fortune--2020-03-16--Plastic that travels 8,000 miles: the global crisis in recycling

This article is part of a Fortune Special Report: Business Faces the Climate Crisis. It was published in partnership with the Pulitzer Center on Crisis Reporting. Photography by Sebastian Meyer.
Cut into a hillside in northern Malaysia, amid oil palms and rubber trees, stands a large, open-air warehouse. This is the BioGreen Frontier recycling factory, which opened last November in the village of Bukit Selambau. On a searing-hot afternoon in January, Shahid Ali was working his very first week on the job. With his feet square in front of a chute on the production line, he stood knee-deep in soggy, white bits of plastic. Around him, more bits floated off the conveyor belt and fluttered to the ground like snowflakes.
Hour after hour, Ali sifts through the plastic jumble moving down the belt, picking out pieces that look off-color or soiled—rejects in the recycling process. Though it looks like backbreaking work, Ali says it is a great improvement over his previous job, folding bedsheets in a nearby textile factory, for much lower pay. Now, if he eats frugally, he can save money from his wages of just over $1 an hour and send $250 a month to his parents and six siblings in Peshawar, Pakistan, 2,700 miles away. “As soon as I heard about this work, I asked for a job,” says Ali, 24, a squat, bearded man with glasses and an easy smile. Still, he’s working 12 hours a day, seven days a week. “If I take a day off, I lose a day’s wages,” he says.
In the warehouse, hundreds of bales are stacked more than 60 feet high—each stuffed with plastic wrappers and bags tossed out weeks earlier by their original users. The address labels still stuck inside the bags offer clear clues to their origins. You can see toilet-tissue wrappers from a household in Half Moon Bay, Calif., packaging from El Paso, and polymeric film from energy-drink maker Red Bull’s U.S. headquarters in Santa Monica.
Plastic waste in Smithtown, N.Y., where plunging prices have pushed the recycling system beyond its limits. Photograph by Sebastian Meyer
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For this detritus, factories like Ali’s are the end of an odyssey of as much as 8,000 miles. The fact that the waste has traveled to this distant corner of the planet in the first place shows how badly the global recycling economy has failed to keep pace with humanity’s plastics addiction. This is an ecosystem that is deeply dysfunctional, if not on the point of collapse: About 90% of the millions of tons of plastic the world produces every year will eventually end up not recycled, but burned, buried, or dumped.
Plastic recycling enjoys ever-wider support among consumers: Putting yogurt containers and juice bottles in a blue bin is an eco-friendly act of faith in millions of households. But faith goes only so far. The tidal wave of plastic items that enters the recycling stream each year is increasingly likely to fall right back out again, casualties of a broken market. Many products that consumers believe (and industries claim) are “recyclable” are in reality not, because of stark economics. With oil and gas prices near 20-year lows—thanks in large part to the fracking revolution—so-called virgin plastic, a product of petroleum feedstocks, is now far cheaper and easier to obtain than recycled material. That unforeseen shift has yanked the financial rug out from under what was until recently a viable recycling industry. “The global waste trade is essentially broken,” says Graham Forbes, head of the global plastics campaign at Greenpeace. “We are sitting on vast amounts of plastic, with nowhere to send it and nothing to do with it.”
Shahid Ali (right) and a coworker at BioGreen Frontier, one of scores of recycling factories that popped up in Malaysia after China banned most plastic waste. Photograph by Sebastian Meyer
This gargantuan overload is creating a conflict that industry and government can no longer ignore—one that pits the profitability and usefulness of plastic against its threat to public health and the environment. There are few places where that conflict is more visible than in Malaysia. Here, rock-bottom wages, cheap land, and a still-evolving regulatory climate have enticed entrepreneurs to build hundreds of factories in a last-ditch bid to stay profitable. The real economic and environmental costs of plastic recycling are on vivid display, as I discovered traveling across the country with photographer Sebastian Meyer. Over the course of 10 days, we visited 10 recycling factories—some of them, including BioGreen Frontier, operating without official registration, under threat of a shutdown—as they grappled with waste shipped by the boatload from across the world. And we saw how the consequences of the broken plastics economy spill over into waste dumps, container dockyards, private homes, and out into the ocean.
For half a century, plastics have seen rocketing growth, for good reason: They are cheap, lightweight, and virtually indestructible. “There’s a great future in plastics,” a nervous young Benjamin Braddock (played by Dustin Hoffman) is told by a would-be mentor in the 1967 movie The Graduate. Acting on that tip would have yielded spectacular returns. Global production soared from 25 million tons a year in 1970 to more than 400 million tons in 2018.
Behind this polyethylene deluge is an economic colossus: a global plastics market worth about $1 trillion last year, according to U.K. data analysts the Business Research Co. Demand for plastics has doubled since 2000 and could double again by 2050. “We have a growing middle class around the world that needs to improve their quality of life,” says Keith Christman, managing director of plastic markets for the American Chemistry Council, an industry organization whose members include major producers like Dow, DuPont, Chevron, and Exxon Mobil. “Plastic is a part of that.” You can find plastic not just in your water bottles and sandwich bags, but in sweatshirts and wet wipes, home insulation and siding, chewing gum, tea bags, and countless other items.
Concerns about plastic have often been eclipsed by debates over carbon dioxide emissions. But the two are closely interlinked, with plastic production emitting considerable greenhouse gases itself. Now the world has fully awakened to the plastics crisis. Images of turtles choking on drinking straws or dead whales with stomachs engorged with plastic junk have gone viral—signifiers of the 8 million tons of plastic disgorged into oceans every year. (The UN Environment Program estimates that by 2050, the oceans will contain more plastic than fish.) The human toll is equally worrying. According to a study commissioned by the World Wildlife Fund, the average American consumes at least a teaspoon’s worth of plastic a week through food—roughly the amount in a credit card—with unforeseeable health consequences.
The durability that makes plastic so appealing, it turns out, also makes it an environmental time bomb. An estimated 90.5% of all the plastic produced since 1950 is still in existence, according to analysis by Roland Geyer, an industrial ecology professor at the University of California at Santa Barbara’s Bren School of Environmental Science & Management. Only 8.4% of plastic waste in the U.S. was recycled in 2017, according to the Environmental Protection Agency. An additional 15.8% was burned to generate energy; the rest wound up in landfills. Recycling rates are even lower in parts of Asia and Africa. Even Europe, with its stringent environmental laws, recycles only about 30% of plastics.
For decades, plastics producers and their biggest customers—consumer-goods giants like Coca-Cola, Nestlé, PepsiCo, and Procter & Gamble—have argued that improving these recycling numbers is the solution to the plastic-waste crisis. They frame the problem as one of behavior—ours. “It’s a knee-jerk reaction to say the problem is with plastic,” Tony Radoszewski, president and CEO of the Plastics Industry Association, tells me. “The culprit is the consumer who does not dispose of products properly.”
It’s true that recycling rates are low. But to blame that fact on consumers alone is disingenuous. The bigger problem is a huge shift in energy markets. Prices for oil and natural gas have plummeted over the past decade. That in turn has made it far cheaper for petrochemical companies to produce virgin plastics than for factories to create recycled plastic. And with big profits to be made, companies have sharply increased virgin production, further driving down prices. Recycling used plastic is labor-intensive and therefore expensive—and the shifting economics now work against recycling in much of the world.
In 2018, this ecosystem endured another major blow when China halted the importation of almost all plastic scrap, saying that its own recycling industry was becoming an environmental hazard. The decision has caused chaos in the world’s plastic-resuscitation economy. Up until then, for example, the U.S. had been sending about 70% of its plastic waste to China. Now, “recycling is on life support,” says Mike Engelmann, solid waste coordinator for Smithtown, N.Y., a town of 120,000 people on suburban Long Island. “Hopefully things will turn around. But I am not sure how.”
Plastic waste along the waterline at low tide in Port Klang, Malaysia. Photograph by Sebastian Meyer
One turnaround option, curbing the production and use of virgin plastics, faces long odds, given the petrochemical and energy industries’ political clout. Indeed, a thriving plastics market has become pivotal to the energy sector’s long-term health. As automakers transition to electric vehicles, and renewable energy takes off, plastics will pick up the slack in oil-and-gas industry growth, according to the International Energy Agency. It estimates that petrochemical feedstocks, much of which go to make plastics, could rise from 12% of total global oil demand today to 22% in 2040—at which point the agency says feedstocks could be the only segment of the industry that’s growing at all.
It’s no surprise, then, that big companies’ responses to consumer concerns don’t emphasize the supply side. In January, big players like Dow, DuPont, Chevron, P&G, and other major players launched the Alliance to End Plastic Waste. The plastics crisis “demands swift action from all of us,” P&G CEO David Taylor told reporters.
But “swift action” did not include cutting production. Instead, companies committed to spending $1.5 billion over five years on projects to reclaim and recycle waste. Christman of the American Chemistry Council cites as one example the Renew Oceans project, which targets plastic pollution in India’s Ganges River. He says the alliance aims to make plastic packaging “100% recyclable” by 2030 and to make sure it all goes into the recycling stream by 2040. But when I ask who will bear the enormous cost of recycling such a mammoth amount, he hesitates, then says, “This will take funding. Part will come from industry, part from governments.”
Environmentalists say the sheer life span of plastics undermines that argument. What’s more, as Geyer’s research points out, most plastic that’s recycled after first use can’t be recycled again. Put another way: Almost every new piece of plastic we add to the planet may well stay here—along with almost all the old ones.
On a steamy afternoon, plastics trader Steve Wong sits at a small sidewalk eatery in the city of Ipoh, in central Malaysia. He’s meeting an old client, Saikey Yeong, CEO of local recycler AZ Plastikar. Under a roaring fan, the two men sit down to business over plates of spicy dumplings and pork rolls, washed down with jasmine tea. Their table is plastic, and so are their yellow chairs.
