ZAPPI: Louisiana's energy future tied to Carbon Capture & Storage
Last week, we were fortunate to be invited to a seminar put on by the Louisiana Association of Business & Industry (LABI) that covered Carbon Capture & Storage.
As one of the top issues in the energy space, CCS is something at the forefront of anyone who has an interest in Louisiana's economy. The lecture, led by University of Louisiana - Lafayette professor and Dean of the School of Engineering, Dr. Mark Zappi, covered the Bayou State's great opportunity to lead in this new industry.
Dr. Zappi gave a thorough breakdown of the engineering process of capturing carbon at scale and how this advancement in LA's most important industry could impact the state as a whole.
Here are 3 takeaways from the seminar:
1. The future of Louisiana's Energy sector is heavily tied to the way CCS is implemented.
"Not IF, But WHEN" - Dr. Mark Zappi
Dr. Zappi covered how many crucial oil and gas companies in the state were making moves toward CCS. He stated bluntly that although there was a lot of debate around the state as to whether Louisiana would adopt Carbon Capture, on a macro scale, the decision had been made.
The Energy Industry is moving forward with CCS whether Louisiana is on board or not.
Following the event, we spoke with a top representative of one of the major Chemical companies in Louisiana, and he reiterated Zappi's point.
In plain terms, he said that Louisiana stood the chance of losing significant investment if the states' decision-makers and public opinion on CCS did not change their mindset on the technology.
2. The economics of this technology is the crux of the debate for level-headed people
Another topic heavily covered during this lecture was the overall economics of CCS. Zappi went on the record saying that, in his opinion, "CCS is doable & realistic."He stated that when compared to some of the other areas in the carbon reduction arena, CCS stands above as one of the most affordable for ordinary people.
To give context to CCS's affordability, Zappi cited recent changes to the federal tax code.
With the implementation of President Biden's new tax policy, the carbon tax credit has been increased by 70% (from $50 per ton to $85 per ton. In lamen's terms, this means that for every ton of carbon that a company captures and sequesters, it will get a tax credit of $85.
The general thinking behind this policy is that it will influence further investment into the carbon-neutral practice of CCS and will lessen the burden a decarbonization transition might have on consumers.
Though not spoken about often right now, the debate over carbon capture will most likely be settled on the cost front. If this technology can deliver savings to consumers while also reducing the carbon footprints of some of the world's largest polluters, most will probably consider that a net win.
3. CCS is the first step into the Hydrogen Economy
If CCS Doesn't Work, the Hydrogen Economy Won't Work - Dr. Mark Zappi
The final and most intriguing part of Dr. Zappi's talk came when he framed Carbon Capture Storage as the first step into the Hydrogen Economy.
Moving to a hydrogen-based energy economy is often talked about as a way forward in the effort to decarbonize.
The hydrogen economy has been drawing attention since the 1970s. It was used for the first time by Professor John Bockris, an electrochemist, in his lecture at the GM Technology Center in 1970. Officially, it was first mentioned in his book, "Energy: The Solar Hydrogen Alternative," published in 1975. In 2002, American futurist Jeremy Rifkin advocated a "hydrogen economy" in the sense of a future society that will transform into an economic system based on hydrogen which is pollution-free and has infinite energy. Public awareness of the hydrogen economy has increased with the George W. Bush administration's hydrogen economy initiative.
The main reason that we need to pay attention to hydrogen is because it is: 1) a universal resource with no regional concentration; and 2) does not emit greenhouse gas. Hydrogen produces electricity and heat through a simple (catalytic) chemical reaction with oxygen which exists in the air, and since its byproduct is water (H2O), it may be technologically challenging, but it is a resource that can be used freely, environmentally, and almost permanently.
Although the market focuses on the eco-friendliness of hydrogen, it should not be overlooked that it is an energy source that exists everywhere, which magnifies the potential of hydrogen. For this reason, not only countries with low energy self-sufficiency, such as Korea and Japan, but also countries with abundant hydrocarbon resources such as the Middle East and Australia, are attempting to nurture the growth of hydrogen businesses. The current hydrocarbon economy relies on resources concentrated in some regions, causing energy security problems and geopolitical conflicts. Hydrogen's omnipresence can completely resolve these problems.
Anyone who follows energy trends and the industry as a whole has at least heard of the Hydrogen economy.
Whether it's a viable option or not is neither here nor there - what matter is that the major players in this space have decided it's worth investing in, and in turn, that means investing in CCS.
What the Hydrogen economy ends up crystalizing as is hard to say, but the point is that major market forces are placing big bets on this - for those invested in the energy industry (as almost all of Louisiana is), we should all take notice.
Zappi's presentation came at a time when CCS is on the radar for many in the business community in Louisiana. While large corporations like Shell, Air Products, and ExxonMobil look to implement new these technologies into their established processes, many at the local level have pushed back.
Parish and municipal governments across the state have taken stands against CCS, and it's forcing stakeholders in the advancement of this technology to rethink their approach.
Reuters reported that the Louisiana state government had successfully submitted its application for a Class VI well (the type of well used for Carbon Capture Storage) and that the EPA would be finalizing its review of the application by May - expediting a process that normally takes years. Following this review, there will be a 60-day public comment period, as is standard with federal permitting processes.
The Energy Sector in Louisiana has always been critical to the state's economy - it's why we call it "The Life Blood of Louisiana."
That being said, the market leaders in this space seem to have made a collective decision on CCS. We believe that if the state does not move with them, our state's lifeblood may be sucked away. What we should do as a state and government is for policymakers to fight about, but if one thing is clear after listening to Dr. Zappi speak and doing a deep dive into the Carbon Capture space.