0:02

Latitude Media, podcast at the

0:04

frontier of climate technology. I'm

0:07

Shail Khan, and this is Catalyst. We're

0:11

building the gas plants anyways. They're being

0:13

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0:15

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0:18

We're already doing A. We're just

0:20

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0:22

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0:24

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1:58

right, I promise we're not going to talk about data centers

2:00

and energy every other episode forever. Or, I

2:02

don't know, maybe we will. I can't

2:04

promise anything. Give me a break. Anyway,

2:06

we have talked before a little bit

2:08

about the build -out of natural gas

2:10

that is planned in the United States

2:12

and a bunch of other countries that

2:14

is being driven by data centers. What

2:18

about the fact that most of

2:20

the companies that are driving that demand,

2:22

the hyperscalers in particular, have been

2:24

on the vanguard of decarbonization commitments and

2:26

take it pretty seriously? Are they

2:28

just going to purchase carbon removal to

2:30

infinity? Maybe not. Maybe

2:32

this is finally the moment for

2:34

natural gas with carbon capture. Or

2:36

maybe it's a mirage, as it

2:39

has been many times in the

2:41

past. Anyway, let's explore. Julio,

2:43

as many of you know, is

2:45

the self -proclaimed carbon wrangler, but he's

2:47

also the chief scientist at Carbon Direct,

2:50

and he's got thoughts, which, if

2:52

you know Julio, makes sense. Here he

2:54

is. Julio, welcome

2:56

back. A pleasure, as always. All

2:59

right, let's talk data centers

3:01

and natural gas and possibly carbon

3:03

capture and sequestration. Starting, though, before

3:05

we get to the CCS part.

3:07

Can you just give an overview

3:09

of what you see as

3:11

happening right now with regard to

3:14

data center energy consumption and specifically

3:16

natural gas build -out or supply?

3:18

Absolutely. So since the last time

3:20

we talked, a lot has changed,

3:22

actually. For starters, we've

3:24

learned the top five things

3:26

that the hyperscalers and people

3:28

building data centers want is,

3:30

in this order, speed, speed,

3:33

speed, cost, and carbon.

3:36

All of those are important, but speed is the thing

3:38

that is driving a lot of this. The

3:40

second thing we've seen is we've seen some

3:42

very large announcement. Five

3:44

to 10 gigawatts is

3:46

the biggest, but many multi

3:48

-gigawatt announcements. Many of these

3:50

are multi -billion dollar announcements

3:52

and involve very large

3:55

data centers, hundreds of acres.

3:57

And when you say

3:59

multi -gigawatt announcements, what you're

4:01

saying is announcements of new

4:03

generating capacity. natural gas

4:05

generating capacity to be constructed to

4:07

serve those data centers. Exactly.

4:10

Yes. Because

4:12

of this urgency and speed and

4:14

because of this, we are also

4:16

starting to see some pushback in

4:18

the form of companies canceling some

4:21

projects. We are also beginning to

4:23

see shortages for natural gas turbines.

4:25

Like all of these things are

4:27

starting to hit the reality of

4:29

it. But we continue to see

4:32

interest in moving quickly. we still

4:34

see interest in large volume in

4:36

terms of both the size of

4:38

the data center and the demand

4:40

for high -quality, high -capacity factor electricity.

4:44

Okay, so lots of planned new natural

4:46

gas build -out, though subject to the

4:48

constraints you described, right, like turbines

4:50

are backlogged until, I don't know, GE

4:52

has said 2029 or 2030 or

4:54

something like that, and prices have gone

4:56

up. But nonetheless, it appears we're

4:58

going to build a lot. new

5:00

of it. And then, as you said,

5:02

number five on the list of five priorities

5:04

remains carbon. So it's on there. So

5:06

then the question, of course, is if we're

5:08

going to build this natural gas, there's

5:11

kind of no way around it, or at

5:13

least that is a perception, then should

5:15

we be throwing carbon capture on it? And

5:17

so I guess the first question there

5:19

is, is anybody in data center world already

5:21

talking about that? Are there announced projects

5:23

that would be natural gas with CCS? Are

5:25

they talking about it? Yes.