Wong takes out several bags and lays the contents in front of Yeong. In one are bits of clothing hangers he has collected from Paris fashion houses. In another is a tangle of plastic rope, the remnants of a polypropylene fishing net, which Wong acquired in the Netherlands. Hunched over the table, the men pull apart the net to check the polymers, at one point holding the flame of a plastic lighter up to the strands, to smell the smoke and determine its chemical makeup. “Look, this is good—we can recycle this, and there is a lot of it,” Wong tells Yeong. “The fishermen usually just dump this at the bottom of the sea.”
Wong is CEO of Fukutomi Recycling, a venerable name in the plastics industry, which he founded in 1984 in Hong Kong. He has the rough-and-ready mien of a door-to-door salesman, which, in a sense, he is. He spends much of his time traveling between the U.S., Europe, and Asia, attempting to match the hundreds of different polymers in plastic waste with whichever factories can process them. It is in settings like these—over $5 lunches and endless pots of tea, rather than in sleek corporate boardrooms—that crucial recycling deals are really decided. (On another afternoon, at another meeting, a Chinese factory owner plied Wong with homemade rice wine. As his wife cooked up a spread of Chinese dishes for us, he and Wong tested plastic samples in a rickety toaster oven.)
The global waste trade is essentially broken. Graham Forbes, head of the global plastics campaign, Greenpeace
In Ipoh, Yeong agrees to buy about 600 tons of the polypropylene each month, for about $228,000 a month. But he fears being stuck with depreciating stock—a common experience these days. “Producing new plastic is so much cheaper than recycling,” Yeong says. “It is a very big problem for us.”
In factories across Malaysia, we hear similar tales. “If you came to me now and asked me to start this business, you had better just kill me,” says Yap Koon Fatt, 59, managing director of YB Enterprise, miming a gun to his head. Yap’s 10-acre recycling factory is set among oil palm trees in his hometown of Padang Serai, where he started recycling at 17. He currently recycles about 1,000 tons of plastic a month. But prices for his products have dropped 20% over the past six months, and Chinese orders have dropped by half.
In the Fizlestari factory, in Nilai, south of Kuala Lumpur, enormous bales of used water and juice bottles from Australia, the U.S., and Britain sit stacked to the ceiling. The factory brought in about $10 million in revenue last year, but its finished product sells for 25% less than in 2017, when the factory opened. “Prices have dropped a lot, a lot, a lot,” CEO Cecil Chan tells me. “And I don’t see them going back up anytime soon.”
Plastics trader Steve Wong (left) shows plastic samples to recycling-factory owner Saikey Yeong. Photograph by Sebastian Meyer
Wong, 62, has heard it all before, and he too is feeling the economic pain. He began as a boy in Hong Kong—“I was in primary school, not even teenage years,” he says—collecting trash for his father’s small recycling operation. He eventually grew the business into a profitable enterprise, and in 2000 he moved his wife and six children to Diamond Park, Calif. By then Wong operated more than 20 factories across the world, including in Germany, Britain, South Africa, and Australia. He says that most years he made $10 million in profit from his Hong Kong operation alone. Like most recyclers, his biggest market was China.
That all came crashing down in 2018, when China launched the ban it calls Operation National Sword. The country had long allowed enormous quantities of plastic-waste imports. But the vibrant industry that sprang up to process that waste eventually prompted complaints about the pollution it generated. Today, China will accept only waste that’s almost completely uncontaminated—a threshold barely 1% of items can clear. Globally, about 111 million tons of plastic waste will need to find other destinations within the next decade, according to the University of Georgia College of Engineering.
China’s actions shut the pipeline that had made Wong rich. He estimates his business has plummeted more than 90% since National Sword, and he has closed all but five of his factories. Now he makes most of his livelihood as a middleman, brokering waste to the thousands of recyclers that have opened in response to China’s drastic change. Many have relocated from China to Thailand, Vietnam, and Malaysia, drawn by cheap land—and even cheaper labor, in the form of migrants from Bangladesh, Pakistan, and Myanmar.
Venturing into the factories of Wong’s customers shows just how labor-intensive the work can be and why communities might not want the factories as neighbors.
Molten plastic exits an extruder at the YB Enterprises recycling factory in Padang Serai, Malaysia. Health and environmental problems near such factories have sparked anger and opposition in local communities. Photograph by Sebastian Meyer
Inside, workers comb through containerloads of plastic waste. They sort through used plastic, separating materials such as PET (polyethylene terephthalate), which is widely used in drinking bottles and packaging, and LDPE (low-density polyethylene), the plastic in throwaway shopping bags. Each of the hundreds of polymers requires different processing. Once sorted, the waste is machine-washed and turned into yarn-like string. The string is then fed into a grinder, which turns it into pellets the size of grains of rice, known as nurdles. Recyclers pack the pellets into bales and sell them back to manufacturers as raw material. Much of the supply goes to factories in China, where it reenters the consumerism bloodstream as material for car parts, toys, water bottles, and thousands of other products.
The process is remarkable—but it has never been close to 100% efficient. Many polymers that users try to recycle are too low-grade for manufacturing. Soiled and damaged plastics often can’t be repurposed. And the price pressures created by the virgin plastic glut have only disrupted things further. “At the moment, there is no economic value to recycle this,” says Muralindran Kovindasamy, operations director in Ipoh for ResourceCo Asia, an Australian company. He buys some of the plastic Malaysian factories can’t use and sells it to cement companies as material for road paving. Most other recyclers simply burn or bury it. “Enforcement is poor,” he says, “and it’s cheap to dump it in the landfill.”
Yeo Bee Yin, then Malaysia’s environment minister, looked almost pained when I asked her how quickly Malaysia’s plastic-scrap trade has grown. Sitting in her top-floor office in the federal administrative center, Putrajaya, Yeo estimated that the trade contributes only $1 billion a year to the economy. Yet she saw herself as waging an all-out war against the operators. Malaysian recyclers require 19 different environmental permits to operate, and Yeo closed more than 200 factories last year alone, for lack of paperwork. If need be, she said, the government should “cut their electricity, cut their water, cut everything that is possible. They are gangsters.”
Yeo’s war awaits a new general: A few weeks after we spoke, she resigned with the rest of Malaysia’s cabinet amid a parliamentary crisis. But whoever succeeds her will have allies among health experts and ordinary citizens, for reasons evident even to the casual observer.
On our first morning in Malaysia, Sebastian Meyer and I climb a plastic mountain 50 feet high in the heart of Sungai Petani, a town of about 200,000 people near the island of Penang. This waste dump comprises plastics that nearby factories have deemed unrecyclable. It is the very end of the plastic supply chain. Burning it seems about the only next step, and someone is doing just that. Tneoh Shen Jen, a physician who directs the city’s Metro Hospital, says residents have experienced breathing problems as factories repeatedly and illegally burn the waste; they “smell burning plastic most nights,” he says.
Jean Tei and her six-year-old daughter, Ang Gia Thong, at their home in Sungai Petani, Malaysia. Ang Gia Thong developed a respiratory illness after factories in their neighborhood began burning more unrecyclable plastic. Photograph by Sebastian Meyer
In a neighborhood nearby, Tei Jean, 40, sits in her living room with her 6-year-old daughter. Their windows are sealed, and the house is stripped of toys, blankets, and curtains. It is a desperate effort by Tei to stop the girl’s respiratory infections, which she says began soon after recycling factories opened in their area last year. The girl has been hospitalized three times since then and last year stayed home from school for six months. “She kept getting worse,” Tei says. “Every time she left the house, her eyes would turn red.” Now the girl spends her days in the quiet, dark living room, drawing at a small pink table.
After protests from activists in Sungai Petani, factory owners stopped burning plastic last fall. But the two sides remain hostile. Last April, arsonists set ablaze two factories overnight. Their owners blame environmental groups. When we visited the town dump, a security guard snapped our photograph with his phone, then texted it to factories across Malaysia, to alert them to our presence. For days after, factory owners eyed us with suspicion, asking, “Are you with the environmentalists?”
On one occasion, we were. One day, near Sungai Petani, two activists guided us down a dirt road that ran alongside the Mudah River, a source of water for local farms. There, a short walk from a kindergarten, a large, unlicensed dump had sprung up. A chemical reek wafted up from pools of orange-colored water, filled with plastics instantly recognizable to Western consumers: Tide laundry soap bottles, Poland Spring water bottles, Green Giant frozen-pea packets. Locals explained that recyclers had discarded unwanted stocks here, in violation of Malaysian law. When a dump-truck driver spotted us, he hurriedly left the area. (Two days later, the site was set alight; local newspapers showed photos of thick black smoke rising over the trees.)
76 percent Share of U.S. used plastic that ends up in landfills SOURCE: U.S. ENVIRONMENTAL PROTECTION AGENCY
Malaysians hope to defend themselves from some of these depredations with the help of the Basel Convention on hazardous waste, which goes into effect next January. The convention bars the shipment of plastic contaminated with any kind of waste, and it has been signed by almost every country in the world—though not the U.S.
Malaysian officials have already begun blocking containers that they suspect violate the rules. On a blustery Sunday afternoon, customs officials escort us around Penang’s dockyard, showing us which containers are marked for return to the U.S., France, and Britain—at the shippers’ expense. Those returns can quickly get mired in a bureaucratic labyrinth, however. One container from Oakland, marked for repatriation, has sat on the dockside in Penang since June 2018.
Yeo, the former minister, believes plastic waste imports should be limited until the new Basel rules are strictly enforced, not only in Malaysia but also in nearby recycling hubs like the Philippines and Indonesia. People are increasingly rankled by the trade, she says. “Why are we a dumping ground for you? Because it is more convenient for you?” she asks me. “The feeling is there is perhaps injustice in it.”
