This audio was created using Microsoft Azure Speech Services
Let’s begin: what Carbon Capture, Utilization and Storage is and how it works
Carbon Capture, Utilization and Storage (CCUS) consist of a series of technologies to capture carbon (usually as CO2) emitted by various processes, to then either be used or stored in an underground reservoir.
Carbon capture can be achieved as part of an industrial process, such as hydrogen, ammonia or ethanol production or natural gas processing. CO2 can also be separated from exhaust fumes of power generation, cement or steel plants; or even be separated from atmospheric air. This direct air capture process requires handling a huge volume of air, as the natural CO2 concentration is very low.
There are different technologies to achieve this actual capture, relying on some chemical or physical absorption mechanism, or based on membranes.
There is still a lot of R&D going on to fine-tune these processes which so far are mainly relevant for large facilities; there is no carbon capture technology yet that could be deployed on each individual gasoline or diesel engine.
- Utilization of CO2, today, is mainly done in the Oil and Gas industry (Enhanced Oil Recovery (EOR)), in the Food and Beverage industry, as well as for Urea production. But the necessary volumes are limited and already well covered.
- Other potential uses include uptake by algae, conversion of fuels and chemicals and mineralization of inorganic materials (e.g., adding a layer of carbonate around granulates used for concrete). Conversion into various types of fuels will of course end up in release of the same amount of CO2, this time likely in smaller applications or engines with no carbon capture capability.
- CO2 can be stored in a saline aquifer (but this option will compete with storage of natural gas, like for winter or strategic reserves setup). CO2 can be also stored into a depleted oil or gas field, where it is injected via a refurbished production well. The CO2 will migrate in the full underground reservoir and will mineralize over time, thereby eliminating any risk of leaks in the distant future.
- One relevant research area in the years ahead consists of finding economical applications for utilization of the captured CO2 in a variety of industries, aside from geological storage.
So, is CCUS the solution to rising global temperature?
The recent COP26 in Glasgow signaled a major boost for the future growth prospects of CCUS projects. Due to the growing political consensus among major emitting countries at COP26, the adoption of IEA Net Zero Carbon emission target by 2050[1] has increased. It is widely acknowledged and noted on the latest IPCC Report that the contribution of CCUS is a critical part of achieving the Net Zero Carbon target by 2050, although current rates of CCS deployment are far below those in modelled pathways limiting global warming to 1.5° C or 2° C. Accordingly, the supply of CCUS will have to face significant expansion in the years ahead, as the following data shows.
Today, only ~40Mtons/year CO2 emissions are captured, which is 0.1% of the 40Gtons/year global emissions from industry and energy. Staying in line with the IEA Net Zero Carbon emission target by 2050 would require boosting capture capacities to 850Mtons/year by 2025 and to about ~8GT/year by 2050. So CCUS is definitely a technology worth investigating, especially for hard to abate processes and industries.
But there is a major prerequisite to the development of this CCUS technology.
CCUS add a cost to existing processes, this cost can vary from about $20/ton in the treatment of natural gas, to about $50/ton in the production of Blue Hydrogen. It ranges from $40 to $80/ton in power generation and can be above $100/ton in steel or cement production. Direct air capture cost can be in the $140 to $300+.
Contrary to other decarbonization measures such as electrification or energy efficiency which may have a reasonable payback and/or generate added value on the process, CCUS growth will depend on government incentives, sustainability regulations and development of the global carbon market.
In order to facilitate the development of CCUS projects, the US use the 4Q Tax credit structure which provides capturing parties a tax credit of $35/ton for CO2 used in EOR operations and $50/ton for CO2 directly stored in Geologic formation. Such incentives for example support the Development of the “Green Pipeline” (Denbury Resources) that Transports CO2 sourced from Facilities in the Gulf Coast, for injection in EOR in LA fields.
As an example of a working CO2 market in the EU Emissions Trading System (EU ETS) world’s first major carbon market, EU ETS carbon prices have passed the €60/ton threshold end of 2021. Some analysts estimate it is on track to reach €90/ton by the end of the decade. These can create further incentives for industries to abate C02 specially as liquidity improves as well as prices. Investors also are increasingly pressuring publicly traded companies to have proper policies leading to reduction in C02 – creating another strong incentive given the potential impact in their stock prices.
