giants like Microsoft ($MSFT) and Amazon ($AMZN). 

Captured carbon can be used in new products, or transported to a suitable location for permanent storage. This usually entails injecting it deep underground – a fitting burial for fossil fuels. The potential capacity of these storage facilities was over 45 metric tons (mt) of carbon dioxide in 2022, a year that saw a record US$6.4b in related investments. Plans for new facilities could account for 188mt by 2030, spurred by government support. But the oil and gas sector is also getting involved, as it seeks to mitigate a very uncertain future in a transitioning energy industry. CCS sceptics, besides arguing the process is ineffective, are critical of these ties to companies that have aggravated the problem in the first place. The reality is, these companies have very deep pockets, experience with large projects and could be well served by diversifying from a few volatile commodities. 

CCS isn’t their only bet. Firms like Chevron ($CVX) and Occidental ($OXY) have also been examining how to extract lithium from brines found in old oil fields. Others have looked into hydrogen and biofuels. In this broader shift to multi-energy strategies, some even rebrand to reset public perception; Statoil became Equinor ($EQNR) and Total is now TotalEnergies ($TTE). It’s not yet clear if they can compete with companies born on the sustainable side, such as Brookfield Renewable Energy ($BEPC). But Danish energy company Ørsted sets a good precedent: it went from getting 85% of its energy from coal in 2008 to becoming the world’s largest producer of offshore wind energy in 2019. That’s the kind of sea change many other firms could strive for.

This does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.