CCUS set for a ‘new dawn’ after decades of uncertainty

Recognised as one of the key technologies essential to achieving Net Zero targets set by more than 70 countries, carbon capture, utilisation and storage (CCUS) development has not been entirely straightforward, and deployment is still far slower than expected.

That is the view of market research specialist IDTechEx, which has published a report entitled Carbon Capture, Utilisation, and Storage 2021-2040, which provides a technology and industry perspective on CCUS and its future.

Although having grown near fourfold in the past 20 years, CCUS deployment is still limited with 2020 capacity growth (41Mtpa) falling 86% short of the target set by the International Energy Agency (IEA) a decade prior. According to IDTechEx, the current global CO2 capture capacity is equivalent to 0.1% of overall emissions.

Despite the CCUS investment pipeline having accelerated over the past two years with multiple announcements of new integrated CCUS facilities, the IEA has stated that the industry needs to grow more than 35-fold by 2030 to reach the capture capacity required for Net Zero emissions as per its Net-Zero Emissions (NZE) by 2050 Scenario.

Commonly thought of as a relatively new technology, the history of CCUS goes back to the Val Verde natural gas processing plant in Texas, US, which commenced operation about 50 years ago.

Global CO₂ capture capacity (in million tonnes per annum) operational, announced, and expected by year. Source: IDTechEx

CO2 was captured, compressed and transported through a pipeline before being injected into the SACROC field for enhanced oil recovery (EOR). In fact, to this day nearly 70% of carbon is captured from oil and gas operations.

In CO2-EOR, CO2 is injected into existing oil fields to increase the overall pressure of an oil reservoir, forcing the oil towards production wells. The CO2 can also blend with the oil, improving its mobility and so allowing it to flow more easily.

According to the IEA’s new global database of EOR projects, around 500,000 barrels of oil are produced daily using CO2-EOR.

Failure to deliver

With natural gas processing plants supplying CO2 for EOR becoming the standard of the CCUS industry, CCUS was met with a plateau during the 2000s. Having taken off since 2010, the industry fell victim to a series of high-profile project cancellations. IDTechEx research indicates that more than 60% of proposed projects have been cancelled on average, notably in the power sector.

The Kemper Project – a natural gas-fired power station in Mississippi, US – was to be a first-of-its-kind electricity plant to employ gasification and carbon capture technologies at large-scale.

With an initial expected operation date of May 2014 at a cost of $2.4bn, by June 2017 the project was still not in service, and costs had soared to $7.5bn. That same month, it was announced that the Kemper project would switch to burning only natural gas to manage costs.

This was followed by the mothballing of the CCS retrofit unit at the Petra Nova plant in Texas in 2020.

Delays due to economic reasons, technical issue and lack of public acceptance were also common, with the CCS component of the Gorgon Facility in Australia coming online two years behind schedule, and Lake Charles, Teesside Low Carbon and the Drax facility all suffering years of setbacks.

‘Hard-to-abate’ sectors and hydrogen

The emergence of the hydrogen economy and a renewed focus on decarbonising ‘hard-to-abate’ industrial sectors such as cement and steel manufacturing has led to CCUS becoming a major talking point when it comes to the discussion of Net Zero targets.

Last year’s UN Climate Change Conference (COP26) saw the fostering of multi-country partnerships in CCUS and a new Infrastructure Investment and Jobs Act passed in the US provided a combined $15bn to support CCUS and low-carbon hydrogen production.

In addition to the announcement of 20 CCUS projects revealed in 2022 alone, advances have also happened in licensing and permitting for geological CO2 storage throughout the year. Norway, Russia and Australia all saw an increasing in licensing activity and the UK launched a CO2 storage licensing round consisting of 13 areas across the North Sea.

In the US, the newly enacted Inflation Reduction Act could improve the 45Q tax credit incentive for carbon sequestration.

The combination of fuel switching and CCUS could act as a steppingstone for hard-to-abate sectors to reach full decarbonisation. Blue hydrogen – where CCUS disposes of the CO2 produced during steam methane reforming (SMR) – is expected to act as a bridge for green hydrogen once electrolyser capacity catches up.

In its ‘Opportunities for Hydrogen Production with CCUS in China’ report, the IEA suggested that hydrogen and CCUS are set to play important, complementary roles in meeting the carbon neutrality goals of China.

Equipping existing hydrogen production facilities with CCUS could be ‘critical’ to reducing the emissions of many of China’s existing coal-based hydrogen plants.

Other potential capture strategies include Carbon Dioxide Removal (CDR), which utilises technologies such as direct air capture (DAC) to directly remove CO2 from the atmosphere. This year alone, the DAC industry has seen more than $1bn worth of investment.

According to IDTechEx, even when considering its fair level of maturity, carbon capture technologies remain largely costly, energy-intensive and underdeveloped. To meet these challenges, the organisation has suggested introducing sufficient carbon pricing or other regulatory incentives, development of CCUS clusters, new policies that establish a viable market for CCUS and prove and de-risk the technology at large-scale to change the ‘unfavourable’ perception of CCUS.

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