5:28

Are there announced projects? No. But

5:31

we are getting a lot of

5:33

inbound on this exact topic. And

5:35

we are talking to, if not

5:38

all of the hyperscalers, almost all

5:40

of the hyperscalers. We're talking also

5:42

to private groups that are developing

5:44

energy parks for data centers and

5:46

other electricity offerings. We are talking

5:48

to utilities. This is

5:50

very much of great interest to

5:52

people. And

5:55

some of the reason why things have

5:57

not been announced is just because it takes

5:59

time to put these things together. Some

6:01

of the reason is that there is uncertainty

6:03

out there. There's uncertainty around things like

6:05

45Q. There's uncertainty around the

6:07

speed of permitting wells. But there

6:09

is a great deal of interest, especially

6:11

in North America, but not exclusively

6:14

North America. Let's divert for a second

6:16

from the data center thing. Can

6:18

you give me like a brief

6:20

history and state of natural gas,

6:22

CCS, globally? How much of it

6:24

is there anywhere? Happy to.

6:27

So even a little bit farther

6:29

back, the first carbon capture device was

6:31

fielded in 1938. We know how

6:33

to do this. The first CO2 injections

6:35

were in 1972. We know how

6:37

to do this. We've been doing integrated

6:39

systems for climate since 1997. So

6:41

this is not exactly a new technology.

6:43

And we have deployed CCS on

6:45

some 40 facilities around the world. We're

6:47

capturing around 60 million tons a

6:49

year and injecting it underground. Originally, that

6:51

was mostly for enhanced oil recovery.

6:53

Not anymore. Now it is mostly just

6:55

for climate and saline aquifer storage. All

6:59

carbon capture technologies

7:01

are tested on natural

7:03

gas. This is an

7:05

aspect of how you mature the technology.

7:07

And the reason why is because natural

7:10

gas doesn't have like sulfur and particulates

7:12

and a whole bunch of other nasty

7:14

stuff. So every technology that's out there

7:16

is tested on natural gas, both in

7:18

the U .S. at the National Carbon

7:20

Capture Center and in Technology Center Monkstad

7:22

in Norway. There is

7:25

one announced project

7:27

that is under construction

7:29

in the U .K.

7:31

And this is

7:33

a large... in the

7:35

Teesside, T -E -E -S

7:37

-S -I -D -E facility

7:39

in northern Scotland. And

7:41

this is a place where

7:43

they will be taking the CO2

7:45

offshore, storing it under the

7:48

North Sea. But they are building a new

7:50

natural gas turbine there, and it is

7:52

going to be integrated with CCS. It is

7:54

under construction, plans to turn it on

7:56

in 2026. And that is the first, I

7:58

just want to clarify what you said.

8:00

We have a 40, carbon

8:02

capture facilities all over the world

8:04

operating, but none of them

8:06

are on natural gas power generation,

8:08

right? And so that Seaside

8:10

project would be the first new

8:12

natural gas project with CCS. Correct.

8:14

And this is for perfectly

8:16

valid technical grounds. The main one

8:19

is that it costs more

8:21

money to capture CO2 from a

8:23

low -concentration flue gas stream. And

8:25

natural gas plants, when they're

8:27

running well, are between four... to

8:29

7 % CO2 in the flue

8:31

gas. So it actually costs

8:33

more money on a dollar per

8:35

ton basis to capture the

8:37

CO2. Something that people are waking

8:39

up to in the modern

8:41

moment is that from a dollars

8:43

per megawatt hour basis, it's

8:45

the opposite. It is actually

8:47

because the natural gas energy content

8:49

is much higher than other fuels.

8:51

You can capture a lot of

8:53

CO2, but it does not require

8:56

as big a parasitic load in

8:58

terms of dollars. So

9:01

this is one of the things that's

9:03

in our recent reports. We've been writing about

9:05

this recently. It's been known for

9:07

a long time. If you think about it

9:09

in terms of dollars per ton, natural gas is

9:11

the most expensive. If you think about it

9:14

in terms of dollars per megawatt hour, it's actually

9:16

the least in the power sector. So

9:18

just to make sure I understand that,

9:20

so if I'm comparing natural gas to

9:22

coal, for example, If

9:25

you're just measuring the dollars per ton

9:27

cost of doing the capture and sequestration,

9:30

natural gas can be more expensive than

9:32

coal, lower CO2 content or lower concentration.

9:35

But if you measure it as an

9:37

adder to the dollar per megawatt hour

9:39

cost, the LCOE of the project, it

9:41

would be a smaller adder. Is that

9:43

the right way to think about it? That

9:46

is exactly the right way to think

9:48

about it. And the reason why is

9:50

coal emits more CO2 per unit of

9:52

energy. So there's an interesting dynamic, though,

9:54

and I guess at the high level I

9:56

want to get your take on this,

9:58

which is I think the fear would

10:00

be, okay, we're going to build out all

10:02

this new natural gas. And so there's,

10:05

as you said, discussion occurring about making it

10:07

carbon capture ready or implementing carbon capture

10:09

from day one. And I want to

10:11

get into some of the nuances of what

10:13

makes that. easier or harder

10:15

depending on the situation or location. But

10:17

to what degree do you fear

10:19

that it is sort of kicking the

10:21

can down the road? In the

10:23

same way that people talked for a

10:25

while about hydrogen -ready turbines that are

10:28

going, you know, very few people

10:30

are actually doing significant hydrogen blending in

10:32

those gas turbines at this point. Is

10:34

that, given that there are

10:37

zero current... active

10:39

natural gas CCS projects. When

10:41

you hear people starting to talk about that,

10:43

or even if you start to see announcements, how

10:45

much credence do you put in them? Let

10:47

me start by saying this is a reasonable concern.

