The role of CCUS must not be overlooked [Gas in Transition]

The International Energy Agency (IEA) drew no small amount of ire from the natural gas industry in November, when it issued a report that cautioned against overreliance on carbon capture utilisation and storage (CCUS)  as a means of tackling emissions over the coming decades.

Emboldened by the conclusions of the report, there has been a chorus of NGOs and media outlets once more attacking the technology, describing it as a dangerous distraction from decarbonisation efforts. CCUS is too expensive and technologically unproven, and locks in fossil fuel use for too long, they say. Instead, they argue that investors and policymakers should leave the technology by the wayside and double down on expanding renewables, improving energy efficiency and addressing methane emissions.

“Oil and gas producers around the world need to make profound decisions about their future place in the global energy sector,” IEA Executive Director Fatih Birol said in a statement accompanying the release of the Paris-based agency’s The Oil and Gas Industry in Net Zero Transitions report. “The industry needs to commit to genuinely helping the world meet its energy needs and climate goals – which means letting go of the illusion that implausibly large amounts of carbon capture are the solution.”

Birol said that while carbon capture was currently a focal point in many companies’ transition strategies, the technology “cannot be used to maintain the status quo.”

“If oil and natural gas consumption were to evolve as projected under today’s policy settings, limiting the temperature rise to 1.5 °C would require an entirely inconceivable 32bn tonnes of carbon captured for utilisation or storage by 2050, including 23bn tonnes via direct air capture,” he said. “The amount of electricity needed to power these technologies would be greater than the entire world’s electricity demand today.”

Getting to the gigatonne scale

Determining how much CCUS capacity is needed depends on projections (and aspirations) for how much oil and gas will be needed in the future. Last October, the IEA forecast in its Announced Pledges Scenaro (APS) that oil and gas consumption would fall by 2% annually between now and 2050. This is nowhere near the decline that is necessary, it says, estimating that oil and gas demand will need to drop by 5% annually during the period to align with net zero goals.

However, if hydrocarbon demand proves more resilient than the IEA hopes, it will have underestimated how much CCUS is needed to abate emissions.

Global energy consumption continues to rise, driven by increasing needs in the developing world. For many of those countries, hydrocarbons – in particular natural gas – are the only affordable and secure source of energy to meet that demand. That growth in energy use will outweigh the impact of efforts mainly in developed countries to increase energy efficiency. And even in the developed world, it will be difficult to decarbonise hard-to-abate sectors such as cement production and metal smelting without CCUS, as there are no easy alternatives for powering these industries with hydrocarbons.

NGOs have frequently dismissed CCUS as technologically unproven. This is despite the fact that the technology has been used in the oil and gas industry for many decades, albeit to separate CO2 produced from reservoirs and reinject it underground, often to boost recovery. How effective CCUS is as a decarbonisation tool of course depends on the capture rate that is achieved. Existing facilities such as Shell’s Quest project in Alberta and Air Products’ facility in Texas have achieved capture rates of 50-60%. However, it is widely acknowledged, even by the IEA, that capture rates of more than 90% are technically possible. 

It is true that CCUS is not inexpensive. However, the same could have also been said of the wind and solar industries in the early 2000s. What happened was that, over time, costs fell significantly as these industries scaled up and innovations in technology were made, with no small amount of policy support, primarily in the form of subsidies. It is reasonable to predict that this success story could be replicated with CCUS, through economies of scale, increased specialisation in the value chain, expertise accumulated as more projects are developed, and technological innovation.

The industry is not expanding as quickly as it needs to, though, and just as with many emerging sectors, the right policies are needed to build momentum. The UN Intergovernmental Panel on Climate Change (IPCC) has estimated that around 10 gigatonnes of annual CO2 storage capacity is needed by 2050 to keep global temperature rise at below 1.5°C, based on the average of 90 models it reviewed. Only 50mn tonnes/year of capacity is currently in operation, with only 33mn t more under construction and 300mn t at the study phase, according to the Global CCS Institute.

To reach 10 gigatonnes by 2050, one can reasonably say that the gigatonne scale will need to be achieved by the early 2030s, suggesting that the current project pipeline is far too small. This said, CCUS is not alone in falling short of targets – the same could also be said for electric vehicles, bioenergy and even renewables.

The good news is that policy support finally seems to be moving the dial, exemplified by the tax incentives and other support provided by the US The Infrastructure Investment and Jobs Act and the Inflation Reduction Act. The likes of the EU, Canada and the UK are also ramping up support for the technology.

While all this is encouraging, though, similar policies are also needed in China, India, and other major emitters in the developing world. There also needs to be increased global cooperation on establishing universally-accepted standards for quantifying emissions and the sharing of knowledge, technology and practices, to spur the creation of a truly global market for carbon trade.