In truth, few people give even a passing thought to where their trash goes. Most assume that after they wheel their garbage bins to the sidewalk, a well-oiled recycling system takes over.
Early one January morning, we tracked Smithtown’s garbage trucks as they proved how far off the mark that assumption is. On the first recycling day of 2020, the trucks tipped out 103 tons of plastic at a collection center that was once a full-service recycling facility. In 2014, Smithtown earned about $878,000 selling its waste to eager recyclers. Now, they pay nearly $80,000 a year to get disposal companies to take it off their hands.
Smithtown’s difficulties typify what has happened across the U.S.—and they predate China’s ban. As oil and gas prices crashed, the market for the town’s used plastic dried up; virgin plastic was simply cheaper. So it drastically cut its recycling and now accepts only higher-quality polymers, called “ones” and “twos”—the numbers inside the triangle recycling icon. Lower-grade plastics, numbered three to seven, are no longer marketable. Hundreds of towns across the U.S. have made similar decisions, and dozens have simply stopped curbside recycling altogether.
$1 trillion Estimated annual revenue of the global plastics industry. SOURCE: THE BUSINESS RESEARCH COMPANY
These days, a trucking company collects Smithtown’s plastic waste and delivers it to the Sims Municipal Recycling Center in Brooklyn. Since Long Island, where Smithtown is located, bans solid-waste landfilling, many low-grade plastics wind up being burned for electricity at a plant in nearby Huntington. Actual recycling of the waste is almost out of the question, says Smithtown sanitation supervisor Neal Sheehan. “It is still cheaper to ship it across the world to someplace, to come back as something,” he says.
If current trends continue, that’s unlikely to change. Oil and gas companies are making major investments in a future virgin-plastic boom. Multinational goliath Royal Dutch Shell is building a mammoth complex near Pittsburgh—one of America’s fracking epicenters—that will produce about 3.5 billion pounds a year of polyethylene plastic. (The plant won a 25-year tax break from the Pennsylvania state legislature that’s worth an estimated $1.6 billion.) In January, Taiwan’s Formosa Plastics Group won approval from state lawmakers to build a $9.4 billion plastic-production complex in Louisiana, which it says will create 1,200 jobs.
These plants are an environmental problem in their own right. The Center for International Environmental Law, an advocacy group, argues that the industry’s expansion could pose “a significant and growing threat to the earth’s climate.” It calculates that the greenhouse gases emitted in the production of plastics will equal the output of about 615 new coal plants by 2050. And Geyer, the UC–Santa Barbara professor, estimates that by then, the world will be creating more than 1.1 billion tons of virgin plastic a year.
Dumps like this one in Sungai Petani, Malaysia, have angered neighbors and regulators. Photograph by Sebastian Meyer
Geyer says that after years of studying industry data, he has reached one conclusion. “There is one thing we absolutely must do, and it is also the hardest,” he says. “We have to commit ourselves to stop growing the production of virgin plastic.”
Yet plastic producers’ capacity to resist that outcome seems as sturdy as a laundry-soap bottle, especially in the U.S. Bans on bags and other “single use” plastics are a case in point. Beginning in 2021, single-use plastics will be strictly controlled in the European Union’s 27 countries, and plastic bags will be banned in major cities in China. In the U.S., petrochemical companies have largely stymied such proposals. Only eight U.S. states ban single-use plastics. At the national level, a measure introduced in February by two Democratic U.S. senators would make companies share the burden of recycling and impose a moratorium on virgin-plastic growth. But Radoszewski, CEO of the Plastics Industry Association, calls the second measure “a nonstarter.”
Radoszewski says plastic-ban proposals are simply “virtue signaling” by politicians, and argues that alternatives like glass, metal, and paper are more polluting over their life span. The association lobbies relentlessly to send similar messages to lawmakers. “Don’t let naysayers dictate the story of plastics,” the group told its members in announcing its national conference on March 25. “Educate those on Capitol Hill about what we already know: Plastics help change people’s lives for the better.”
For all the fighting words, there are signs that some businesses are rethinking plastics—in part because of pressure from concerned customers.
Some clothing companies have proved that recycled plastics can command a luxury premium. In 2017, Adidas began selling high-end sneakers made of plastic waste hauled from the ocean off the coast of the Maldives. The $200 shoes have been a sold-out hit, and Adidas made 11 million pairs last year. The company says it now aims to eliminate virgin plastic from its production completely. Nike has also designed sportswear from recycled polyester and plans to expand that effort.
Behavioral changes in the packaged-goods world could have an even bigger impact. Unilever CEO Alan Jope said last October that the company would “fundamentally rethink” its packaging—its plastic footprint exceeds 700,000 tons a year—and halve virgin-plastic use by 2025.
Advances in recycling also show promise. Unilever has partnered with SABIC, a company owned by Saudi Aramco, to create packaging using chemical recycling, a process that breaks down used plastics and converts them into material it says is as good as virgin. And IBM last year said it had created a chemical process to eat through PET and turn it into nurdles—in a process it says is far more efficient and scalable than the painstaking washing and sorting in factories like the ones we visited in Malaysia.
Cut their water, cut everything. They are gangsters. Yeo Bee Yin, former Malaysian environment minister, speaking about local plastic recyclers who violate pollution laws
Several owners of those factories see promise in these moves—a glimmer of hope that their nurdles might finally become desirable commodities again. “Nike and Adidas want to tell customers they care about the earth and will use 100% recycled plastics,” says Adu Wu, chief operating officer for Grey Matter Industries, a Taiwanese recycler. The recent announcements might signal a turning point, he says. “We want to be part of that.”
Back at BioGreen Frontier, company director Engboon Ooi, 56, says he too hopes changing behavior among multinationals could help him land big deals. In the meantime, he’s preoccupied with short-term woes. Ooi is still waiting for official permits for his factory and risks being shut down. And in late January, BioGreen and other recyclers, like much of the global economy, were hit with a body blow from the coronavirus. Within weeks, China shut down factories and ports and canceled orders for recycled-plastic pellets, causing havoc for recyclers. By phone in mid-February, Ooi told me he has begun stockpiling nurdles in the warehouse, while hunting for other clients. “I don’t want to send the workers home,” he says.
Those workers continue to flood into Malaysia from some of the world’s poorest countries, eager to recycle the waste from some of its richest. For them, the plastic-waste industry, even in its depressed state, remains a large step up the economic ladder. “I have worked here for two months,” says Aung Aung, 25, from Yangon, Myanmar, as he stands on the BioGreen production line. He says recycling plastic pays far more than his previous restaurant jobs in Penang. “I need to think about my family,” he says.
Shahid Ali, meanwhile, has big plans. He says he will work at BioGreen for two more years before returning to Peshawar. “I will get married then,” he says, standing amid the sodden washed plastic. “I have already chosen a girl.” Until then, he’s willing to spend 84 hours a week on the recycling line—building a home, figuratively speaking, out of plastic scraps.
Pushing Back on Plastic
Our appetite for plastic is almost limitless; the planet’s ability to absorb it is not. Barely 9% of used plastics are recycled worldwide, and about 8 million tons are dumped into the oceans every year. A growing wave of popular anger over plastic waste is pushing companies to take bolder steps to tackle the problem. These three approaches are gaining momentum.
Karol Serewis—SOPA Images/LightRocket/Getty Images
1. Chemical recycling
The plastics industry is bullish on this strategy to address the global glut. The method involves breaking down plastics that are typically landfilled or burned, like plastic wrappers, film, and coffee pods, into their raw chemical ingredients. Those are then mingled with virgin resins to make materials that are just as strong as new plastic. There are downsides, however. The process generates a substantial carbon footprint, for example, limiting its overall benefit to the climate.
2. Bioplastics
Unlike traditional plastic, which is made from petroleum feedstocks, bioplastics are produced by extracting sugar from corn or sugarcane and turning it into polylactic acids or polyhydroxyalkanoates. Those materials look and feel much like carbon-based plastics, without the fossil fuel consumption. Critics note that crops for bioplastics require pesticides and hog land on which food could be grown. And recycling bioplastics requires high heat in composting plants, increasing the risk that used items will be landfilled.
3. Pay-per-package
One way to counteract a broken recycling market: require companies to pay city governments to recycle their plastic packaging. In most of the European Union and some Asian countries, such laws already exist. In the U.S., Maine’s legislature is considering a similar bill. Plastic makers say they would prefer to boost recycling rates rather than shoulder the costs. But in Europe, the laws have helped spur companies to cut packaging and rethink their use of plastic.
With additional reporting by Selvanaban Mariappen and Sebastian Meyer
A version of this article appears in the April 2020 issue of Fortune with the headline “Vicious (Re)cycle.”
More from Fortune’s Special Report on the Climate Crisis
—5 charts projecting the cost of climate change by 2100
—Big Oil’s Hail Mary
—Wall Street’s pressure on the fossil fuel industry is not aggressive enough
—Sci-fi tech tackles climate change with fake trees
—Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power
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fortune--2020-03-16--Big Oil’s Hail Mary

Big Oil’s Hail Mary

This article is part of a Fortune Special Report: Business Faces the Climate Crisis.
Like an old racehorse, the West Seminole oilfield, a 12-square-mile patch of dirt on Texas’s far western flank, has been trudging along for years, kept kicking by an elixir its jockey shoots into its rump.
On a recent afternoon, as storm clouds blanketed the field and a winter wind howled, dozens of rusty pump jacks rocked up and down, groaning with each revolution as they sucked out more black gold. The drug that the field’s operator, Occidental Petroleum, injects into West Seminole loosens the oil in the stone beneath the sagebrush—forcing from the rock ever more of the hydrocarbon treasure locked inside its geologic pores. The magic medicine is an old industrial gas with a new image problem: carbon dioxide.