10:50

We've been talking about carbon capture power

10:52

plants for a long time. My friend

10:54

from the Natural Resources Defense Council, David

10:56

Hawkins, said, hey, if the power plant

10:58

is capture ready, my driveway is Ferrari

11:00

ready. Come on in. I do

11:03

think that this moment is a little

11:05

different for a couple of reasons. One,

11:08

we're building the gas plants anyways.

11:12

They're being built. So

11:14

it's not a question of do you

11:16

do A versus B. We're already doing

11:18

A. We're just emitting uncontrolled. So

11:21

actually, I give the builders and the

11:23

hyperscalers a lot of credit for keeping the

11:25

eye on carbon. They don't have to,

11:27

but they really do care about their corporate

11:29

commitments. They're really focused on keeping the

11:31

emissions down. But they can't wait. They have

11:33

to build as fast as they can. The

11:36

second thing is, again, we

11:38

couldn't get paid in the past.

11:40

Now we can. 45Q

11:42

exists. An interesting aspect of this actually

11:44

is that the hyperscalers are also willing

11:46

to pay a premium for the clean

11:48

in the way that they would with

11:50

nuclear. But they can build a natural

11:52

gas with CCS plant in roughly half

11:55

the time in which they could build

11:57

a nuclear plant. And

11:59

the third thing I would say is

12:01

that we... going to do this everywhere,

12:03

but it's not kicking the can down

12:05

the road. It's kind of the opposite.

12:07

It is taking responsibility for your emissions.

12:10

It is actually walking the walk of

12:12

cleaning up your mess. And so I

12:14

sort of bridle at the idea of

12:16

somehow this like supports. a dying industry

12:18

and we should be doing renewables. Part

12:20

of the reasons we're doing this is

12:22

because there's backups in the renewable queues.

12:24

Part of the reason we're doing this

12:26

is because there's supply chain challenges in

12:29

renewables as well as in natural gas.

12:31

Part of the issue is if you

12:33

want to site a 100 megawatt solar

12:35

plant, it's a whole lot easier than

12:37

a 5 gigawatt solar plant. So

12:40

there is hair on all of

12:42

this. I do believe that in a

12:44

bunch of markets, renewables will be

12:46

cheaper and will be faster. If that's

12:48

the case, build the renewables. Yeah,

12:50

I'm not making any statement with regard

12:52

to renewables. I'm just wondering, and

12:54

maybe here's the distinction. Tell me if

12:56

this distinction matters to you. Will

12:59

the projects be announced as

13:01

we are building a new

13:03

natural gas plant with CCS

13:05

from day one versus CCS

13:07

ready? It'll take

13:09

a while for that to click, but

13:11

the answer is we better be doing that.

13:15

So you've seen this large

13:17

announcement of this meta

13:19

project in Louisiana, right? 2

13:21

.6 megawatts, $10 billion, that's

13:23

going gangbusters. Gigawatts, right?

13:25

I'm sorry, yeah, 2 .6

13:27

gigawatts, my apologies. I

13:31

have every expectation that there will be carbon capture

13:33

done on that plant. I know a lot of

13:35

good people who are working on it. They have

13:37

not yet made an announcement. Until

13:39

they do, it's reasonable to be

13:41

skeptical. to say, hey, you

13:43

guys are talking the talk, are you

13:45

going to walk the walk and actually do

13:47

the capture, right? We have not yet

13:49

seen anybody who says we're going to add

13:51

this one and a half gigawatt plant,

13:53

and we definitely will do the carbon capture.

13:56

We haven't seen that either, right? Part

13:58

of that reflects the uncertainty of the

14:00

moment. Part of that reflects the

14:02

complexity of this project. But

14:04

we have to get to that

14:06

position. We have to move from capture

14:08

ready to capture committed. You

14:11

mentioned cost. Do you have estimates of

14:13

what measured in, I guess, dollars per

14:15

megawatt hour is the number that I

14:17

care about more than dollars per ton,

14:19

what the adder should be or will

14:21

be? Right. So we published a report

14:23

on this back in March. I encourage

14:26

people to go to the Carbon Direct

14:28

website, take a look. In

14:31

the U .S., assuming $3

14:33

per million BTU for

14:35

natural gas, on a

14:37

new build, Costs.

