Government net-zero targets drive record CCS growth: report

A record 71 new carbon capture and storage (CCS) facilities have been announced this year as the total pipeline of facilities reached 135, with 27 operational so far, according to a study by the Global CCS Institute, an Australia-headquartered think tank.

The CO2 capture capacity of all the CCS facilities under development has risen to 111 million metric tons per annum from 73 million mt/year, an increase of 48% compared with a year earlier.

This is in part because national and corporate net-zero targets have spurred commercial CCS facility announcements since the think tank's annual report last year. But states and investors must pick up the pace of funding to reach net-zero goals, the Global CCS Institute pointed out.

"Net-zero commitments made by more than 100 countries and by thousands of companies have driven home the necessity of CCS, and this has kick-started a virtuous cycle whereby governments around the world are strengthening policy support for CCS," General Manager of Advocacy and Communications in the UK Guloren Turan said at the report launch.

"We expect to see a rising number of facilities all around the world in the next few years in response to strengthening climate policy, and other business drivers," she added.

Of the 135 facilities found, most (78) are in North America as well as in Europe (38). The countries that had the most CCS projects were the US, the Netherlands, Belgium, and the UK.

There are four CCS facilities operational or under development in the Middle Eastern states of the Gulf Cooperation Council that includes the UAE, Bahrain, Saudi Arabia, Oman, Qatar, and Kuwait. There were nine CCS facilities in the rest of the world, including Asia.

Several countries started development of commercial CCS facilities over the past year, including Belgium, Denmark, Hungary, Indonesia, Italy, Malaysia, and Sweden.

North America is at the forefront of the charge, with over 40 new CCS projects announced in 2021. The report credited this to US policies, such as a clearer definition of CCS tax credits under revised rules, and the recommitment to carbon reduction under the Paris Agreement by US President Joe Biden.

Diversifying sector

While many CCS projects are experimental, the technology is not wholly new. Many large oil and natural gas producers have used it for three decades as part of a process referred to as enhanced oil recovery (EOR), according to law firm Latham & Watkins.

Nowadays, CCS facilities are serving a broad range of new sectors that are starting to decarbonize such as power generation, LNG production, hydrogen production, cement, steel, waste-to-energy, and Direct Air Capture and Storage (DACS).

For example, the recently approved Norcem Brevik project, part of the Longship (Langskip) network in Norway, is integrating CCS with cement manufacturing.

Planned or operational CCS facilities are capturing emissions in other new sectors, for example coal-fired power plants or ethanol plants, while smaller facilities capture carbon at natural gas-fired power plants, processing facilities, and for the production of hydrogen from natural gas, the report found.

CO2 networks a growing trend

The report observed a new trend of projects sharing CO2 "networks," specifically transportation and storage pipelines, shipping, port facilities, and storage wells that link several CCS end-users to the same capture facility to lower investment costs.

Such CCS networks were called "the dominant operating model" by the report.

One example of this is the Porthos project in Rotterdam, the Netherlands, where a shared pipeline will transport liquid CO2 from four new blue, or natural-gas derived, hydrogen projects. The project is being developed by Shell, ExxonMobil, and two industrial gas producers, Air Liquide and Air Products.

Another project in Rotterdam, TotalEnergies and Shell's Aramis CCS network, will use a system of pipelines as well as seagoing barges to transport CO2 for different companies in the waste to energy, steel, chemicals, oil refining, and cement sectors.

Net-zero goals to require $1.2 trillion investment

In most of IHS Markit's outlooks showing the paths for the world to reach net-zero, CCS is required to capture energy-sector-related CO2 emissions starting in the 2030s.

Only about 36.6 million mt/year of capture capacity is operational worldwide today, far below the 5.6 gigatons the International Energy Agency estimates is required to decarbonize industry and reach net zero by 2050 in line with Paris Agreement goals.

In the UK alone, the government's ambition is to reach 10 million mt/year by 2030, which represents about a third of all existing CCS capacity.

So far, 24 governments have mentioned CCS in the national carbon reduction strategies submitted in accord with the Paris Agreement, the report said.

The institute argued the private sector will need to invest as much as $1.28 trillion in new CCS capacity over the coming 30 years. In 2018, the entire energy sector's capital spending totaled $1.85 trillion.

As a result, governments should help to finance and provide policies that support the creation of CO2 pipeline and storage networks at industrial hubs, it said.

The state assistance is needed because there is little time left to increase the rates of CCS facility development to levels required by 2030 and get them operating by 2050. Large CCS facilities or pipeline networks can take seven to 10 years to enter service.

The report's authors warned that considerable investment would be needed soon. "There is no time to waste. Creating an enabling environment for investment in CCS facilities and other net-zero aligned assets—particularly in supporting infrastructure—through both policy and funding, should be a high priority for governments between now and 2030," they said.

When it comes to the billions required, several barriers have historically prevented investors from plowing the required funding into CCS, including low carbon prices and a lack of demand.

What's more, the potential cost of managing risks at CO2 storage facilities—such as well blowouts or potential leaks of CO2 in the natural geology—pose a financial risk that Swiss Re has proposed addressing with insurance.