Blue Planet, And Climate Change: Taking Lemons And Making Lemonade
By Hersh Shefrin
The production of cement and concrete has been, and continues to be, a major contributor to anthropogenic climate change. This is important because on a global basis, the industry that produces cement and concrete generates between 7-and-8% of annual carbon dioxide emissions.
Thus far, the production of cement and concrete has generated real lemons for Earth’s climate. However, there is a decent chance of being able to take some of these lemons and make lemonade from them. The lemonade in question involves capturing carbon dioxide from power plants that burn fossil fuels, and sequestering the captured carbon dioxide within concrete, in a way that is both permanent and economical.
An indication of whether this might be possible, at a large enough scale to make a difference to climate change, involves the outcome of a pilot plant located in Pittsburg, California, just north of San Francisco.
In this post, I want to share with readers what I recently learned about “making lemonade from lemons” while teaching climate finance to students at Santa Clara University, just south of San Francisco. The Pittsburg plant is owned and operated by the firm Blue Planet Systems. Blue Planet’s CEO, Brent Constantz, recently spoke to one of my finance classes, and below I will summarize some of the key points he made in his presentation.
Human activities emit approximately 40 gigatonnes (Gt), or 40 billion metric tons, of carbon dioxide per year into the Earth’s atmosphere. A metric ton (tonne) is 10% greater than a standard ton (2000 lbs.). By way of comparison, approximately 30 Gt of concrete are poured each year.
Concrete is basically a mixture of cement, sand, and gravel, with cement being the agent that binds the sand and gravel together. The combination of sand and gravel is called “aggregate,” and it comprises about 80% of concrete. This 80% amounts to 24 Gt in weight; and because 44% of aggregate consists of carbon dioxide, concrete production roughly entails 10.5 Gt of carbon dioxide, a very large amount.
Globally, asphalt has about the same carbon dioxide content as concrete, and so the two together contain just over 20Gt of carbon dioxide. Instead of being emitted into the atmosphere, plausibly, this 20 Gt of carbon dioxide can be sequestered at the Earth’s surface. Remember: 20Gt is about half of current annual emissions of CO2.
Blue Planet System’s idea is to capture carbon dioxide emissions from power plants and other sources, and use the CO2 to manufacture the aggregate which goes into making concrete. If successful, the firm claims that the end result is a double win: first, carbon dioxide from the production of energy is diverted from being emitted into the atmosphere, and is instead sequestered; and second, the synthetic aggregate results in reduced emissions that would have been associated with the production of cement and concrete by conventional means.
As for the cement, Brent Constantz has pioneered a way to manufacture cement which mimics the way that corals build reefs. Cement and coral reefs are both limestone, and therefore the issue involves how to make limestone in a way that does not produce large emissions of carbon dioxide. Thus far, corals do it successfully, and humans do not. Limestone is calcium carbonate, which can be produced as a chemical combination of carbon dioxide, oxygen, and calcium.
Constantz likes to point out that over 99.9% of all carbon on Earth resides in the limestone making up coral reefs, with the residual 0.1% residing in the atmosphere, non-reef component of the oceans, and biosphere.
Think about what happens if the Blue Planet pilot plant in Pittsburg succeeds.
Success entails successfully capturing carbon dioxide from a Calpine natural gas fired power plant which provides electricity to San Francisco.
Success entails being located at a deep water port, where large amounts of raw material, mostly old concrete, can be economically brought into the Blue Planet plant and treated to extract calcium.
Success entails transporting the carbon dioxide from the power plant to Blue Planet’s pilot plant, so that the carbon dioxide can be mixed with water and calcium to produce synthetic limestone aggregate.
Success entails using the deep water port facility to transport finished aggregate to end use customers, mostly by water which reduces transportation costs.
Success entails doing all of this economically, as a regular business where the activity of carbon capture and sequestration pays for itself.
Success entails doing all of these things while being carbon negative, meaning taking into account the emissions associated with all of the energy required to conduct its business, Blue Planet prevents significantly more carbon dioxide from entering the atmosphere than it adds from its activities.
The power plant in Pittsburg produces 2 million tonnes of carbon dioxide per year. Relative to potential, and the need to address the magnitude of climate change, this is a small amount. In this regard, Constantz contends that Blue Planet’s technology is scalable within a short time frame, by which he means five years, from start of permitting to having an operating plant which is fully operational.
Being a behavioral economist, I recognize that there are a lot of behavioral issues upon which to focus. The planning fallacy especially comes to mind, meaning the combination of excessive and overconfidence, on the part of corporate executives. There are simply a lot ways which projects fail — especially large, complex projects like the one in Pittsburg — which are difficult to imagine at the time of inception; and many things have to go right in order for a project like this one to succeed.
With any new technology, there is a lot of risk; and Blue Planet’s technology is no different. With this in mind, I would suggest there is also reason to be cautiously hopeful. Planes, cars, and trucks now drive along cement and concrete produced by Constantz’s ventures, concrete which can be found in California’s main coastal highway and also at San Francisco International Airport.
In addition to the question of whether the technology works, which it does, there is a second reason to be cautiously optimistic. Blue Planet Systems produces a product with economic value, which holds the promise of generating a reasonable return to investors.
Significantly, Blue Planet’s business model does not depend on the receipt of government subsidies funded by taxes. The main role of government is instead procurement: purchasing “clean” concrete for infrastructure projects. In this respect, think globally. Think about regions on the planet where infrastructure has been decimated by war, and where infrastructure in need of being rebuilt. Tragically, these regions come easily to mind, such as Ukraine.
Blue Planet Systems is a company to watch. Climate change is a controversial topic, and readers will react in different ways to ventures such as this one. Some readers might think the whole idea behind Blue Planet is pie in the sky, and that human life on the planet is already doomed. Others might resent that companies such as Blue Planet will profit from climate change. Still others are concerned about moral hazard, that if companies like Blue Planet are successful, then emitters will feel more comfortable increasing greenhouse gas emissions into the atmosphere.
My advice to readers is to find a way to be simultaneously open minded and skeptical, and to the extent possible avoid letting ideology color opinions. The end goal is to restore the health of Earth’s climate to the extent possible, and if Blue Planet’s technology can move the needle in that direction, that is a good thing.
As for moral hazard, let me be clear that we need sensible public policy in place that prices carbon at its social cost. Thus far, global policy makers have failed miserably when it comes to pricing carbon sensibly; but it is difficult to see how objecting to sensible carbon capture and sequestration because of public policy failures makes matters any better.
Investors take note. When it comes to climate change, the stakes are large; and so is the potential upside associated with Blue Planet’s technology. There are global enterprises watching with great interest to see what happens in Pittsburg. If the pilot plant is a success, there is good reason to expect them to form partnerships with Blue Planet, which will enable rapid scaling.
The IPCC continually reminds us that what gets done on the climate front during the current decade is crucial. Constantz is impatient. He has a plan in place to scale up his firm dramatically before 2030. In this regard, his pronouncements are quite bold. He is clear to say that under very plausible medium term scenarios, Blue Planet’s technology will reduce 35 times more carbon dioxide emissions than Tesla’s electric vehicles.
Over time, we have handed ourselves a very large number of climate lemons, including failed public policies for pricing carbon globally at its social cost. Going forward, we will need a broad mix of solutions for addressing the associated problems, some of which will entail making lemonade from lemons. Blue Planet Systems provides one example of making lemonade from lemons, and will be a story worth watching, as it plays out.
This column originally appeared in the March 31, 2022 edition of Forbes.