14:41

That means cost of capture,

14:43

compression, transportation, storage, and permitting. You're

14:46

looking at $70 to $100

14:48

a megawatt hour. Total. Total.

14:50

Everything. In

14:52

many markets, that's competitive with wind,

14:54

solar, and batteries. In many markets,

14:56

that just beats nuclear cold. I

15:00

will add, if you retrofit

15:02

an existing plant, it's cheaper. Because

15:04

assuming that plant has been

15:06

fully depreciated, so you're retrofitting something

15:08

that's in a utility off

15:10

on the grid somewhere, the costs

15:12

come in more like $40

15:14

to $70 a megawatt hour. So

15:16

quite cheap. And

15:19

that means you're looking at

15:21

something like $25 to $30

15:23

a megawatt hour is the

15:25

adder in most markets. And

15:28

45Q knocks off, say, half

15:30

of that. And let's talk

15:32

about the siting constraint here.

15:34

I mean, we've talked a

15:36

little bit about there's ample

15:39

saline aquifer potential. for

15:41

carbon sequestration, whether it be from this

15:43

kind of point source or DAC or

15:46

whatever it might be in the United

15:48

States. But how much of

15:50

a sighting, you know, the interesting thing

15:52

about the build -out of all of this

15:54

natural gas is it is independent of

15:56

the carbon capture part. It

15:59

is sighting constrained because either it's co -located with

16:02

the data center, in which case it is

16:04

where the data center is, the data center needs

16:06

to be where the power... is available, or

16:08

it's not co -located, but then you need to

16:10

figure out where you can inject gigawatts of power

16:12

into the grid. So either way, the grid

16:14

is a constraint. And so you're adding an additional

16:16

siting constraint by trying to figure out how

16:18

to either edge to a pipeline or sequester. How

16:20

much does that limit the aperture of where

16:22

you think this is applicable? So first of all,

16:24

heck yes. We're not going to be doing

16:26

this in New England. There's no place to source

16:28

CO2 in New England, period. Virginia

16:31

is an interesting case. We are

16:33

building huge amounts of data centers

16:35

in Virginia. There's not great storage

16:37

there, right? So this becomes a

16:39

real issue. In contrast, of course,

16:41

Texas, Louisiana, central Illinois, the

16:43

Rockies, these are great places to

16:45

store CO2. Even, humbly, California, if you're

16:47

looking at the Sacramento Delta or

16:49

the Central Basin, yeah, you can store

16:51

CO2 in these places. So

16:53

it does add an

16:55

extra circle to the Venn

16:57

diagram. And so you're

17:00

not just optimizing here for, say,

17:03

infrastructure, electricity infrastructure and

17:05

or fiber. You're

17:07

not just looking for land. You're not

17:09

just looking for communities that will

17:11

say yes. You also then have to

17:13

say, hey, am I near CO2

17:15

transportation infrastructure or am I near a

17:17

viable way to get to storage? And

17:20

one of the things we've been looking

17:22

at is actually that. There are

17:24

more ways to move CO2 than most

17:26

people think about. If the only option

17:28

was a CO2 pipeline, we would have

17:30

a much smaller aperture, but it's not.

17:32

We can move CO2 by rail. We

17:35

can move CO2 by barge. And when

17:37

you do these things, the aperture opens

17:39

up. So as one example, I'm not

17:41

proposing this. I'm not endorsing this. But

17:43

if you wanted to do a CO2

17:45

storage project in Minnesota, there's no

17:47

place to store CO2 in Minnesota. Not

17:49

an option. But you can actually put

17:51

a CO2 on the barge and send

17:53

it down to Louisiana. And that's pretty

17:55

cost -competitive, actually. In our analysis, we

17:58

show the cost for that, and it's

18:00

much more reasonable than a lot of

18:02

people understand. Catalyst

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.anzarenewables.com. so...

19:33

It limits the aperture somewhat. There may

19:35

be more places than one might

19:37

think that you could do it. Let's

19:40

talk about the technology for a second. Sorry,

19:43

before we do that, if I may,

19:45

I want to make sure everybody hears

19:47

this. If there is no CO2 transportation

19:49

in storage, there is no project. Period.

