Investments by local companies have exceeded R$1bn since 2020
07/17/2023
Oil and gas companies in Brazil have accelerated investments in research related to the capture, storage, and use of carbon dioxide. The aim is to achieve decarbonization goals with an eye on the carbon credit market. Companies in the sector have spent more than R$1 billion for this purpose between 2020 and 2023. This amount is almost half of the R$1.8 billion invested in decarbonization research since 1999, according to a study conducted by the National Petroleum Agency (ANP) at the request of Valor.
The technique of capturing carbon dioxide and burying it underground is in the development stage in some countries. In Brazil, the activity is not yet regulated. Since last year, the Senate has been working on rules for carbon capture and storage projects. Bill number 1425/2022 was introduced by Senator Jean Paul Prates before he took over as CEO of Petrobras. The text was approved by the Infrastructure Committee and is now making its way in the Chamber of Deputies’ Environment Committee. At the same time, the government is preparing to present a bill on the issue as part of a broader package of measures called the “Fuel of the Future” bill.
“The proposal of the government bill advances the point that deals with CCS (Carbon Capture and Storage) in the Fuel of the Future by assigning to the ANP the regulation of this activity in the authorization regime. The amendment to bill number 1425, which is making its way in the Federal Senate, simplifies investments in Brazil, which is why the Ministry of Mines and Energy (MME) understands that the text of the Future Fuel Law must be approved,” the MME said in a statement.
Experts and companies interviewed by Valor say that it is not yet clear how the two projects will proceed but reiterate that it is necessary to advance in the regulation. According to Nathalia Weber, director of CCS Brasil, an organization that produces research and studies on the activity, this is the main obstacle to the development of such companies in the country. “This is really one of the main bottlenecks that hinder more development of projects with geological storage of CO2. It’s not the only one, but it’s the one that creates the most uncertainty for investors and companies looking for decarbonization alternatives,” she said.
Proponents of the method claim that storing CO2 helps decarbonize and is a more cost-effective way to get to zero emissions by 2050. However, environmentalists are wary of CO2 capture as a way to reduce emissions, with many calling it a “false solution.” These environmentalists claim that there is a “lobby” by oil companies to prolong the production of fossil fuels and not to make concrete commitments to the energy transition, which the sector denies.
The United States, Australia, Canada, and Japan already capture CO2 and bury it underground. Norway recently regulated the activity and a commercial carbon transport and storage service, visited by Valor in June, is about to go live in the country. In Brazil, companies have been working to pre-empt regulation by exploring areas of geological potential and developing technologies for use in future pilot projects. In the oil and gas sector, investments are made through Research, Development, and Innovation (RD&I) projects, which are overseen by the ANP.
The agency’s Superintendent of Technology and Environment, Raphael Moura, said the numbers are expected to grow with the introduction of more ambitious projects: “These numbers tend to grow in the coming years, with the establishment of projects of greater technological maturity, such as the establishment of pilot plants for CCS and even direct air capture (DAC). In addition to the change in strategy of companies in the face of the opportunities associated with decarbonization and energy transition,” he said.
Petrobras and Repsol Sinopec are already investing in the development of the activity, as well as FS Agrisolutions, the largest producer of corn ethanol in the country. The projects are in various stages of development, and the continuity of the research, as well as the commercial exploitation of the projects, depends on the progress of the legislation.
“This is a particularly interesting opportunity for oil-producing countries because we can make a migration of technical expertise. We are not only a major producer, but we also have a chain of value, supplies, equipment, installed in Brazil,” said Heloísa Borges, head of oil and gas studies at the Energy Research Company (EPE), linked to the Ministry of Mines and Energy.
With the federal government also interested in the activity, EPE will hire an outside consulting firm to map areas suitable for CO2 storage in the country. Work is expected to begin later this year and take 18 months. The Paraná Basin and the coast of Rio de Janeiro are the main areas of interest for the government and the private sector due to their proximity to industries in the southeastern region.
Although a new technology, CCS projects are based on a technique used by oil companies several years ago. It consists of injecting carbon dioxide into an already explored well to revive oil and gas production. Petrobras, for example, is using Carbon Capture and Utilization (CCUS) in its deepwater fields. For experts, the expertise of the oil and gas industry is a positive point for the development of the activity in countries such as Brazil.
Environmentalists, however, are wary of the initiative. Gabriel Mantelli, advisor to the Program for the Defense of Socio-Environmental Rights of the NGO Conectas, said that the creation of the infrastructure involves a kind of “environmental toll” that may not compensate for the effort: “There is talk of tolls because if we take into account that the company will build plants and gas pipelines, the combination of this environmental liability ends up not paying off. In addition, there are doubts about whether the removal of carbon dioxide from the air will be 100%, and also about the geological risks involved in the operation,” he said. But despite the doubts of society, the work is progressing.
*Por Paula Martini
Source: Valor International