As the world grapples with the urgent need to combat climate change, some investors are turning to renewable energy sources such as solar and wind, and the electrification of transportation (i.e.: EVs). While direct investments into renewable energy companies are crucial, fossil fuels will continue to play a role in the energy transition as not all sectors are easy to decarbonize.
For some industries such as cement, waste-to-energy, steel, and aviation, emissions are costly and complex to reduce with current available technology. As such, a large part of the reduction of greenhouse gas emissions needs to be tackled through a process called carbon capture and storage. The Nicola Sustainable Innovation Fund has invested in a pure-play carbon capture company called Aker Carbon Capture that specializes in this.
Carbon capture and storage has emerged as a vital tool that aims to bridge the gap between the present and a greener future. According to Bloomberg New Energy Finance (BNEF), 1.8 gigatons of capture capacity must be online by 2030 for the world to be on track for net zero by 2050 as set out in the Paris Agreement. To put this into context, carbon capture capacity is slated to reach just 372 million tons per annum by 2030 if all announced projects are built, which is still an eight-fold jump over current levels. The good news is that governments around the world are conscious of reaching their climate targets, so they continue to implement policies that incentivize the adoption of carbon capture.
How does it work?
This innovative technology allows carbon emitters to capture otherwise unavoidable carbon dioxide (CO₂) emissions from fossil fuel-based power plants and store them safely underground or convert them into useful products, thus reducing their impact on the climate.
This, however, is a complex process for many businesses as it involves a multi-step approach of capturing emissions, converting the gas to liquid, transporting the CO₂, storing it into the ground, and finally monitoring to minimize leakage risks. This level of complexity leads to a need for companies to outsource the entire process to professionals.
Carbon capture as a service
Based in Norway, Aker Carbon Capture offers carbon capture as a service and solution in a range of industries, including the cement, bio and waste-to-energy, gas-to-power and blue hydrogen segments. Aker has over 10 years of experience with modular carbon capture plants, and over 60,000 operating hours capturing CO₂ internationally with their proprietary technology, which offers a unique, environmentally friendly solution for removing CO₂ emissions.
The carbon capture process uses a mixture of water and organic amine solvents to absorb the CO₂ that can be applied to emissions from various sources. With their differentiated services and technology offerings, we view Aker Carbon Capture as well-positioned to benefit from the growing carbon capture market.
The Nicola Sustainable Innovation Fund aims to provide investors with opportunities to invest in companies that can help reduce greenhouse gas emissions. The fund invests in decarbonization themes such as clean energy, innovative transportation, water infrastructure, and carbon capture. We believe that carbon capture and storage is one of the many technologies that is key to achieving global climate goals and ultimately making the transition to a sustainable future.
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. This investment is intended for tax residents of Canada who are accredited investors. Residency restrictions apply. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. All investments contain risk and may gain or lose value. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances. Nicola Wealth Management Ltd. (Nicola Wealth) is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required securities commissions.