19:51

Plop. You can't make it work. And

19:53

as people are citing their data centers,

19:55

they should be citing with an eye

19:58

towards that is another piece of resource

20:00

and infrastructure they could consider. Yeah, though,

20:02

as you said, it's down the list,

20:04

right? There's a big

20:06

long list before that, and it's challenging

20:08

to cite data centers, and so

20:10

it's tough to do that. And it

20:12

adds more infrastructure and more risk,

20:15

and you can see why it's not

20:17

the top of anybody's priorities at

20:19

the moment, because it kind of currently

20:21

pushes directly against the first three

20:23

priorities, which is speed, right? Anytime

20:25

you're trying to add some additional complexity

20:27

and permitting and infrastructure, it's slower. Almost

20:29

inherently. Well, I would push back on

20:31

that a little bit. Part of why

20:34

we are seeing what we're just seeing

20:36

is that people are building the natural

20:38

gas, and then they're like, all right,

20:40

well, now let's get serious about the

20:42

carbon capture piece. So you can build

20:44

a gas plant fast, and then you

20:46

have another couple of years to build

20:48

the CCS retrofit. And

20:50

over that time, you're generating power

20:52

and you're generating money. So there's another

20:54

way to think about this. Since

20:57

you can decouple the carbon capture and

20:59

the carbon... storage piece

21:01

from the power generation, you can build

21:03

it in two steps. To

21:05

your earlier point, though, that comes with

21:07

a risk. You got to actually do

21:09

the second piece if you care about

21:11

the climate piece. So about the technologies. Yeah,

21:14

technologies. I mean, you know, the way

21:16

you described it at the beginning sort of

21:18

implied, like, we've been doing this for

21:20

decades and, you know, no major revolution needed

21:22

from a technology perspective. Is

21:26

that true? as

21:28

it pertains to natural gas power plants,

21:30

given that it has not been done?

21:32

As you said, everybody tests on a

21:34

flue gas stack for natural gas, and

21:36

a lot of the stuff that we

21:38

are actually deploying has other weird contaminants.

21:40

Natural gas doesn't. But do you view

21:42

the technology risk on, I don't know,

21:45

how these turbans are going to perform

21:47

or their lifetime, whatever, for natural gas

21:49

as being effectively retired already? Or do

21:51

we need to see it first? Yeah,

21:53

it's better than that, actually. So let's

21:55

start with the established technologies. There's a

21:57

handful of companies that will today sell

21:59

you a big facility with a performance

22:01

guarantee and a wrapper. And they will

22:03

sell you like up to 10 million

22:05

tons of capture a year. They will

22:07

sell you big facilities. These are Fluor,

22:10

Schlumberger Acker, Shell

22:13

CanSolve, and Mitsubishi. These

22:16

are all liquid solvent technologies, but

22:18

that technology is in the basket. It's

22:20

done. Okay. Behind them

22:22

are the next generation of

22:24

technologies, which are, in fact,

22:26

really kind of being built

22:28

for natural gas. So another

22:31

solvent technology, ion technology, a

22:33

different kind of liquid solvent,

22:35

Capsol, out of Norway. There's

22:37

also physical sorbent technologies,

22:39

like Svante. There's

22:42

cryogenic technologies, like

22:45

Frost CC. There's...

22:48

What's the other one? Oh, membranes. There's a

22:51

bunch of companies selling CO2 capture membranes. Interestingly,

22:53

each of those has a different

22:55

sweet spot in this ecosystem. So

22:58

one of the things we are beginning

23:00

to see is many of the hyperscalers

23:02

are saying, you know what, let's start

23:04

small. Let's go with 50 or 100

23:06

megawatts. If that's the case, you're not

23:09

going to call Mitsubishi. It's the wrong

23:11

technology. It's too big, actually, for the

23:13

plant that size. But if you're building

23:15

a 50 to 100 megawatt power plant,

23:17

hey, maybe one of these other technologies

23:19

serves you better, either because of the

23:21

duty cycle or the heat rate or

23:23

the climate of the facility itself, whether

23:26

it's in a cold place or a

23:28

hot place or a dry place or

23:30

a wet place. And these

23:32

new technologies are kind of at TRL

23:34

6 or 7. They're really getting

23:36

to the point now where you can

23:38

deploy them. there

23:41

is an option to come in with

23:43

these technologies, and almost all of them

23:45

are coming in at a substantially lower

23:47

price. So there's a lot

23:49

of room to move in terms of the capture

23:51

cost reduction as well. We've been

23:53

focused mostly on the U .S. We're

23:55

both based here. A lot of the

23:57

data center build -out is here, and

23:59

we have 45Q. How much is

24:01

happening internationally on this? So, great question.

24:03

Glad you asked. First stop is

24:05

our friends to the north in Canada.

