Dive Brief:
- BlackRock, the nation’s largest asset management firm, is investing $550 million in an industrial-scale direct air capture plant being developed by energy company Occidental Petroleum, the pair announced last week.
- Occidental’s Stratos plant in Ector County, Texas, is about 30% complete and is expected to be operational in mid-2025. The facility is designed to capture up to 500,000 metric tons of carbon dioxide annually.
- The energy company, which is one of the largest oil and gas producers in the U.S., has already reached deals with Amazon, Houston sports teams the Astros and Texans, and TD Bank to purchase carbon removal credits from the facility.
Dive Insight:
BlackRock’s investment will be managed through its Diversified Infrastructure division in a joint venture with Occidental’s subsidiary 1PointFive, which aims to curb global temperature rise to 1.5°C by 2050 through the deployment of decarbonization solutions. Stratos will store any carbon dioxide pulled from the atmosphere underground in geologic formations.
BlackRock CEO Larry Fink said in a LinkedIn post the companies had been finalizing the partnership over a few months. The construction phase of the project will employ 1,000 people, and the facility will have a staff of 75 once commercially operational, according to the release.
“Occidental’s technical expertise brings unprecedented scale to this cutting-edge decarbonization technology,” Fink said in the release. “Stratos represents an incredible investment opportunity for BlackRock’s clients … and underscores the critical role of American energy companies in climate technology innovation.”
Occidental’s growing list of removal purchase agreements also includes aerospace company Airbus and Tokyo-based airline All Nippon Airways. The company said the Stratos facility provides hard-to-decarbonize sectors another solution to combine with its own emissions programs.
“This joint venture demonstrates that direct air capture is becoming an investable technology and BlackRock’s commitment in Stratos underscores its importance and potential for the world,” Vicki Hollub, CEO and president of Occidental, said in the release.
The Department of Energy released a report last year that said carbon removal technologies can help limit the pace of global warming.
“The massive scale of negative emissions needed requires a suite of diverse [carbon dioxide removal] approaches,” the report said.
While there is agreement on how carbon capture technology can be helpful, some environmental advocates have concerns the oil and gas industry will use the technology to justify continuing producing fossil fuels.
Environmental law firm EarthJustice said carbon capture technologies could have use in industries like cement that are hard to electrify, “but only if projects do not prolong the use of fossil fuels and health, safety, and environmental justice concerns are addressed.” The firm also noted that, currently, there are less than 20 carbon capture projects operating in the U.S, but nearly all of them use the captured carbon to pump more oil out of the ground through a process called “enhanced oil recovery.”
Hollub told attendees at the energy industry’s CERAWeek Conference earlier this year that she believes carbon capture technology will give the industry “a license to continue to operate” for 60 to 80 more years, according to Politico.
The facility’s placement in Texas is also notable given BlackRock’s involvement. The asset management firm is currently marked for divestment from all state funds as the only U.S.-based organization on the state comptroller’s list of institutions “who boycott the oil and gas industry.”
