Q&A with Climate Scientist David Victor, Part 3: The Future of Energy
In the last segment of this three-part series, we talk with David Victor, a member of Dimensional’s network of ESG researchers and academics,1 about carbon capture and sequestration technologies and nuclear energy, and whether, if adopted more broadly, they could have an impact on the pace of climate change. Victor is a professor of innovation and public policy at UC San Diego, director of the campus-wide Deep Decarbonization Initiative, and an adjunct professor of climate, atmospheric science, and physical oceanography at the Scripps Institution of Oceanography. He’s also part of the Washington, DC-based think tank the Brookings Institution.
Dimensional: We’ve been hearing more about carbon capture and sequestration in recent years. Can you talk a bit about carbon capture and sequestration and how they have evolved?
Victor: Carbon capture and sequestration is essentially the process of capturing carbon dioxide (CO2) from power plants or industrial processes, transporting the captured CO2, usually through a pipeline, and injecting the CO2 into underground rock formations that trap the CO2 and prevent it from being released into the air. What I find interesting about carbon capture is that many of the basic ideas have been around for a long time. The patent on acid gas scrubbing—which is the main technology used to capture CO2—goes back to the 1930s. The idea of capturing CO2 and putting it underground has been around in a serious way for 20–25 years, but almost all the projects failed for one reason or another. Sometimes the technology costs got out of control, sometimes investors weren’t confident in the systems integration, but more often there wasn’t enough reliable policy support.
Dimensional: Has there been more success in recent years?
Victor: The Northern Lights project in Norway, which has been operational since 2024, is the most interesting carbon capture project in the world right now. Northern Lights is a joint venture owned by TotalEnergies, Equinor, and Shell, with support from the Norwegian government and the EU. They’ve developed the infrastructure to transport CO2 by sea from various capture sites to a central station on land, and from there the CO2 is transported by pipeline to a reservoir 2,600 meters under the seabed. It is a very expensive, first-of-a-kind project.
It is also transformative because it shows that carbon capture and sequestration can be done not just from power plants, but also from highly concentrated industrial sources, like natural gas processing facilities, cement plants, steel plants, and a handful of other industrial applications where we have highly concentrated CO2 already.
In addition, some of the carbon capture technologies can be retrofitted on existing plants, so it’s not just new plants that can use these technologies.
Dimensional: Do you think it will be possible for projects like Northern Lights to scale to a level that could have a meaningful impact on the pace of climate change?
Victor: To be relevant at scale, tens of thousands of plants would have to use carbon capture and sequestration. It is still early days.
We need first-of-a-kind projects like Northern Lights to demonstrate that the systems of technologies needed for carbon capture work reliably—and to shed some light on costs and how they might come down over time with experience. The scalability of the technology of a big industrial system like this is a question of a couple of decades of experience. The backers of these early projects are creating the possibility of more rapid scaling a decade or two down the road as the technology becomes more mature. Until that happens, few if any private investors will back this technology at scale. Most investors want boring projects that yield predictable returns, not projects that are exciting to scientists but laden with scary financial prospects.
Even though it may take some time, overall, I am optimistic that carbon capture and sequestration have the potential to slow down the rate of temperature increases.
Dimensional: Another recent development is the renewed interest in nuclear energy. As you discussed in Part 1, some of this renewed interest has been sparked by the current energy crisis. What makes nuclear energy appealing at this point in time?
Victor: For a company—or a country—that needs lots of power and favors clean power, nuclear is very interesting. The key here is that existing nuclear plants become more interesting, while new nuclear plants can still be very costly and risky.
The US market is the most interesting one, because as we discussed in Part 2, the data center demand for energy is so great. When there was renewed interest in nuclear energy in the early 2000s, power demand in the US and Europe was flat or declining. Now power demand, because of data centers, electrification, and, to a certain degree, electric vehicles, is going up. We’ve also seen a few nuclear power plants shut down in the US because they weren’t profitable, and the increase in demand might make it possible to restart those. Indeed, pretty much every shut nuclear reactor in the United States that feasibly can be reopened is now at various points in the restart process.
For new nuclear, technological changes have been really significant. That’s largely about small modular reactors. Small modular reactors are still very expensive, but because they’re smaller and could plausibly be built in factories, they could have a big potential for significant cost savings. Some of these designs produce high levels of heat, which is useful for chemical processes. All of them, in various ways, are intrinsically safe, which makes them a lot easier to license and operate.
As for building more large plants, the world today seems pointed in two opposite directions. In the US and in Europe, the cost overruns and completion delays to build large-scale reactors have been significant. We haven’t built that many plants in the US in recent years, and so we forget how to do these things! As a result, each plant is a little bit different from the last one, which makes it hard to lower costs when we are not building large numbers of the same thing. The UK and the French and others are having similar experiences.
The Koreans and the Chinese, on the other hand, have been building the same plants over and over again. The Barakah plant in the Emirates has four units of Korean design, and as we’d expect when one design is built multiple times, the fourth unit came on much faster than the first unit. Having a repeatable process is the No. 1 reason. Inside China this is happening at a stunning scale, and it has produced a vibrant Chinese nuclear energy industry.
Dimensional: Thank you so much for your time and insights, David.
Footnotes
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1. David Victor provides consulting services to Dimensional Fund Advisors LP.
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