24:08

They have a substantial investment tax

24:10

credit, 60 % ITC for carbon

24:12

capture technology. That goes a

24:15

long way. And in fact, it

24:17

is not impossible that the

24:19

first integrated natural gas with CCS

24:21

data center project will be

24:23

in some place like Saskatchewan or

24:25

Manitoba or Alberta. Second

24:28

look overseas, the UK

24:30

is very interested in this

24:32

and they are building

24:34

these industrial hubs. So

24:36

in addition to the Teesside project, which

24:38

I mentioned, that's being supported with

24:40

a contract for differences policy. That kind

24:42

of support becomes a magnet. You're

24:44

going to see more of these plants

24:46

there. In part, that's a way

24:48

to both have the UK meet its

24:50

targets, displace coal, and also serve

24:52

the domestic natural gas industry. Not

24:55

to be outdone, our friends in

24:57

the Gulf states, the MENA region, this

24:59

is a hot topic. They

25:01

are very interested in attracting

25:03

hyperscalers and data centers. They have

25:05

pore volume. They have natural

25:07

gas. So look to Saudi Arabia,

25:09

the Emirates, Qatar. They're all

25:11

working this up in real time.

25:15

Not to be outdone, even though they

25:17

don't have natural gas resources, look

25:19

to Japan and Korea. They sell the

25:21

technology. So they want to sell

25:23

the turbines. They want to sell the

25:25

capture tech. They want to sell

25:27

the EPC contract. And they will do

25:29

that in a place like northwestern

25:31

Australia or, for that matter, in Mexico.

25:34

Any place where they can actually get the land

25:36

and the gas and the storage volume, they can

25:38

put these together. And we have

25:40

been talking to these large industrial

25:42

conglomerates in East Asia that are very

25:44

enthusiastic about exactly this. They see

25:46

the opportunity. And because the

25:48

hyperscalers are a distinct customer set, one

25:50

that is prepared to pay for clean,

25:52

it squares the circle of, well, who's

25:54

going to pay for all this? Cost

25:57

is an issue for the hyperscalers. It

25:59

really is. But at $100 a megawatt, even

26:02

at the high end, they're in pretty

26:04

good shape. I will reiterate

26:06

that this number, $70 to $100

26:08

megawatts, requires low -cost natural gas.

26:10

So Europe is not going to

26:12

be doing a lot of this,

26:14

right? In

26:17

contrast, though, the Middle East, Australia,

26:19

yeah, that could work. You mentioned

26:21

some of the conglomerates that can

26:23

provide the turbine and the capture

26:25

tech and the EPC. I've

26:27

been curious about whether that's how this market

26:29

ends up evolving. Are there

26:31

pre -baked combined package offerings as opposed

26:33

to, okay, I'm going to buy

26:35

my turban from GE and then

26:37

I'm going to pick my capture

26:39

technology from somebody else and I'm

26:41

going to stick them together. I

26:43

would presume that there is some

26:45

savings you can yield from a

26:47

holistic integrated solution. You are correct.

26:50

One that has already hit

26:52

the airwaves that you've seen

26:55

is this partnership between Chevron

26:57

GE Verona and Engine No.

26:59

1, which is actually bringing

27:01

together the capture tech, the

27:03

financial wherewithal, the storage expertise

27:05

into one vertically integrated offering.

27:07

There's something quite similar to

27:10

that with ExxonMobil. They don't

27:12

have their own proprietary capture

27:14

technology. Watch this space.

27:16

We'll see if that changes. But they

27:18

are offering vertically integrated systems. They'll build the

27:20

power plant. They'll run the power plant.

27:22

They'll store the CO2, right? Baker

27:25

Hughes has this as an operating with GE.

27:27

Baker Hughes has a capture technology of their

27:29

own. I

27:32

think you're going to see Siemens do something

27:34

along these lines quite quickly. And

27:36

Mitsubishi has that. Mitsubishi has the turbines.