For decades, Occidental has been pumping massive quantities of CO₂ into the ground, juicing the flow of oil in aging fields that have lost the oomph nature originally gave them. The CO₂ frees more oil to rise to the surface, where it can be sold and burned. The petroleum industry has used this turbocharging technique—called “enhanced oil recovery”—elsewhere. But Houston-based Occidental is a global expert. Across thousands of square miles of eastern New Mexico and western Texas, on the iconic swath of land called the Permian Basin, the company nicknamed Oxy has built a multibillion-dollar web of infrastructure to manage vast quantities of the CO₂. The Permian rocks’ structure makes them particularly giving of their oil when their spongelike holes are coaxed with the greenhouse gas in liquid-like form.
REJUVENATOR: Pumping systems like this one at West Seminole could use recycled CO₂ to help old oil wells stay productive longer. Photograph by Benjamin Rasmussen for Fortune
Oxy buys CO₂ drilled from natural formations in Colorado and New Mexico, then sends it through thousands of miles of pipelines, goaded by massive pump stations. At the end of the line, the company blasts it into thousands of wells that fan out like toy soldiers across the Permian, a booming chunk of the American West that now accounts, extraordinarily, for some 5% of global oil production. Oxy’s setup amounts to a ruthlessly efficient assembly line for hydrocarbons.
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Now, amid rising consumer anger about global warming and ballooning government subsidies for companies working to solve it, Oxy is attempting a stunning CO₂ pivot. It hopes to stop pumping into its fields CO₂ extracted from the earth, and instead deploy CO₂ sucked from man-made sources: from power plants, factories, and even thin air.
The company’s ambition is to build into a core business a process that has long been little more than a science project: “carbon capture and storage,” or CCS. It involves chemically snagging CO₂, typically as it’s wafting out of smokestacks but also from ambient air itself, and then injecting it into subterranean rocks. The goal: Rather than continue to dump CO₂ into the atmosphere, where it’s thickening a chemical blanket that’s warming the earth, humanity can bury it underground, ostensibly forever.
Burying CO₂ under fields like this one, in West Texas, could allow Big Oil to sell “carbon neutral” petroleum. Photograph by Benjamin Rasmussen for Fortune
Countless difficulties imperil the CCS dream. Influential environmentalists oppose it, arguing it diverts attention from renewable energy. Beyond principle, technical dilemmas loom. One, now fueling a technological race, is how to slash the cost of capturing CO₂, which remains too expensive to work without subsidy. Another, now evolving into a high-stakes lobbying fight, is how far regulators should go in forcing oil companies to prove that CO₂ they’re sending into rock stays safely where it’s put.
No member of Big Oil is gunning harder for CCS than Oxy. Even before concerns about the coronavirus—and a global petroleum-price war—sent oil-company shares tumbling this March, Oxy was trading around a 15-year low, burdened by debt from a recent acquisition. And its CO₂-fueled position in the Permian is core to its viability. So from its Houston headquarters, whose walls are hung with glamour shots of oil rigs, Oxy is making a series of bold CCS bets. One is on a contraption of massive fans that would suck CO₂ from the air. Another is a bid to establish what amounts to a green-minded polluters’ club: a network in which some of America’s biggest industrial emitters would capture and sell CO₂ to Oxy, delivering it through an as-yet-unbuilt pipeline bankrolled with the help of American taxpayers.
Oil companies need a reason to exist. It’s a second chance. Anthony Cottone, an executive at Oxy Low Carbon Ventures, on the importance of acting to reduce atmospheric CO₂
If the plans work, Oxy contends, the company will be able to accurately say that much of its oil is “carbon negative”—actually good for the planet, because extracting it would involve the safe disposal of more CO₂ than burning it would emit. More immediately accretive to Oxy’s bottom line, the move would boost its oil sales and also capture subsidies governments are rolling out to companies that can prove they’re capturing man-made, or “anthropogenic,” CO₂. For Oxy, such a masterstroke might repaint its brown corporate image green. It also could gird the company for a future in which, more oil executives are coming to believe, they will have to somehow neutralize emissions from their hydrocarbons in order to continue selling them.
Vicki Hollub, Oxy’s CEO, tells me that she has concluded that her company’s “social license to operate”—the consumer and political buy-in any firm needs to sell its product—depends on doing “all that we can do to address climate change.” The trick will be to do so while satisfying shareholders. Hollub argues Oxy’s CO₂ expertise is a competitive edge in an industry ever more concerned about a warming planet. “The world will transition out of fossil fuels, but it’s going to take quite a long time,” she says. Along the way, “the last barrel of oil produced in the world” should come not from a new well but from an aging field, helped by CO₂. “The carbon footprint is lower,” she says, “and it’s just more efficient for the planet.” Like lemonade from lemons, her environmental argument leverages her corporate portfolio.
Anthony Cottone, senior director for strategic development at Oxy Low Carbon Ventures, a unit the company created to engineer this shift, is even more direct. Buffeted by today’s push for lower-carbon energy, “oil companies need a reason to exist,” says Cottone, who contends that reason should be to serve up CCS. “It’s a second chance.”
As consumers eye a torrent of natural disasters indicative of a warming world, scientific experts say curbing carbon emissions enough to avert the worst consequences of climate change will require deploying CCS at grand scale. The existential task, according to the Intergovernmental Panel on Climate Change, or IPCC, a scientific body whose pronouncements frame conventional wisdom on global warming, is to slash emissions by 2050 to “net zero,” meaning any remaining emissions would have to be offset by pulling CO₂ out of the air.
So far, emissions continue to rise. Although renewable energy use is growing fast, the International Energy Agency projects fossil fuels, which provided 81% of global energy in 2018, still will provide 74% in 2040. If there’s any chance to meaningfully decarbonize the economy, it will require decoupling the emission of greenhouse gases from the burning of hydrocarbons. And that will mean grabbing as much as possible of the approximately 33 billion metric tons of CO₂ that fossil fuel combustion produces annually and siphoning it away.
Flags fly above White Energy’s Plainview ethanol plant. Photograph by Benjamin Rasmussen for Fortune
That is why governments are racing to support CCS—from Sacramento to Washington, from Texas to North Dakota, from Canada to the U.K. to Norway and beyond. Some of them view the technology as a way to sustain their own fossil-fueled economies. Others see it as a bridge to a future when renewable energy is cheap and robust enough to power the world largely on its own.
Carbon capture, in short, presents heavy industry and all who profit from it with the possibility of switching in the public eye from climate villains to climate saviors—without abandoning their reliance on fossil fuel, and largely at public expense. It’s a potential new lease on life at a time when markets—far more than policymakers—are pushing polluters to clean up their acts. In January, BlackRock, the world’s largest asset manager, announced it will reorient its investments to trim their climate risk, including reducing fossil fuel exposure. In February, BP, the British oil behemoth, said it would aim for net-zero carbon emissions by 2050, a plan that depends largely on CCS.
With real money suddenly on the line, the race to scale up CCS has entered a cutthroat, meaning very real, phase. The competition is among the surest signs that global capitalism is undergoing a fundamental transformation to adapt to a warming world. Whether the metamorphosis will actually check climate change is, alas, another question.
The promise and the difficulty of large-scale CCS loom in cement and steel over the outskirts of southwest Houston. The W.A. Parish Generating Station was the seventh-largest CO₂ emitter in the U.S. in 2018. It also houses one of the largest carbon-capture projects in the world.
A bulldozer drives on a coal mound at the W.A. Parish Generating Station, home to the Petra Nova carbon-capture project. Luke Sharrett—Bloomberg via Getty Images
As I approach Parish on a drizzly winter morning, I try to wrap my head around the notion that CCS might anchor a green future. My first glimpse, from several miles away on the highway, is of the plant’s four dominant smokestacks. They tower some 500 feet, dwarfing anything else on the horizon. When I reach the entrance, where the red, white, and blue sign boasts “Pride & Power,” I see a black pile of coal so massive that two yellow earth-moving machines crawling atop it, grunting as they spread the solid fuel, look from my vantage point like toy trucks. The coal arrives from Wyoming, typically twice daily, in trains about 120 cars long.
The carbon-capture project—dubbed Petra Nova, Latin for “new rock”—starts with a 15-foot-diameter pipe that sucks, from the smokestack of one of Parish’s four coal-fired power-generating units, some of the waste gas it coughs out. CO₂ constitutes about 13% of that waste gas, which whooshes through the pipe and into a 300-foot-tall tower. That tower is a vertical maze of tubes, inside which the gas mixes with a chemical, amine, that grabs the CO₂. As the rest of the gas heads into the sky, the amine, in another chemical reaction, releases the CO₂, which flows into huge compressors. Pressurized, the CO₂ enters a pipeline, travels 81 miles to an oilfield near Vanderbilt, Texas, and is injected into the earth—with the aim of helping produce a lot of sellable oil.
The carbon-capture machinery is working as planned, says NRG, the power producer that helped launch the project and owns Parish. In 2017 and 2018, Petra Nova’s first two full years of operation, it captured about 8% of the approximately 32 million tons of CO₂ that the Parish plant produced. The rest has risen into the atmosphere. But that small victory was the objective, Judith Lagano, NRG’s senior vice president of asset management, tells me during a tour of the plant: “It’s doing what it was supposed to do.”
Financially, however, Petra Nova, whose $1 billion price tag was defrayed by $195 million in federal grants, has underperformed. Global oil prices and the quantity of oil the CO₂ has wrung from the field near Vanderbilt have fallen below expectations and triggered $209 million in “impairment losses” for NRG in 2016 and 2017.
