David Mora’s Post

Decarbonization strategies should not let perfect get in the way of good. Progress TODAY will enjoy compounding effects and will have a much bigger impact than “perfect plans implemented tomorrow”. It is unlikely that we’ll wake up in ~2030 with perfect solutions ready to implement, therefore, starting with gradual improvement – and consequential acceleration – will yield a better and more certain outcome. Some great practical solutions proposed by the World Economic Forum report (written in collaboration with Bain). Their call to action is something to be supported. The reality is that corporations’ ability to decarbonize their value chains goes down to affordability. Currently companies and their boards lack sufficient incentive to reallocate capital away from their core business toward decarbonization efforts/activities. To do so, they need to know who will fund the capital required for them to achieve their net zero targets. There are, at least, two clear choices: (1) Customers: via their willingness to pay a premium for a lower carbon intensity product, or; (2) Shareholders: via their willingness to accept lower profitability Without any regulatory requirements leveling the playing field, shareholders will likely reallocate their investment so they could realize their target returns (with sustainability having varying degrees of influence over their decision-making frameworks). This situation limits near-term action to a small subset of companies with both “high profitability” AND “relatively low emissions intensity” – these companies today are also enabling an entire new sector to scale up by serving as early adopters of these emerging technologies. While positive, this approach still leaves the vast majority of emissions unaddressed. Looking at the issue through a more practical lens (i.e. evolved perspective), it is easy to see how the VCMs could bridge the divide by financing emissions avoidance projects on industrial applications where the owners simply could not afford direct abatement opportunities. It may be tempting to ignore the consequences of affordability and resort to more idealistic propositions, but the reality is that industrial assets are both long-lived and capital intensive. Companies that own/operate them will not ‘voluntarily’ decommission them any faster than they would sacrifice their own profitability

Last week at #NorthAm23 (North America Energy Capital Assembly), I had the opportunity to discuss all things #CCUS with my co-panelists Robin Fielder from Talos Energy and Stuart Page from the DOE Loan Programs Office. It was a wide ranging discussion where we touched on different subjects, from the various aspects of CCUS projects (Capture, Transportation and Storage) to key aspects of the contractual and commercial arrangements needed to progress these large projects from the early stages of development, through financing construction and ultimately operations. While the #IRA provides unrivaled support to enable these projects, there are other elements that will be equally as important for the emerging CCUS sector to reach its full potential and meaningfully contribute to global #decarbonization goals. Thanks to Ben West from The Energy Council for the invitation to participate in the panel and to Greg Owen for moderating. #carbonmanagement #netzeroenergy #energytransition #infrastructureinvestment #carbonmarkets

Congratulations to all investors, lenders, advisors and the NEXT team who worked tirelessly over the past few months (or longer) to achieve this great milestone. Many more important milestones to come but this sets the foundation for a landmark ($18.4 Bn) energy and infrastructure project which will provide much needed energy to the world with an embedded option to make meaningful contributions towards net-zero emissions via carbon capture and storage #CCUS #energytransition #lng #infrastructure #carbonmanagement #netzeroenergy #carbonmarkets #infrastructureinvestment

Good news from the EPA today. There is an expectation for Louisiana to receive primary responsibility to approve ClassVI wells ("primacy") this year. To that end, the EPA just determined that the State of Louisiana's application meets all requirements for approval and the state will implement the program consistently with the Safe Drinking Water Act. EPA also scheduled an in-person public hearing on June 15th. I don't know yet what exactly is the path/timeline between the public hearing and final delegation of primacy but following the EPA's letter to governors last December (encouraging states to pursue primacy), this seems like great progress and it bodes well for the applications made by other states. Most importantly it is an important step in addressing potential bottlenecks in the development of #CCUS projects and accelerating their contribution towards #netzero https://lnkd.in/giws5bVy #ccs #energytransition #carboncapture #carbonemissions #carbonmanagement #carbonmarkets #infrastructure #projectdevelopment

I enjoyed reading the DOE’s recently published “Pathways to Commercial Liftoff: Carbon Management” – it provides a great overview of this exciting vertical within the energy transition. Few points stood out for me: 👉 With existing capture/storage capacity of 20 MTPA, meeting Net Zero / Energy Transition Goals will require 1,100 MTPA by 2050 – that represents a ~16% CAGR for 27 years. 👉 Unsurprisingly, if you have ever looked at CCUS projects (or infrastructure projects), this represents an investment opportunity of $600 billion by 2050 (for context, according to Bloomberg NEF data published last January, the entire energy transition complex in the US received $141 billion of investments in 2022) 👉 Given how these estimates include assumptions on costs reductions / technology improvements, investment pace will be meaningfully back-weighted (~$100bn by 2030). In other words, it will require going from ~$10 Bn/year up until 2030 and then increasing to ~$25 Bn/yr average until 2050 👉 There are references to 7 independent forecasts, three differentiate between CCUS and CDR. Only one of those three expect CDR to have a more meaningful contribution than CCUS by 2050 (personal editorial comment: currently both technologies operate at a different scale and there is an argument to be made regarding how near-term impact should drive capital allocation across the various technologies but that is probably the subject of a different post) 👉 Beyond the capture facilities there are large transportation and storage requirements. Transportation may need to be scaled up to 30,000 - 96,000 miles by 2050 (from 5,000 today) and large storage complexes need to be developed. Class VI wells approval timelines is mentioned as a potential bottleneck. There have been 6 Class VI wells approved to date, 60 applications and a much larger number needed to sequester more than 1,000 MTPA by 2050. 👉 Utilization (instead of capture and storage) as thought of today may contribute up to ~15% of required emissions reductions by 2025 (certainly an area where one would hope the forces of ingenuity will cause the potential to be underestimated – I know there is a lot of work going into this space today) 👉 Beyond the foundational characterization of what carbon management can contribute towards net-zero targets, there are two key aspect that will enable adequate and timely deployment/adoption of these emerging technologies: a. Additional revenue sources, whether market driven (e.g. voluntary carbon markets, low-carbon premia) or policy driven (e.g. compulsory markets) b. Expedited approval process for Class VI CO2 injection wells Let's connect and discuss your views on (i) development of #ccus projects to achieve your #netzero targets or (ii) how #voluntarycarbonmarket benefit from the deployment of these technologies at scale #carbonmanagement #cleantech #decarbonization #netzeroenergy #energytransition #infrastructureinvestment #carbonmarkets

Thank you Association of International Energy Negotiators (AIEN) for the invitation to participate in the US Regional Chapter Conferece addressing the Energy Transition: Oil and Gas in a shifting ESG Landscape. I enjoyed discussing the outlook for the CCUS industry with my fellow co-panelist Moji Karimi and Assaad Mohanna and Greg Matlock as moderator. Amazing opportunities ahead! #CCUS #energytransition #voluntarycarbonmarket #energyfuture #carbontrading