10.05.2022
Occidental Petroleum’s contract with a Korean refinery will see them offset the buyer’s carbon emissions by storing atmospheric CO2 with a DACCS facility.
In March, US-based Occidental Petroleum published a Memorandum of Understanding to sell 1 million barrels of “net zero oil” over five years to a Korean refinery from 2024. The announcement should be seen in light of Occidental’s 2020 announcement of their goal of being climate-neutral by 2050. Their stated strategy is to continue focusing on oil and gas production combined with significant use of CCUS and DACCS in order to offset their customers’ emissions (known as scope 3). The strategy is in line with the oil and gas industry standard published by the IIGCC investor group last autumn, which outlines the use of international credits or DACCS to achieve climate-neutrality. Compared with other carbon credits (such as afforestation), buying credits from a DACCS project is likely more expensive, but may be viewed as more measurable and credible, and not to mention more scalable.
The contract with the Korean refinery involves Occidental offsetting the buyer’s carbon emissions by storing atmospheric CO2 at a DACCS facility, which will be built using technology from Carbon Engineering in Texas. The facility will have a capacity of 1 million tonnes of CO2 per year and be ready by 2024. Airbus has also agreed to buy carbon storage from the project. The costs associated with large-scale carbon capture using DAC are uncertain. The most relevant technology suppliers have announced their expectation that costs will fall to $100 per tonne of captured CO2, but a recently published report from IEAGHG estimates that a cost of around $200 per tonne of CO2 is more realistic. Credits are currently sold in a range of markets, which may justify these costs. One such example is California’s Low Carbon Fuel Standard (LCFS). Carbon Engineering stated last year that the energy consumption needed to capture one tonne of CO2 from the air could fall to 8.81 GJ. In comparison, one barrel of oil contains an equivalent of around 6 GJ and leads to emissions of around 430 kg of CO2 during combustion.
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