Today, Lagano says, NRG has new hopes for Petra Nova’s profitability. One reason is Texas know-how: NRG and its partners expect, as they’re getting more familiar with the oilfield, to boost production. A more immediate reason is Washington politicking: A newly generous carbon-capture tax break is about to start flowing.
The tax credit, passed in 2018, succeeds a much-smaller prior version. It results from six years of oil-industry lobbying, in large part by Oxy. When I ask Oxy’s Hollub whether that push was defensive, to ensure her industry didn’t lose ground to renewables, or offensive, to win Oxy market share over oil rivals, she doesn’t flinch. “It was, without a doubt, an offensive move,” she says.
The subsidy gives operators of CCS projects, for 12 years, a tax credit ramping up to $35 for every metric ton of man-made CO₂ they catch and deploy to boost oil production. It gives them a credit reaching $50 for every metric ton they capture and shoot into a different sort of geology, filled not with oil but with salty water. Studies suggest underground “saline aquifers” could be stuffed with quantities of CO₂ that dwarf those in oilfields—indeed, that could entomb global emissions through the end of the century.
Massive pump stations, like this one in West Texas, help Oxy transport CO₂ from natural formations in Colorado and New Mexico to Oxy oilfields in the Permian Basin. Photograph by Benjamin Rasmussen for Fortune
Once Oxy won the subsidy, it raced to take advantage of it. In 2018, it created Oxy Low Carbon Ventures, essentially a low-carbon skunkworks. Its marching orders were “to replace natural CO₂ with anthropogenic CO₂” in the Permian, says Robert Zeller III, a buttoned-down chemical engineer and Oxy lifer who was tapped as the unit’s vice president for technology. Zeller and I are speaking at Oxy’s headquarters, in a windowless and mirthless conference room. Oxy won’t let me meet with Zeller in his office, in part for fear, the spokeswoman overseeing the discussion explains, that I’ll see something on the walls that’s too revealing.
In plain English, says Zeller, his unit’s mandate was: “You have a blank palate. Go figure it out.” The team figured it out—through some calculations that bowled them over. Burning a barrel of oil typically coughs out about 8,000 cubic feet of CO₂, Zeller says. The team realized that Oxy typically shoots about the same quantity of CO₂ into the Permian to produce each barrel of enhanced-recovery oil. That meant that if Oxy could capture enough CO₂ to replace the natural CO₂ it was using, it could call that oil “carbon-neutral.” The equation would be even more compelling in certain regions where the geology requires more CO₂ to push out every barrel. CCS-produced oil from those formations could be not just carbon-neutral, but actually carbon-negative.
“That,” Zeller says, “was the eureka.”
To capture CO₂, Oxy is pursuing two parallel paths. The sexy one aspires to grab the gas from thin air. Studies have concluded that if enough CO₂ could be economically vacuumed out of the sky, the climate could benefit materially. A handful of “direct air capture” startups have since become investor darlings. Bill Gates was an early backer of a Canadian firm called Carbon Engineering, which has built a pilot plant in British Columbia. Oxy invested in Carbon Engineering in January 2019, after concluding its technology is particularly scalable in oilfields. (U.S.-based oil major Chevron also invested in the firm. Neither oil giant will say how much it put in.)
The challenge is to slash the technology’s cost. Zeller says Carbon Engineering’s first commercial-scale plant will be up and running in the Permian by 2023. It will be sized to take from the sky 1 million metric tons of CO₂ yearly, roughly as much as is coughed out by 216,000 cars. The plant’s likely cost: $1 billion. “The first of a kind is going to cost too much,” he says, but Oxy intends to position potentially dozens more such facilities in the region, at which point Zeller expects the cost for each to fall at least 30%.
Oxy’s less-sexy strategy is to lock down a supply of anthropogenic CO₂ from smokestacks, Petra Nova–style. It has mapped the locations of America’s biggest emitters: power plants, steel plants, petrochemical plants, and more. Oxy executives won’t show me their map—it’s presumably one of the things on their walls I’m not supposed to see. But emissions data is publicly available, and as CCS enthusiasm spreads, such maps line the walls of more and more offices in the oil patch. They show hotspots in Midwest coal-burning country and throughout the Texas and Louisiana oil colossus. Oxy is now scrambling to line up deals for the CO₂ these polluters are releasing into the atmosphere.
White Energy CEO Brian Steenhard at his company’s ethanol plant in Plainview, Texas. The company hopes to earn lucrative tax credits by capturing CO₂ from its waste gas for underground burial. Photograph by Benjamin Rasmussen for Fortune
It’s also now lobbying Washington for another subsidy, this one for a pipeline to ferry human-spewed CO₂ to the Permian. In case the government doesn’t concur, Hollub tells me, Oxy is wooing infrastructure-investment funds. Her ultimate goal: Cheaper CO₂, because it and electricity are the biggest costs in Oxy’s Permian operation. By “the mid to latter part of the 2020s,” Hollub says, a shift to anthropogenic gas should cut Oxy’s CO₂ costs by 20% to 30%.
Many other big oil companies, consultants and bankers tell me, are also angling for CO₂ pipeline incentives. “They can’t let anyone know they’re jockeying,” explains one well-placed consultant who doesn’t want to be identified, “because then people would know they’re not doing it for society—they’re doing it for themselves.”
To monetize CCS, companies need permission from regulators to shoot CO₂ underground. The rules governing such storage are young, they differ among jurisdictions, and they have yet to be tested. This spring, they’re prompting lobbyist combat in Washington, where the Internal Revenue Service is formulating rules to govern who qualifies for the federal tax credit—and in California, where a potentially bigger financial prize awaits.
In natural CO₂ deposits, rock securely traps gas much as, elsewhere, it traps oil. The IPCC, the global climate-science group, says more than 99% of injected CO₂ is “likely” to stay put for 1,000 years in a well-designed and managed project. What’s more, the IPCC says, CO₂ tends to grow more “immobilized” over time, and thus a project could retain essentially all of its CO₂ “for up to millions of years.”
The first of a kind is going to cost too much. Robert Zeller, an Occidental executive, on the projected $1 billion price tag of the company’s first Carbon-capture plant
The question is how to ensure CCS is done well. Regulators want to prevent CO₂ from seeping into other underground areas—either into someone else’s property, or into geologic layers, such as drinking-water sources, where it could cause harm. They also want to make sure it doesn’t waft back up, years or even centuries later. If sequestered CO₂ leaked into the sky, its climate-saving value would be negated, and the polluter that pocketed subsidies for capturing it would have contributed no lasting benefit.
The industry’s D.C. drama boils down to whether an independent third party should verify that oil companies have safely stored as much CO₂ as they claim. An industry group that Oxy helps fund, the Carbon Capture Coalition, whose roster also includes Shell, recently wrote to the IRS that such verification is “vitally important” to the viability of the credit. That puts them at odds with another group, the Energy Advance Center, which lists ExxonMobil and Denbury Resources, both of which have extensive CCS operations, among its members; it opposes mandatory third-party verification. BP recently quit that group, and the company endorsed mandatory verification.
An aerial view of the West Seminole oilfield. Photograph by Benjamin Rasmussen for Fortune
Beyond Washington, however, Oxy is trying to loosen some rules. Even richer than the federal tax break is a subsidy that California is rolling out. When companies can substantiate that they’ve used low-carbon processes to produce transportation fuel they sell in California, the state grants them “carbon credits,” which they can sell to other, less-green fuel producers. A credit representing one metric ton of CO₂ saved currently sells for about $200. And that’s cash, not merely a credit against taxes. Oxy has tussled with California over what it must do to monitor man-made CO₂ that Oxy wants to inject at West Seminole. The source of that gas: two ethanol plants in the Texas Panhandle.
Plainview, Texas, lies between Lubbock and Amarillo, on a highway whose speed limit is 75 miles per hour but doesn’t seem to much matter. The town’s name fits: On the early morning I visit, the pancake-flat landscape, offset by a vast orange sky, affords what seems an endless vista. Dominating the horizon on the eastern edge of town are the seven 807,000-gallon fermentation tanks at an ethanol plant owned by Frisco, Texas-based White Energy.
Ethanol, made in the U.S. primarily from corn, has long been marketed as a clean fuel. But its production, a process of fermentation that resembles—and smells like—beermaking, produces gobs of CO₂. Soon after sunrise, I circle the plant with Brian Steenhard, White Energy’s chief executive. As we linger at the ethanol tanks, he points to a pipe atop one. It belches as much as 350,000 tons of CO₂ yearly. White Energy’s Hereford plant, an hour away, emits about the same amount.
GAS STATION: Excess CO₂ from this ethanol plant in Plainview, Texas, could eventually be stored in Oxy oilfields. Photograph by Benjamin Rasmussen for Fortune
White Energy and Oxy have applied to the California Air Resources Board, known as CARB, to receive credits for capping those pipes and sending the CO₂ to the West Seminole field for burial. Steenhard estimates that if regulators signed off, and if White Energy figured out how to ship to California all the ethanol it produced in Plainview and Hereford, the credits would generate between $360 million and $720 million over 12 years. The project could receive federal incentives over that same span, potentially offsetting some $275 million in taxes. CCS projects being hatched elsewhere would be far, far larger.
The obstacle: California has tougher requirements than the feds for ensuring injected CO₂ stays put. But those rules’ effects on the ground still are taking shape. Originally, for instance, CARB wanted Oxy to insert fiberoptic “geophones” into each West Seminole CO₂-injection well to listen for signals that the injection might be prompting an earthquake, Bill Raatz, Oxy’s chief geologist, tells me. Oxy argued that was “a complete nonstarter” for cost reasons, Raatz says, so Oxy asked CARB to let it put a geophone down no more than a handful of the wells and use cheaper aboveground seismic monitors elsewhere.
