Carbon price not enough to cut emissions: Oxy CEO

Simply putting a price on carbon is not enough to incentivize the investments needed to significantly cut global emissions, according to the chief executive of Occidental Petroleum.

Taxing CO2 emissions and creating a market for companies to buy and sell credits to manage their reduction obligations is a policy idea supported by even some oil and gas companies. But Occidental's Vicki Hollub said the world needs to remove exponentially more CO2 from the atmosphere than it is now in order to meet goals like the Paris Climate Accord target to keep global temperature increases to below 2°C. That requires building out large scale carbon capture and storage technologies, she said.

"If we just had a carbon price where people can buy and sell carbon, without the incentive to build carbon capture, it becomes a market, not a march, a commitment to build what the world ultimately needs over time," Hollub said at the Energy Intelligence Forum. "We are trying to ensure whatever mechanism is put in place provides the best opportunity for the industry and the world to build something sustainable over time."

Many companies have have explored technologies like carbon capture and sequestration (CCS) for years, in which CO2 is removed from emissions and stored permanently underground. Oil and gas companies have also used CO2 extensively for enhanced oil recovery (EOR), in which the CO2 is injected into an oil or natural gas reservoir to push out even more of the resource.

Critics of CCS and EOR say the technology is unproven and costly and that the best way to lower carbon emissions is to simple cut the world's dependence on fossil fuels.

But Occidental is betting big on CSS and EOR technologies. In August Occidental and private equity firm Rusheen Capital Management formed a joint venture called 1PointFive to finance and develop a technology designed to capture carbon directly out of the air. The partners plan to build the world's largest Direct Air Capture facility at a 100 acre site in the prolific oil producing Permian basin in Texas.

In 2018 Occidental also established a partnership with White Energy to capture CO2 produced at ethanol plants at Hereford and Plainview, Texas, and then transport it to Occidental's facilities in the Permian basin to be used for enhanced oil recovery while also storing the CO2 underground.

Hollub said 1PointFive could use the technology to help other companies offset their emissions, including the marine and air transport industries, as well as tech firms that operate large, power-hungry data centers.

"We're feeling a sense of urgency to get things moving," Hollub said.

By Thomas Lee