27:39

They have the capture tech. They have the

27:41

EPC contracting. So they are very interested

27:43

in being the full -service partner. And

27:45

they're not alone. Kawasaki, same kind of

27:47

thing. Back to the

27:49

infrastructure question. I mean, you mentioned the places where

27:51

we can do it and the places where

27:53

we can put CO2 on a barge or whatever

27:55

it might be. I'd

27:58

be interested to get an update from

28:00

you, though, on permitting, on classics

28:02

well permitting, because that obviously has been

28:04

the... been a long pull in

28:06

the tent for any CCS project in

28:08

the U .S. There's

28:10

action there, but tell me how much

28:12

it's accelerating. There's a lot

28:14

more action than people see. The story six

28:16

months ago was about backlog. Six months

28:18

ago, there was this massive backlog of Class

28:20

6 wells at the EPA that were

28:22

not getting permitted. Since then,

28:25

there have been a... Flurry of

28:27

announcements. That includes wells

28:29

in Louisiana. I would add

28:31

that includes wells in

28:33

California. California permitted four classics

28:35

wells in Bakersfield. So

28:37

we are starting to see these

28:39

happen. And that is being enabled

28:42

both at the federal level through

28:44

the training and streamlining of people

28:46

to do the regulatory permitting. That

28:48

was money from the bipartisan infrastructure

28:50

law. They gave the EPA $50

28:52

million to train people. That's finally

28:54

coming through. The other thing

28:56

we're seeing is states are interested. So

28:59

there's this poll from places like Louisiana

29:01

that have primacy, North Dakota that have

29:03

primacy. They're getting their wells permitted. California

29:05

does not have primacy, but Governor Newsom

29:07

wants to see this as an option

29:09

in the state. And so the state

29:11

of California has been working with the

29:13

EPA to get this done. It is

29:15

by no means settled. But I'm

29:17

pleased to see the progress we have, and

29:19

we're slowly banging our way through this backlog

29:21

of permitting requests to the point where now

29:24

there are enough holes in the ground that

29:26

people can start to think seriously about this.

29:28

What has been the response from, I mean,

29:30

I guess to the extent that projects are

29:32

being announced or planned, or we can speculate

29:34

on this if not, the

29:36

response from local communities to these kinds

29:38

of projects? I mean, whether the natural

29:40

gas projects that are being built in

29:42

the first place or adding CCS to

29:44

them. Right. For starters,

29:46

again, let me reiterate, the

29:48

natural gas plants are

29:50

being built. That is happening,

29:53

right? And everything associated

29:55

with them, the upstream fugitive emissions

29:57

for where that's a problem, that's still

29:59

happening. So the communities are facing

30:01

this choice where they're like, well, we

30:03

haven't stopped the project. We can't

30:05

stop the project. What should we be

30:08

thinking about? And I've been pleased

30:10

to see at least some of them

30:12

are open to the idea of

30:14

CCS. Most communities still don't understand what

30:16

it is. They don't understand how

30:18

it can benefit their community. The community

30:20

benefits are at best opaque, at

30:22

worst complicated. I'm pleased, again, to see

30:25

the groups that are doing this

30:27

are leaning forward pretty heavily. Not just

30:29

the hyperscalers, but their partners, companies

30:31

they're working with. They are walking the

30:33

walk of going to communities. Many

30:36

of these communities... want the revenues, they

30:38

want the jobs, they want a cleaner

30:40

environment. And in fact, if you have

30:42

a natural gas plant that's running uncontrolled,

30:44

carbon capture reduces the pollutant load. So

30:46

we're starting to see some traction. It

30:48

is very much one by one. This

30:50

is a retail discussion. You have to

30:52

really understand each community, engage them where

30:54

they are and see what's going on.

30:56

Mostly though, I'm happy to see that

30:58

this is happening. And

31:00

the most committed people are putting

31:02

together community benefits plans because they want

31:04

the communities to benefit as well. Okay,

31:07

so final question for you. We probably

31:09

can't avoid talking about this. We're obviously at

31:11

a particular moment in time in U .S.

31:13

politics. What

31:15

have we seen so far

31:18

from this administration and this Congress

31:20

that would affect the likelihood

31:22

of build -out, the ease of

31:24

build -out of natural gas with

31:26

CCS in either direction? So first

31:29

from the administration, There's

31:33

a lot of stuff that I just won't

31:35

go into because it's so rapidly changing and

31:37

it's not particularly useful. But

31:39

we are seeing Secretary Wright

31:41

propose a set of

31:43

cuts to programs that were

31:45

approved by Congress and

31:47

approved by the prior DOE.

31:50

In some cases, the

31:52

contracts have already been made.

31:55

And this is part of the

31:57

broader rescission around clean energy.

31:59

It's the DOGE push. Frankly,

32:03

that's, in my humble opinion,

32:05

an error. The United States

32:07

is a global leader in this technology. If

32:09

we want energy dominance, this is what it

32:11

looks like, right? We should be the world

32:13

leader in these technologies and deploying them and

32:15

providing services, etc. And if we don't, these

32:17

other countries like the Middle East and Japan

32:19

are ready to go. They will just do

32:21

this. Problem

32:26

with that sensibility is it will

32:28

chill projects everywhere. We'll lose a decade

32:30

of investment. If that money gets

32:32

raked back, people who've put tens of

32:34

millions of dollars into feed study,

32:36

people who've been working on permits, they'll

32:38

just bolt. And we're going to

32:40

lose a generation of workers and a

32:42

generation of projects. These are like

32:44

OSED projects? These are projects

32:46

in OSED, the Office of

32:48

Clean Energy Demonstrations. Yes, the

32:50

Office of Clean Energy Demonstrations.

