AI surge gives carbon capture a new push

Driving the news: At least five projects under consideration across the U.S. would capture carbon dioxide emissions from natural gas plants connected to data centers, according to company statements, news coverage and independent reports.

• This includes Google's publicly touted project in Illinois, another one Google is reportedly behind in Nebraska, projects by ExxonMobil and Chevron and another by Meta that has the option to add the tech.
• What's more, multiple interviews with top executives in both energy and AI sectors indicate the technology is under active discussion.

What they're saying: Big tech companies "will be the leaders in demonstrating carbon capture," said KR Sridhar, co-founder and CEO of Bloom Energy, a maker of fuel cell units that generate power with natural gas.

• That leadership will help the technology proliferate around the world, said Sridhar, whose product is facing surging demand as a fast way to bring power to data centers.
• "I strongly believe carbon capture use and storage will be the only way we will decarbonize the planet in a big way over the next two decades," Sridhar said.
• Bloom is in early talks with "many of the hyperscalers" about deploying carbon capture, but Sridhar said the company won't talk about it publicly until next year.

The big picture: The AI-driven surge in electricity demand is lifting nearly every type of energy technology, especially natural gas but also more novel tech like fusion and long-term storage.

Between the lines: Oil and gas companies have led much of the early development of carbon capture, but high costs have limited its deployment.

• Big tech companies, meanwhile, are largely sticking to their climate goals even as AI drives a surge in power demand — and political support for climate action weakens.
• That tension, combined with deep balance sheets, could finally push carbon capture toward broader use.

Friction point: "Unabated natural gas is being pursued by all the hyperscalers no matter how stringent their climate goals," said Alex Dewar, managing director at consulting firm BCG, who recently authored a report on this topic.

• Companies are trying to square those goals with rising gas use, he said: "That's where the solution does come back to carbon capture."

The intrigue: "We have not yet announced a project ... but we're pursuing a bunch of opportunities," said Cully Cavness, co-founder and president of data center developer Crusoe. "Ultimately, it's an economics question."

• Federal subsidies help but don't close the gap, he added: "Soon we'll be able to share something."

Reality check: Cavness has been making comments like this for the last couple of years without much to show for it publicly.

• That gap between talk and action reflects the industry writ large, which has been saying for many years that this technology would commercialize widely.

• In fact, no natural gas plants operating in the U.S. have carbon capture equipment right now, though progress is slowly being made on a global level and domestically capturing carbon from different types of facilities.

"To be sure, it's still a technology that has a long way to go before it can be commercialized at scale," said Michael Terrell, head of advanced energy at Google. "And we're committed to helping get it there."

How it works: Gas plants paired with carbon capture could be especially attractive for data centers, which need reliable, around-the-clock power.

• BCG's recent analysis found they were the only option that scored consistently well across cost, speed, scalability and emissions among eight power sources.
• A separate report from the Great Plains Institute released last week identified the Gulf Coast, West Texas and Oklahoma as prime regions for this kind of buildout.

By the numbers: If it takes off, the impact could be significant.

• BCG estimates up to $80 billion could be spent on new gas plants and retrofits with carbon capture.

Yes, but: The economics are still tough.

• A federal tax credit — currently set to expire in 2033 — is key to making projects viable.
• Upfront capital costs remain high, even with subsidies covering some operating expenses.

"The biggest hurdle is the scale of the capital required," said BCG's Dewar, lead author of the report.

What's next: "There's a lot more in the pipeline than what's publicly known," Dewar said. "We're seeing a shift to smaller-scale projects to demonstrate the technology and scale up from there."

What we're watching: Whether the growing buzz — fueled by AI demand — turns into actual projects.

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