CARB officials say they won’t comment on their discussions with Oxy and may rule on the West Seminole application later this spring. In March, CARB was reviewing a 520-page document from Oxy that argues that the field would safely sequester CO₂. When I asked to see it, both Oxy and CARB refused to give it to me. Only after Fortune submitted an open-records request to CARB did the agency relent. And only after that did Oxy hand over a heavily redacted version that it had submitted to CARB. That version blacked out big chunks of information the company calls “business confidential.” What wasn’t redacted boils down to a four-word argument that Zeller, the Oxy technology executive, had lobbed at me in Houston. I asked him about the likelihood that man-made CO₂ at Oxy’s Permian fields might escape. Said the engineer: “It ain’t coming out.”
Occidental’s West Seminole oilfield, viewed from a nearby roadside Photograph by Benjamin Rasmussen for Fortune
A roadside entrance to the West Seminole field is marked by a worn, rusty sign, pocked with what appear to be bullet holes. On sections of the field, among the pump jacks still rocking, chunks of old machinery lie atop the dry brush. The scene evokes an oil-patch graveyard.
Whether this acreage should become a graveyard of a different sort—a resting place for CO₂—is, fundamentally, a question about how humanity will wrestle with the wicked complexities of global warming. Proceeding will signal that a technology widely seen as crucial to addressing climate change may finally scale. Delay will leave the future of that technology in the same place where a lone bird is gliding above West Seminole on the gray afternoon I glimpse the field. It’s the place where, every day, more CO₂ is heading: up in the air.
Burying climate change
Carbon capture and sequestration (CCS) shows promise as a weapon against climate change, but the technology has barely begun to be deployed. Here, some facts to keep the science in perspective.
1. A growing slice of the pie
Curbing climate change in line with United Nations goals would require slashing global energy-related CO₂ emissions, now about 33 billion tons a year, to below 10 billion tons in 2050. CCS would have to shoulder about 9% of the carbon-cutting load between now and 2050, and 28% of cuts in 2050 itself, according to the International Energy Agency.
2. So far, slow going
In the United States, total energy-related CO₂ emissions were 5.3 billion tons in 2018. But the U.S. has developed only about 25 million metric tons of CO₂-storage capacity, according to a December 2019 study by the National Petroleum Council, a government advisory group, enough to bury less than one-half of 1% of those emissions.
3. Plenty of room
The U.S. has enough room in geologic formations to store hundreds of years’ worth of emissions from “stationary” sources like power plants and factories, according to the National Petroleum Council’s report.
Aging oilfields account for most current capacity; the greater potential, scientists say, is in underground formations onshore and offshore that naturally hold salty water, not oil.
4. Big, down under
CCS began in 2019 at Gorgon, an Australian project led by Chevron that’s capturing CO₂ from an underwater natural-gas field and injecting it into a formation under an island. When ramped up, it will be one of the world’s biggest CCS projects, injecting up to 4 million metric tons of CO₂ per year.
A version of this article appears in the April 2020 issue of Fortune.
More from Fortune’s Special Report on the Climate Crisis
—Wall Street’s pressure on the fossil fuel industry is not aggressive enough
—Plastic that travels 8,000 miles: The global crisis in recycling
—5 charts projecting the cost of climate change by 2100
—Sci-fi tech tackles climate change with fake trees
—Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power
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fortune--2020-03-16--Wall Street is starting to put pressure on the fossil fuel industry—just not aggressively enough

This article is part of a Fortune Special Report: Business Faces the Climate Crisis.
The fossil fuel industry faces a classic business problem: Someone else has come up with a better technology. Over the past decade, engineering advances have helped drive down the price of solar panels and wind turbines by some 90%. Clean energy is now the cheapest way to generate power in most of the world. And today, storage batteries are on the same plummeting price curve—so that, increasingly, the sun’s habit of going down at night is no big deal. Even the car, which has helped define our culture and consumes vast quantities of fossil fuel, is changing fast. No honest person who has driven a Tesla will dispute that it’s a superior machine: fast, with few moving parts, and a quiet elegance that makes a rumbling muscle car seem more than a little old-fashioned.
Faced with that kind of challenge, incumbent industries usually play for time, trying to eke out another decade or two of profits before wandering off to a well-appointed retirement home. For the energy industry—at the heart of our economy for so long—transition periods have been particularly slow. Fixed investments and established supply lines mean that, in the past, converting from wood to coal or coal to oil has played out over 40 or 50 years or more. Plenty of time for a nice wind-down.
But the fossil fuel industry also faces a decidedly novel business problem: It turns out that its product is destroying the world.
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Does that sound like hyperbole? This winter, a team of economists at that radical outpost known as JPMorgan Chase prepared a report for high-end clients that eventually leaked to the British press. It explained the current science in great detail and concluded: “We cannot rule out catastrophic outcomes where human life as we know it is threatened.” Quoting many groups from the International Monetary Fund to the UN’s Intergovernmental Panel on Climate Change, the report said policymakers have no choice but to force the transition off coal, oil, and gas because a business-as-usual climate policy “would likely push the earth to a place that we haven’t seen for many millions of years,” sweeping the planet past irrevocable tipping points as the poles melt and oceans acidify. “It is clear that the Earth is on an unsustainable trajectory,” it said. “Something will have to change at some point if the human race is going to survive.”
How the world deals with the fossil fuel industry’s two existential problems, in other words, will define humankind’s future. And it has become increasingly clear that while government plays a key role in the race to solve these problems, so too do banks, insurance companies, and asset managers: Wall Street as well as Washington, if you like shorthand. There’s an emerging agreement among all parties, activists and financiers alike, that if the transition to clean energy goes at the pace that the oil and coal lobbyists would like, the planet will break.
If that transition instead goes unnaturally fast—well, we can’t stop global warming. Not anymore. But we might limit it to the point at which civilizations endure. I wrote the first book for a general audience on this topic back in 1989, and I can tell you we are at a point we have never seen before. The demand for urgent action is today crashing up against a climate denial script that has been carefully nurtured by the oil industry since the 1990s and is now the reigning wisdom at the White House. Which narrative emerges victorious will not only determine the financial landscape of the planet, but it will also determine the literal landscape—how high the seas rise, how many forests burn, how many people must leave their homes. Changing the climate is the biggest thing humans have ever done, and now we’ll see how effectively we can respond to a mess of our own making. One thing is for certain: The chances of success are very low unless the business world embraces the challenge.
About a decade ago, analysts at a small London think tank, the Carbon Tracker Initiative, published a report laying out the essential underlying facts of the climate crisis. The fossil fuel industry had in its inventory of reserves a vast quantity of carbon: that is, the coal and gas and oil deposits it had identified and told shareholders and regulators it would burn—enough to produce almost 3,000 gigatons of carbon in the form of carbon dioxide. The world’s scientists, however, had concluded that we could really only burn about 600 gigatons more and have any hope of meeting the climate targets that the world’s governments had set. The numbers have fluctuated some over the decade as those targets have shifted, but the ratios remain unchanged: In essence, the industry has far, far more supply than the atmosphere can deal with.
And that’s a problem not just for life on earth but also for balance sheets. You could call that excess supply a carbon bubble if you’d like—at current prices it may represent something like $20 trillion worth of fossil fuel that is already reflected in the value of these firms but that scientists say we must keep in the ground. (The dramatic decline in crude prices that has helped rock the stock market of late, meanwhile, has put a profit squeeze on Big Oil.) Mark Carney, who just stepped down as governor of the Bank of England in March to become the UN’s climate finance envoy, was far ahead of other regulators in recognizing the danger, telling the world’s insurers at Lloyds of London in 2014 that they were dangerously overexposed to the risk of these potentially stranded assets.
Beginning in 2012, environmental activists around the world, myself included, began calling for institutions to divest their holdings in fossil fuels. At first, we campaigned mostly on moral grounds, and the early respondents were small colleges and religious denominations. But the push quickly gained steam, becoming the biggest anticorporate campaign in history. As of December 2019, some $12 trillion worth of endowments and portfolios had divested, according to Gofossilfree.org, in part because the smart money had come to realize that the fossil fuel sector was lagging everything else in the market.
The institutions that have begun to divest include New York City’s pension fund, half of the colleges and universities in the U.K., the Norwegian sovereign wealth fund (at more than $1 trillion, the biggest pool of investment capital on the planet), the Rockefeller charities (which descend from the planet’s first oil fortune), and the vast University of California system. Not a day goes by without some new announcement: As I was writing this piece, Twitter flashed the news that KiwiSavers, the primary retirement fund in New Zealand, had joined the ranks. Together, divestment has changed the dialogue, not to mention the cost of capital: Coal executives complain it’s nearly impossible to raise money because so many funds have divested, and in last year’s annual report, Shell Oil called divestment a material risk to its business. As America’s favorite stock picker, Jim Cramer, put it in a typically manic diatribe on CNBC this winter, there’s no money to be made anymore in fossil fuel stocks because “we’re starting to see divestment all over the world.” As a result, he said, fossil fuels were “in the death knell phase.”
$20 trillion Estimated market value of fossil fuels reflected in energy companies that scientists say we can’t afford to burn. Source: Carbon tracker Institute
But that phase-out still isn’t coming fast enough to meet the scientific targets necessary to mitigate the climate crisis. As Carney explained in one of his last appearances as BofE governor in December, big institutional investors tended to have horizons of two to 10 years. “In those horizons, there will be more extreme weather events, but by the time that the extreme events become so prevalent and so obvious, it’s too late to do anything about it.”
As a result, campaigners have expanded the divestment drive one ring out, this time pressuring the financial institutions themselves instead of just the fossil fuel companies. We have mounted a fast-growing crusade to get the BlackRocks and the State Streets, the JPMorgan Chases and BofAs, the Liberty Mutuals and the Chubbs to end what they call a “money pipeline” that has funneled at least $2 trillion in loans to the fossil fuel industry since the end of the Paris climate talks in 2015.