Recent advances on Government Incentives for CCUS at COP26
COP26 produced some good news in this regard. Most strongly backed by the US, the Net Zero initiative announced significant financial and technological assistance to ramp up the implementation of CCUS; as well as other mitigation technologies in partner countries starting now in 2022. This new initiative is intended to accelerate global energy system decarbonization. It will support partner countries to achieve net zero in their energy systems. It will develop technical roadmaps and then fund technical assistance and capacity building, including access to expert assistance in the US, specifically from the national laboratories and financial support for in-country technical institutions.[2]
Also, at COP26 the US Department of Energy (DOE) launched two initiatives aiming to catalyze the growth of a global Carbon Dioxide Removal (CDR) industry; including CCUS, but also including storage, enhanced mineralization, direct air capture, among others. The objective is to stimulate removal and durable storage of gigatons of CO2 for less than $100/t this decade. This is the US government’s first major effort on CDR innovation, with a “whole-of-government” approach. It aims to catalyze a global CDR industry by increasing R&D, harmonizing LCAs and techno-economic analyses, and facilitating pilot tests, to achieve 100 million tons of CO2 per year by 2030.[3] Cooperation on CCUS were also specifically mentioned in a Joint Agreement between US and China at the COP.
Major private firms that are already implementing CCUS projects also lobbied at COP26 to increase both public and private financing of CCUS technologies, including government policies and public investment to scale up deployment of CCUS projects.[4]
Success criteria for CCUS in the wake of the energy crisis
Another condition for success of CCUS, in addition to national (and probably regional) incentives and regulations, will be the creation of an ecosystem, or hub, or cluster, as already highlighted by the most mature projects. Such a hub will need one or several ‘supplier(s)’ of CO2, but also a network of pipelines, a depleted oil or gas field, the right injection facility, and the monitoring over time of the complete system, in particular CO2 inside the reservoir.
This implies the need for CCUS clusters to be located close to a depleted Oil and Gas field and will also require the proper Pipeline infrastructure to collect the CO2 and injected into the reservoirs.
There are such potential locations around the North Sea or in Texas (Permian Basin/Houston/LA area), where some of the initial projects have taken a hold – some lead by major Oil and Gas (now Energy) Companies, however countries lack Korea or Japan lack access to such formation.
These countries without such formation and legacy Oil and Gas infrastructure explore either the capture of carbon as a solid powder (not as CO2), or various utilization options, making carbon capture integral to industrial plant design.
Finally, there is another often neglected condition for the success of CCUS projects.
We are speaking about large installations, adding about 10% cost and ‘hardware’ to an already large process such as power generation or steel or cement plant. There is little experience on industrial scale carbon capture processes. The developers and EPCs need to ensure the proper design, define the right power and process architectures, optimize operations and maintenance. Safety and cybersecurity should not be neglected either.
Building the necessary pipeline infrastructure, to collect/transport and inject the CO2 to reservoirs can represent up to 20 to 30% of a CCUS project. Such infrastructure is to be utilized by the industries that are capturing the CO2.
Selected Oil and Gas companies have legacy experience in the safe, reliable transportation of CO2 and are becoming major actors teaming up with industry to address the transportation needs, either repurposing existing infrastructure and/or building additional ones.
The building of CCUS assets and ecosystems, depending on government subsidies and regulations, will require the industry to also develop partnerships with the right suppliers of automation, energy, and software technologies that can support them in this journey to repurpose or develop the new infrastructure and ensure they are managed and operated using the proper technology.
Stay involved in the discussion – read the latest articles where we address climate targets and energy management considerations for the Oil and Gas industry.
Contributors: Jean Acquatella PHD Environmental Policy
[1] COP 26 refers to the 26th Conference of the Parties to the UN Climate Change Convention (UNFCCC) recently held in Glasgow U.K.
[2] ieaghg – “Net Zero World” Initiative
[3] ieaghg – US launches two initiatives on CDR
[4] Carbon Clean – COP26 carbon capture and storage
