From the Editor: Centre stage for CCUS [Gas in Transition]
The International Energy Agency (IEA), in its World Energy Outlook 2023 (WEO 2023) published in mid-October, referenced the rapid growth in carbon capture, utilisation and storage (CCUS) projects around the world.
In 2022, it said, global investments in CCUS reached a record $3bn, largely fueled by activity in North America, where US President Joe Biden’s Inflation Reduction Act (IRA) is offering more generous tax credits and new grant funding programmes – driving forces behind the announcement of more than 100 projects in the US alone.
Globally, WEO 2023 noted, the CCUS project pipeline represents more than 400mn tonnes/year of CO2 capture capacity vying to come online by 2030. And the Global CCS Institute says there are a total of 257 facilities in operation, under construction or in varying stages of development around the world, representing about 308mn tonnes/year of capture capacity, up from 194 projects and 242mn tonnes/year of capture capacity and the end of 2022.
Besides the US, notable progress in CCUS deployment is being made on large-scale projects in Canada and China, while regulatory advances to support CCUS are taking place in Canada, Denmark, Indonesia, Japan and Malaysia.
The US and Norway, the institute says, lead in the world in carbon management spurred by differing approaches to pricing carbon: the US has its 45Q tax credit, which under the IRA offers $85/tonne for CO2 sequestered permanently; Norway was the first in the world to implement a carbon tax in the oil and gas sector in 1991, and that has led to the development of the Sleipner and Snohvit projects now in operation and the Longship project now under construction.
What’s happening in the US and Norway, the institute says, highlights that it’s not technological challenges holding CCUS back, as many critics say, but the need to create an economically viable commercial business climate. In other words, build it, and they will come.
The US has a comprehensive policy framework in place to support carbon management, including providing funding, supporting research and development and facilitating storage resource development.
Biden’s Bipartisan Infrastructure Law provides over $12bn in investments in next-gen carbon capture – the latest is $7bn for regional hydrogen hubs, many of which incorporate CCS – direct air capture, industrial emissions reduction demonstration projects and CO2 transport and storage infrastructure, including its Carbon Storage Assurance Facility Enterprise (CarbonSAFE) initiative, which seeks to develop several geologic storage sites, each with the capacity to sequester 50mn tonnes of CO2.
A year ago, the Norwegian parliament agreed to a funding model and conditions for further development of the Longship project, the largest climate technology in Norwegian history offering emitters across continental Europe the opportunity to store up to 6mn tonnes/year of CO2 under the Northern Lights component of Longship.
In Canada, the federal government announced in its March 2023 budget an investment tax credit (ITC) that will cover 50% of the capital cost of capture projects (60% for direct air capture) and 37.7% of the cost of facilities to transport, utilise or sequester CO2. Sequestration will also earn carbon credits of up to C$170/tonne of CO2 stored.
And the UK, which is decarbonising its economy faster than any other, has set a target to deploy 50mn tonnes/year of CCS capacity by 2035, and this past spring committed £20bn to scale up CCS projects across the UK but particularly in North Wales, the northwest of England and the east coast.
But it’s not enough, the IEA says, to get the world to its net zero by 2050 target. “Current policies…are wholly insufficient to support the outcomes that match government net zero emissions pledges.”
Under the IEA’s Stated Policies Scenario (STEPS), which incorporates climate actions already in place, CCUS deployment would need to grow nearly three-fold, from 40mn tonnes/year of CO2 captured in 2022 to 115mn tonnes/year in 2030.
The more ambitious Announced Pledges Scenario (APS), which incorporates ambitions not yet implemented, would require a 10-fold increase in global CCUS deployment, would grow 10-fold by 2030. And the Net Zero Emissions (NZE) Scenario – the only path that would keep global warming under 1.5°C – would require the capture and sequestration of a staggering 1bn tonnes of CO2 in 2030.
Reaching those levels of CCUS deployment, the IEA says, would require strong policy support, including measures to facilitate strategic investments in infrastructure, and that’s where the numbers get particularly interesting.
To reach NZE CCUS targets, the existing global CO2 pipeline network of about 9,500 km would need to be expanded to between 100,000 and 600,000 km to facilitate CO2 storage of 5.5bn tonnes/year and CO2 utilisation of 600mn tonnes/year by 2050.
The high end of that range, the IEA says, “is a similar order of magnitude to the more than 1mn km of natural gas transmission pipelines that have come online over the past century.”
The UNFCCC wants to see more discussion of CCUS at COP 28, which begins next month in Dubai. Its synthesis report of the first Global Stocktake, which measures how well the world is on track to meet Paris Agreement targets, notes that additional incentives are required to scale up CCS deployment and sustain the kind of high-paying jobs that have historically relied on high-emitting industries, like oil and gas.
There will be much to talk about at COP 28. Let’s hope that a focus on CCUS will be on the agenda.