On the one hand, it may seem like an unlikely crusade: These are, after all, the richest institutions on planet Earth; even after the global financial crisis of 2008 they mostly emerged unscathed and, in some cases, bigger than ever. Do they have anything much to fear from scruffy protesters?
But the anger of the general public over climate change is reaching a crescendo, especially as people have come to understand the degree to which the fossil fuel industry covered up its early knowledge of global warming. This winter, a poll conducted by Yale researchers found that fully a fifth of Americans were ready to “personally engage in nonviolent civil disobedience” against “corporate or government activities that make global warming worse,” if a person they liked and respected asked them to. One guesses that such sentiment is highly concentrated in precisely the urban and suburban precincts where American money is highly concentrated—Trump may own the bright-red electoral map of the U.S., but the money map tilts in the other direction. And financial institutions need to be a little wary of their customers: There are a lot of Chase credit cards in the hands of people who have come to care about global warming.
Something will have to change… if the human race is going to survive. David Mackie and Jessica Murray, JPMorgan Chase economists in a February 2020 report titled “Risky Business: Climate and the Macroeconomy“
In fact, the speed with which these institutions have begun to bend is instructive. Early on in this new Stop the Money Pipeline campaign—which includes big NGOs like the Sierra Club and Greenpeace—protesters gathered outside Liberty Mutual’s Boston headquarters, pointing out that the insurance giant was continuing to invest heavily in fossil fuel projects, even as it was cutting off policyholders in California because climate-fueled wildfires were making their homes too risky to underwrite. And it was only a matter of weeks before Liberty Mutual began to buckle, announcing a policy in December that would restrict its investment in coal and in Canada’s dirty tar sands oil complex. Others like the Hartford soon followed, and that same month even Goldman Sachs proclaimed that it would restrict financing for fossil fuel projects in the Arctic.
A significant breakthrough came in January, when Wall Street behemoth BlackRock—the biggest financial player of all, with $7.4 trillion in assets under management and a key target of the emerging campaign—announced that it was going to put sustainability at the center of its investment strategy. In a letter to investors, CEO Larry Fink said, “The evidence on climate risk is compelling investors to reassess core assumptions about modern finance.” Fink said that BlackRock would vote against management teams that weren’t working toward sustainability goals, and his firm would press companies to disclose plans “for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized.” And since BlackRock is the biggest single stockholder for many public companies, the threat comes with real weight.
Of course, this is only half the equation for businesses thinking about the climate crisis. The other half is all upside: Someone is going to have to build—and finance—the most massive industrial transition in human history. “Achieving net zero emissions will require a whole-economy transition,” Carney said in his valedictory speech to the City of London in late February. “Every company, every bank, every insurer, and investor will have to adjust its business model. This could turn an existential risk into the greatest commercial opportunity of our time.”
Consider just one small example: Late last year, New York City decreed that all big buildings in the five boroughs needed to cut their carbon emissions 40% by 2030. That’s necessary because the 2% of buildings over 25,000 square feet contribute about half the city’s emissions. Meeting the target clearly won’t be easy. As the CEO of the Urban Green Council, John Mandyck, said, “This law could possibly be the largest disruption in our lifetime for the real estate industry in New York City.” You’re a landlord who misses your target? The fines run up to $268 a ton of carbon, which could mean a million dollars for some big property owners. But, on the other hand, think of the money to be made from those repairs: a whole new workforce trained in insulation or overhauling HVAC. It’s all technically achievable. As Vivian Loftness, a Carnegie Mellon professor, explained to reporters, “We’ve got [older] mechanical systems that are running at 50% efficiency, where there’s things on the market that will run at 95% efficiency. We’ve got a lot of room for upgrades for boilers and chillers, air-handling units, control systems—there’s so much room in just the hardware of buildings.”
Imagine the money to be made from financing that kind of overhaul. And then think of the money to be saved once you have completed the upgrades: If you’re using 40% less energy, year after year, you have suddenly found a remarkable boost to your P&L. Energy efficiency is one of those revolutions that can pay for itself.
$12 trillion Total value of asset managers and endowments that had divested from fossil fuels as of December 2019. Source: Gofossilfuelfree.org
But none of it is really worth doing unless it can be done fast. That’s the rub with climate change: Our period of leverage to affect the outcome seems to stretch only a few years into the future. The scientists of the Intergovernmental Panel on Climate Change issued their most recent update in October of 2018, cautioning that unless fundamental transformation of our energy system took place in the decade of the 2020s—and they defined that transformation as cutting carbon emissions in half—we could kiss goodbye any hope of meeting the necessary climate targets.
And that would be, in the long run, rather expensive. In the same month as that IPCC report, British economists attempted to calculate the damage that would come from global warming that reached about 3.7 degrees Celsius by century’s end, which is in line with our current trajectory. Their figure? $551 trillion. Which is significantly more money than currently exists on planet Earth.
Our options are clear: Invest now with the opportunity to earn a nice return (and save humanity in the bargain), or take unfathomable losses down the line. The correct choice should be obvious to any smart financier.
Bill McKibben is an author, environmentalist, and activist whose books include The End of Nature (1989) and Falter (2019). He is a cofounder and senior adviser at 350.org, an international climate campaign organization.
A version of this article appears in the April 2020 issue of Fortune with the headline “Putting the Money Squeeze on Fossil Fuels.”
More from Fortune’s Special Report on the Climate Crisis
—Big Oil’s Hail Mary
—Plastic that travels 8,000 miles: The global crisis in recycling
—5 charts projecting the cost of climate change by 2100
—Sci-fi tech tackles climate change with fake trees
—Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power
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fortune--2020-03-16--5 charts projecting the cost of climate change by 2100

This article is part of a Fortune Special Report: Business Faces the Climate Crisis.
The world’s five warmest years on record have been its past five, according to the National Oceanic and Atmospheric Administration, part of the U.S. Department of Commerce. And as the planet continues to heat up, a growing body of academic research shows that rising temperatures will have profound effects on the global economy. While some countries may actually prosper, one study projects average global incomes will fall 23% by the end of the century.
There is an optimal temperature, believe it or not, at which economic performance peaks: 55° F. That’s according to researchers at Stanford and UC-Berkeley who examined long-term economic data from 166 countries to project the impact of changing climate on the global economy. New York City and Palo Alto, it’s worth noting, both have average annual temperatures near 55°. For cooler countries, rising to the mid-50s can boost output. But the hotter it gets above that, the more productivity slides, thanks to factors such as increased energy demand, lower crop yields, and even declines in cognitive function. (It’s hard for humans to concentrate when it’s scorching.) The same trend applies to the U.S. economy: Places where it’s already relatively hot are likely to be hit harder as temperatures rise. A separate study by researchers from UC-Berkeley, Princeton, and other institutions found that counties in the West, Midwest, and Southeast would be disproportionately hurt by unmitigated warming, with some losing up to 20% of GDP by 2100.
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If warming continues to be unmitigated, Southern states will have to contend with huge increases in energy costs, rising damage from coastal storms, lower crop yields, and even higher mortality rates owing to extreme heat.
A version of this article appears in the April 2020 issue of Fortune with the headline “Projecting the Cost of Climate Change.”
More from Fortune’s Special Report on the Climate Crisis
—Big Oil’s Hail Mary
—Plastic that travels 8,000 miles: The global crisis in recycling
—Wall Street’s pressure on the fossil fuel industry is not aggressive enough
—Sci-fi tech tackles climate change with fake trees
—Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power
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fortune--2020-03-16--3 months before coronavirus, a war game called ‘Urban Outbreak’ showed we weren’t ready

How early GPS gadget maker Garmin mapped out success against the likes of Apple and Google

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On Sept. 17, the U.S. Naval War College and the National Center for Disaster Medicine & Public Health began a war-game simulation they called Urban Outbreak. Benjamin Davies, a researcher and game designer at the college, gathered 50 experts in disaster response from the government, military, academia, and the private and nonprofit sectors for two days of exercises at Johns Hopkins University’s Applied Physics Lab in Laurel, Md.
The aim, Davies told me, was to see how people would respond in real time to “a profoundly dangerous and complex problem set”—the sudden arrival of a deadly pathogen in a dense metropolis. The question, in short: Would we be ready?
Within three months of that exercise, the first cases of illness from a novel strain of coronavirus were being identified in Wuhan, China, a city of 11 million people. In the three months since then, the virus has spread to more than 100 countries, overwhelmed governments and health care systems in cities as far-flung as Seoul and Seattle, and forced the quarantine of an entire European nation more than 5,000 miles away from the disease’s epicenter.
Just as with Davies’s simulated outbreak in the fictional city of “Olympia,” the real-life coronavirus outbreak has revealed a striking, if not unexpected lesson: We weren’t— and still aren’t—ready.
A visual from “Urban Outbreak” a war-game simulation led by Benjamin Davies, a researcher and game designer. NATIONAL CENTER FOR DISASTER MEDICINE AND PUBLIC HEALTH NAVAL/WAR COLLEGE/JOHNS HOPKINS APPLIED PHYSICS LABORATORY
As Davies explained, that takeaway from the September simulation was a mark of success. The exercise, after all, was designed to reveal the resource gaps and communication failures among the players—the biases and confusions, the inevitable confrontations and areas where leadership and revised strategies are badly needed. The goal was to learn from all that and be ready the next time.
“Games have a wonderful tendency to raise hidden critical issues that remain just under the surface of a problem or interaction,” said Davies, who is also the operations specialist for the Naval War College’s humanitarian response program. “When you get all those people in the same room, and they lay out their plans in front of each other, suddenly all new issues arise: What time of day will the shipment arrive? By truck or helicopter? Where will the helicopter land? What will the military do if desperate people approach them?”