32:52

Thank you. There are also

32:55

some other projects, ones that

32:57

were just approved in the

32:59

bipartisan infrastructure law separately, like

33:01

the hydrogen hubs or the

33:03

DAC hubs, the large projects

33:05

hubs. There are other projects

33:07

in the annual appropriations that

33:09

aren't OSED related that would

33:11

also get hit. Total,

33:14

just for this class of projects,

33:16

we're talking about $8 billion worth of

33:18

projects. It's bad. If that stuff

33:20

happens, it will be Golgotha. Not to

33:22

mention the sort of hard -to -quantify

33:24

risks to 45Q in whatever reconciliation bill

33:26

is up and coming. I think,

33:29

who knows, right? I've given up trying

33:31

to speculate on that. Well, that's

33:33

where I was going to go. Congress

33:36

has got the ball on a

33:38

lot of this stuff, right? First

33:40

of all, Congress approved the money

33:42

for these other things, and they

33:44

approved... and authorize the expenses, the

33:46

contracts are written. A lot of

33:48

these projects want Congress to help

33:51

them get built. With respect to

33:53

45Q and other tax credits in

33:55

the IRA, the Inflation Reduction Act,

33:57

I give high odds that they

33:59

will sustain 45Q, 45V related projects.

34:02

We'll have to see. Already

34:04

21 members of the House have written

34:06

a letter to Speaker Johnson saying that they

34:08

want to keep this provision. I believe

34:10

them. Four senior

34:13

senators, including Senator Murkowski

34:15

from Alaska, have

34:17

come forward and say they want

34:19

to preserve these particular credits. That's

34:22

important because both in the

34:24

House and the Senate, those numbers

34:26

are large enough to be... And

34:29

to be clear, that's not specifically

34:31

45Q. It's 45Q amongst a basket

34:33

of credits, right? It also includes

34:36

the ITC and PTC. They

34:38

say the energy tax credits

34:40

in those letters. That is correct.

34:43

In many cases, though, let's say,

34:45

look at Senator Barrasso or Senator

34:48

Whitehouse. These are provisions for CCS

34:50

that they personally worked on quite

34:52

hard. So they haven't pulled them

34:54

out by name. But I think

34:56

there's a broad expectation. that

34:58

these are among the

35:00

more favored classes. Same thing

35:03

with Senator Cassidy in

35:05

Louisiana. There are people of

35:07

substance in the House and the Senate

35:09

for which this particular tax credit would

35:11

matter. Yeah. Like I said,

35:13

I've given up on speculating, but it's not

35:15

hard to imagine that 45Q would be more

35:17

resilient than at least some of the other

35:19

tax credits from the IRA. Nonetheless,

35:22

I mean, I think you've

35:25

made an important point here,

35:27

which is their is momentum

35:29

in this space, but that

35:31

momentum is, you know, sort

35:33

of shaky as a result

35:35

of the current political environment

35:37

in a couple of directions.

35:39

And to your point, I

35:42

think you said this before,

35:44

that presumably also delays final

35:46

investment decisions on new projects

35:48

that might include CCS as

35:50

well. A hundred percent. And

35:52

for me, this is the

35:54

money question, is literally, This

35:57

kind of uncertainty is killing

35:59

investment decisions. At best, they're

36:01

delayed. At some point or another, people just

36:03

walk away. And it is

36:05

critically important that the United States

36:07

resolve these questions firmly and clearly

36:09

so that investors can put money

36:11

to work. That includes companies

36:14

like Engine No. 1. That includes

36:16

companies like the hyperscalers. That includes

36:18

the vendors. People want to put

36:20

money in this space, but they

36:22

need to have confidence in it,

36:24

and the uncertainty will kill the

36:26

investments sure. All right, Julio.

36:28

Super interesting. Thank you, as always, for

36:30

the time. Always a pleasure, my

36:32

friend. Julio

36:35

is the chief scientist and carbon

36:37

wrangler at Carbon Direct. This

36:39

show is a production of Latitude Media. You

36:41

can head over to latitudemedia.com for links

36:43

to today's topics. Latitude is

36:46

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at preludeventures.com. This episode

36:56

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36:58

and theme song by Sean Marquand. Stephen

37:00

Lacey is our executive editor. I'm

37:02

Shail Khan, and this is Catalyst.