State of the Union: Carbon Capture, Use and Storage

Carbon Capture, Usage and Storage (CCUS) Key to Net-Zero

Contributing to around 40% of global emissions, industry is the largest source of carbon emissions in the world. IPCC’s report in April this year called for widespread carbon capture in order to reach net-zero global emissions by 2050 – CCUS’s growth is crucial to heavy industry, a sector that cannot avoid emissions entirely. Prominent emitters in the sector include cement, steel, natural gas processing, and hydrogen production.

With 29 commercial and pilot projects underway, CCUS’s growth looks promising. According to the Global CCS Institute, the first nine months of 2021 saw a 50% growth in CCRUS projects, resulting in 111 million metric tonnes of captured CO2 worldwide. The gas is captured from fuel combustion and industrial processes, after which it is either used or transported for storage in geological formations underground.

But there are significant challenges ahead. Whereas the International Energy Agency (IEA) estimates that a 40-fold increase in capacity by 2030 in CCUS is required to achieve net-zero targets, only 0.12% of energy-related CO2 emissions are captured by CCUS. The relative lack of progress so far is largely due to high capital costs. Experts believe that these costs can be offset by improving economic and policy incentives, such as building new revenue streams by finding more uses for captured carbon.

Industry Leaders are Adopting CCUS Now 

CCUS’s usage is highly concentrated in industries with low carbon extraction costs, such as natural gas processing, fertiliser, and ethanol production. Gas processing plants require CCUS for enhanced oil recovery (EOR), i.e. the extraction of more oil from a used well.

But this is beginning to change. Other industries, where carbon capture costs are much higher, are slowly entering the CCUS market. For instance, HeidelbergCement, and Holcim, two of the largest building materials companies in the world, are building operational CCUS facilities at their cement plants. And global steelmakers like ArcelorMittal, Nippon Steel, ThyssenKrupp, and Posco are also committed to meeting their net-zero targets by applying CCUS to hydrogen manufacturing.

Carbon Capture is key to Unlocking Clean Hydrogen

A new report from the International Renewable Energy Agency (IRENA), called Geopolitics of the Energy Transformation: The Hydrogen Factor, says clean hydrogen could account for 12% of the global renewable energy mix. Depending on its level of emissions, hydrogen manufacturing is considered grey (dirty), blue (dirty, but emissions are immediately captured), or green (produced by emission-free renewables). Manufactured by the extremely polluting process known as ‘steam methane reforming’ (SMR), most hydrogen produced in the world today is grey. SMR can be decarbonised using carbon capture to result in the production of blue hydrogen in places like Canada, where oil is abundant but too dirty to be used directly. 

North America and Europe Lead in Carbon Capture

From the coal-reliant India and China to the gas exporting economies of the Middle East, the potential of CCUS is being recognised all over. However, by far, the biggest players are the US, the UK, and Continental Europe.

North America is home to half of the world’s operational CCUS capacities. Most of these are located in the US. Not only does the US have a sizeable natural gas market, its government’s policies are exceptionally supportive of CCUS usage. For example, the 45Q tax credit allocates $50 per tonne for every tonne of CO2 stored underground. 

On the other side of the Atlantic, the UK and Norway are significant entries in the carbon capture market. While the UK is looking to produce blue hydrogen with H2H Saltend at Humberside, Norway’s Longship carbon capture project and its associated Northern Lights transport and storage scheme is stated to store 1.5 million tonnes of carbon a year by 2024. Iceland’s Orca Direct Air Capture (DAC) plant captures 900 tonnes.

Developments in Carbon Capture CleanTech

Most of the carbon captured today involves liquid absorption in amine-based solvents, but there are newer technologies around the corner. No clear winner has emerged so far. However, these developments – which range from using non-amine solvents or solid sorbents to using membranes for carbon capture – seem highly promising.

For instance, Canada’s Svante is looking to establish its new carbon capture technology in hard-to-abate sectors like cement and steel industries. The company’s CCUS product uses a structured solid sorbent to bind the CO2 – this sorbent is placed in a rotating column where it captures the gas and releases it in a concentrated form upon exposure to steam. Similarly, Italy’s Saipem is building what it calls an “industrial lung”, a carbon capture technology that uses naturally occurring enzymes to extract the CO2 from flue gases, following which it purifies the CO2.

High Cost: the biggest challenge

Retrofitting active facilities with carbon capture technologies tends to be a very expensive process. Each facility is built differently and may not support emissions-monitoring. This escalates the costs associated with installing or modifying any CCUS technology. So high is the cost barrier in implementing CCUS that some facilities have had to shut down or face setbacks due to threatened commercial viability. One of the world’s largest CCUS plants – the Petra Nova facility, located in Texas – had to cease operations in 2020 due to Covid-19 driven oil price decrease. 

Carbon Taxes and Tariffs are Key

CCUS is a must for achieving net-zero global emissions by 2050. Although 141 carbon capture plants are under development, the IEA predicts that the current capacity needs to be scaled up by 100 times in the next 30 years. For this, newer economic and policy incentives are necessary.  The amendment to the EU’s Trans-European Networks for Energy Regulation, by ensuring the development of more CO2 transportation facilities, is a step in this direction. What would also spark global carbon capture adoption is the wider implementation of carbon taxes and carbon tariffs. These policy changes, among others, will pave the way for the growth of CCUS.