Each question can spiral into confusion or uncertainty, he says, and confound players as they chart the best course of action.
Which brings me to this issue of Fortune. Consider the stories in our April issue as our version of a war game for a crisis that may pose an even greater threat to civilization than the current spread of the coronavirus: the warming of the planet.
The platform here may be two-dimensional, but the goal is the same: to raise critical questions about our readiness to respond; and to shine a light on the gaps and ineffectiveness of the business community’s current efforts on these fronts so that, perhaps, we can mount a more robust response moving forward.
To be sure, global industry—and yes, those of us who rabidly consume the products and services these businesses provide—caused many of the climate and environmental problems we face today. But then, as deputy editor Brian O’Keefe writes in his introduction to the package, business is also in a position to try to fix them. There’s even a $26 trillion market opportunity for those who do, according to one estimate.
The alternative to acting boldly, it should be emphasized, isn’t “business as usual.” It’s “game over.”
A version of this article appears in the April 2020 issue of Fortune with the headline “Game Theory.”
More coronavirus coverage from Fortune:
—How coronavirus is affecting the global concert industry
—Politicians around the world are going into quarantine
—Some extreme ways companies are combating coronavirus
—How Europe is adapting to the coronavirus outbreak
—What Xi Jinping’s visit to Wuhan says about China’s virus recovery
—Conferences go online amid coronavirus fears
—Coronavirus may not be all bad. Consider the “stay at home” stocks
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fortune--2020-03-16--Inside ‘Project Odessa,’ an experiment in greener fossil-fuel power

This article is part of a Fortune Special Report: Business Faces the Climate Crisis.
Capturing carbon dioxide and storing it underground seems a no-brainer, according to the new calculus of a changing climate. But it has a dirty downside: It burns a lot of energy, which typically means it spews a lot of other pollutants.
New technology proposed for commercial deployment in the West Texas oil patch aims to address that problem, providing cleaner fossil-fueled power optimized for the carbon-capture process. And that technology’s wider development, including in a separate proposed project in Louisiana, could expand and prolong the use of fossil fuels in an increasingly carbon-averse world.
Combusting fossil fuel with air, whether in a power plant generating electricity or in a car cranking out motion, yields a witch’s brew of pollutants. One is CO₂, a colorless, odorless gas that’s warming the planet and that society, until recently, much cared to curb. Others, such as nitrogen oxides, contribute to local pollution such as acid rain and smog.
Net Power’s pilot plant in La Porte, Texas. The company’s technology is designed to burn natural gas without releasing pollutants into the air. Courtesy of NetPower
Governments long have regulated those local pollutants, which is why fossil-fueled power plants have elaborate exhaust-cleaning equipment and why cars and trucks have catalytic converters. In limiting pollution, though, those devices typically lessen power, making the electricity plant less efficient and—as generations of teenage drivers know—the car less throaty off the line.
Capturing CO₂, too, requires energy. How much depends on how concentrated the supply of CO₂ is. In the waste gas coming out of a typical coal-fired power-plant smokestack, the concentration of CO₂ is about 15%. In ambient air—whose CO₂ a technology called “direct air capture” proposes to hoover up, often using giant fans—the concentration of CO₂ is radically, dauntingly, lower: 0.04%.
Once the CO₂ is captured, moreover, compressing it and injecting it into underground formations also requires a lot of juice.
For more on carbon-capture technology, read “Big Oil’s Hail Mary.”
But what if fossil fuel could be burned in a way that produced no pollutant other than CO₂—which itself could be captured? Presto: Fossil fuels would be green.
That, at least, is the theory. It’s also the stated promise of a newfangled natural-gas-fired power plant developed by North Carolina-based Net Power. Its investors include Houston-based oil producer Occidental Petroleum and Chicago-based power producer Exelon. Both see Net Power as a potential economic savior—one that could make fossil-fuel-powered electricity newly competitive amid mounting pressure to curb CO2 emissions..
Oxygen in, cleaner gas out
The Net Power process burns natural gas not with air, about 80% of which is nitrogen, but with oxygen. As a result, according to the company and its investors, the combustion produces only CO₂ and water. Because that CO₂ is highly pure—it constitutes about 98% of what comes out of the Net Power machine—it can be captured relatively easily and then, rather than being sent skyward, shot underground.
So far, no full-scale Net Power plant has been built. A small one exists at the end of a gravel road in an industrial part of La Porte, Texas, on the southeast fringe of Houston. (On the day I visited the plant in February, power generation was down for an inspection, and as of mid-March it remained down for an upgrade of a key part.)
Occidental, known as Oxy, says it will build a commercial-scale Net Power plant by 2023 in the Permian Basin, a vast stretch of western Texas and eastern New Mexico in which Oxy long has shot CO₂ into aging oilfields to loosen oil in the rock and coax more of it up to the surface. The project will be located on an Oxy oilfield not far from Odessa, Texas, says Bill Brown, chief executive of Net Power, which refers to the initiative internally as “Project Odessa.” Odessa is the quintessential Permian oil town immortalized in the book, film, and TV series “Friday Night Lights.”
If the Net Power machinery could be rolled out affordably and at scale—still a big “if”—it could boost demand for natural gas, a glut of which is flooding the Permian and the U.S.
At the Texas oilfield, Oxy intends the Net Power contraption to power a machine to capture CO₂ from the air, a technology developed by Carbon Engineering, a Canadian firm in which Oxy also has invested. Together, Oxy says, the two machines, which Oxy intends to perch atop a number of its Permian oilfields, would sequester enough CO₂ to render the oil Oxy pulls up there “carbon-neutral.” Additional electricity from the Net Power device would, Brown says, be sold into the power grid.
Photos courtesy of Net Power. Courtesy of NetPower
The endgame for Oxy is to boost the profitability of its oil output. Electricity and CO₂ are its two biggest costs in the Permian, and so, to fatten margins, it needs cheaper supplies of both. Vicki Hollub, Oxy’s CEO, tells me she anticipates the Net Power machinery will slash Oxy’s power costs by at least 25% over the next several years. And she predicts Oxy’s CO₂ costs will fall by perhaps 30% as Oxy shifts to getting its CO2 from increasingly cheap man-made sources rather than, as it now does, buying CO₂ that’s been drilled up from natural underground formations in the American West.
On the drawing board in Louisiana
Another Net Power project is on the drawing board near Louisiana’s Gulf of Mexico coast. Two entities led by Charles “Chas” Roemer IV, whose father is former Louisiana governor Charles “Buddy” Roemer III, are working with Net Power and with Siemens, the German industrial-equipment giant, to cobble together the money and the government approvals necessary to build a massive liquefied-natural-gas facility that they say would be essentially carbon-neutral.
LNG plants use massive amounts of energy in compressing natural gas into liquid form for shipment around the world. Typically, the energy burned to produce that compression emits prodigious quantities of CO₂ and other pollutants. Using Net Power equipment to generate that electricity, say those assembling the Louisiana deal, would allow them to avoid emitting those pollutants and to capture essentially all the project’s CO₂—and then send the CO₂ underground.
The advancement of the project, which would be located on the Calcasieu Ship Channel south of Lake Charles, La., is far from certain. The backers still need federal approval, including on the environmental front, and they have in hand only a tiny slice of the $8.75 billion that the project is expected to cost, says Kyle Simpson, chief strategy officer of G2 Net Zero LNG, the project developer. Chas Roemer chairs G2 and heads the investment group that, Simpson says, has put an initial $32 million into the project.
The idea is that the project ultimately would crank out about 13 million metric tons of liquefied natural gas annually, with production starting in 2026. It would capture basically all the 3.9 million metric tons of CO₂ the process produced. The initial plan is to send that CO₂ through a pipeline and ultimately to an oilfield where it would be injected underground – a process that would qualify the project for what Simpson estimates would be $172 million per year, for 12 years, in federal carbon-capture tax credits.
As soon as 2024, Simpson says, G2 hopes to have one of the project’s four planned Net Power machines operating, which would provide early revenue from the sale of electricity, from tax credits, and from the sale of nitrogen and argon, substances contained in air that the project would separate from the oxygen used to feed the Net Power machines.
Siemens would build motors and compressors to liquify the natural gas, among other potential roles in the project, says Matthew Russell, Siemens’ executive vice president for LNG. The project is strategically intriguing to Siemens, which has to find a future in a warming world for a business that makes equipment for the fossil-fuel industry. “We’ve got a really, really difficult challenge ahead of us, in terms of continuing to support what is the existing fossil business” amid intensifying societal constraints on CO₂ emissions, Russell says. “There are going to be tremendous pressures for those fossil projects to be as green as possible, knowing that there is a transition period between conventional and renewables that is going to be many decades long.”
Net Power, for its part, is talking with additional companies about deploying its fossil-fuel-burning power plant, says Brown, its CEO. He knows he’s straddling a fine line. On the one hand, he says, his technology offers the potential to upend “the keep-it-in-the-ground challenge,” the argument that the only way to avoid disastrous climate change is to stop burning fossil fuels. On the other hand, it would upend that argument only if the CO₂ his machine emitted really were captured and kept out of the atmosphere. That’s why, Brown tells me, Net Power won’t sell its kit to any company that doesn’t agree to capture the CO₂. “Basically,” he says, “we’re not going to sell opioids to addicts.”
More from Fortune’s Special Report on the Climate Crisis
—Business is finally starting to reckon with climate change
—Wall Street’s pressure on the fossil fuel industry is not aggressive enough
—Plastic that travels 8,000 miles: The global crisis in recycling
—5 charts projecting the cost of climate change by 2100
—Big Oil’s Hail Mary
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