Carbon Capture and Storage - an effective tool to speed up decarbonization of industry
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It is unfortunate that writing about Carbon Capture and Storage (CCS) for the Technology Outlook 2030 is not dramatically different to previous editions. The technology is well established and an essential decarbonization tool, especially given our continued reliance on industrial processes that emit significant quantities of CO2. The harsh reality is that emitting carbon dioxide is cheaper than capturing and storing it and this is where policymakers must step forward, and they must do so soon. Although it has not yet scaled on an industrial level, there are corners of the globe where progressive tax policies are stimulating CCS uptake and may show a path forward in the coming decade.

CCS involves three major steps; capturing CO2 from the emitted gas at the source, transporting it to the storage site and then injecting it deep into a carefully selected underground reservoirs, where it is permanently and safely stored.

The most established method for removing CO2 from gaseous emission streams is by scrubbing it from the gas using a solvent, in the so-called absorption-desorption cycle. The sorbent is continuously routed between an absorber where it binds to the CO2, and a desorber where the pure CO2 is released by heating up the solvent. Such systems require a heat supply around 130-140 °C which is typically provided with steam. For each tonne of CO2 captured, about 2.5-4 MJ of heat is required. For gas or coal power plants, the energy penalty corresponds to about 8-10%-points on efficiency, or about 20-30% of power output reduction. The pure CO2 is compressed up to 150-200 bar and then transported in liquid form by pipeline or ship to the storage site.

Often, CCS is referred to capture systems applied at coal and gas fired power stations, however, the actual range of application is larger and include major industries like cement, steel, hydrogen and ammonia - namely to all processes that release CO2 in the atmosphere as a result of a combustion. When applied to processes using biomass (e.g. wood), CCS is often referred to as Bio Energy with CCS (BECCS) which can lead to net-negative emission reductions. When the captured CO2 is used for commercial purposes as part of the value chain, CCS is referred to as CCUS, where the U stands for Utilization.

All components of CCS are proven technologies that have been used in a wide range of industries since 1972 when several natural-gas processing plants in the Val Verde area of Texas began employing carbon capture to supply CO2 for Enhanced Oil Recovery operations. Since then, more than 200 million tonnes of CO2 have been captured and injected deep underground.1

CCS application has been successfully demonstrated at large scales up to 1 Mt/y from a single facility, like at the Petra Nova coal fired plant in Texas. Today there are 19 large scale CCS plants in operation, 4 under construction and about 28 in various stages of development2. The total yearly volume removed by the operating plant amount to circa 40 Mt/year. Most of the operational facilities are located in US and Canada and are connected to EOR operations.

Opportunities and market impacts

CCS can provide a significant contribution to achieve deep decarbonization at large scale and in relatively short timeframe in several industries. CCS should not be intended as the only route to decarbonize sectors heavily dependent on fossil fuel, however it could be a bridging solution to decarbonize some of the industries for which alternative low-emission solution would require much longer lead time to be implemented or are simply not yet available (eg. cement).

CCS can thus play a critical role to achieve the 1.5°C targets. The findings published in the Special Report on Global Warming 1.5°C produced by IPCC3 support this message. Of the four main pathways scenarios referenced in IPCC study, CCS is required in almost all scenarios to mitigate climate change. Further, IPCC’s AR5 Report4 showed that removing CCS from the technology portfolio significantly raises the mitigation costs. The pathways generally rely on a significant scale-up of CCS in gas-fired power and industry, and in combination with BECCS and in order to reach the necessary levels of assumed capturing capacity by 2050, there needs significant scaling up compared to today’s plans.

As hydrogen is gaining interest again, there’s an opportunity to develop a CCS market in synergy with the raising hydrogen economy. Decarbonised hydrogen can be produced through the application of CCS on Steam Methane Reforming units (blue hydrogen) or through electrolysis using renewable energy sources (Green hydrogen). Current cost of blue hydrogen production with large-scale SMR with CCS have been estimated at 2-4 €/kg of H2 (depending on gas price) compared to the cost of about 4-8 €/kg of H2 for production via electrolysis5. Blue hydrogen is today more cost competitive and could be considered as a stepping stone toward the development of a hydrogen economy and the required infrastructures.

Despite a lack of coordinated global policy to facilitate the uptake of CCS, there are regions where it has more of a foothold. In the US, in particular, the new 45Q legislation is underpinning a new generation of CCS projects6. This legislation incentivises deployment of CCS and CCU, by providing a tax credit of up to $50/tCO2 for dedicated geological storage, and $35/tCO2 for EOR. Updated in 2018, the law lowers the eligibility threshold from 500,000/t to 100,000/t of CO2 stored on an annual basis for industrial projects and maintained the original threshold of 500,000/t per year for power generation. 45Q requires construction of CCS and CCU facilities to begin before January 1, 2024, with such facilities eligible for the credit for twelve years.

Excessive cost (and who should pay for it) is often cited as one of the main reasons CCS has failed to scale more significantly, but as decarbonization becomes a real risk for economies tied to the fortunes of fossil fuels, CCS should be seen as an attractive option. One study, for example, predicted that industrial scale CCS could lead to the creation of 40 000 jobs in Norway7. It is also important that policy makers consider the skills held by the oil & gas sector as having an important decarbonization role to play.

Risks and uncertainties

According to our Energy Transition Outlook (ETO) forecasts, CCS will not be implemented at scale until at least the 2040s, unless governments change policy and set a higher carbon price than the cost of the technology. The main barrier is the relatively high capital cost for its implementation and the lack of financial incentives to support the investment. To date, CCS projects have only been possible with government intervention. The use of CCS for enhanced oil recovery (EOR) stands alone as the only attractive business case for CCS proponents.

Basically, CCS struggles to gain traction because there is a cheaper option for industry: continuing business as usual. Emitting carbon into the atmosphere costs virtually nothing. Most economists see governments setting carbon prices as the most cost-effective way to incentivize emissions reductions. Yet, 85% of global emissions are currently untaxed. If the cost of emitting carbon into the atmosphere increases, the speed at which industry will deploy CCS technology will also increase.

According to our ETO forecast, the expected level of CCS capacity in 2050 is ca 800Mt/y which would mean that one CCS plant, with 1 Mt/y capturing capacity, must be built every second week from today until 2050. The ETO forecast does not achieve the Paris climate goals, so for more aggressive climate targets incorporating CCS, this pace needs to speed up. Thus, in order to implement CCS at scale, the costs must come down significantly and the way to achieve this is ramping up capacity following technology learning curves similarly to those reducing cost for Solar PV with each doubling of capacity installed.

Another barrier that has slowed down CCS development is the public perception around the safety of storing CO2 underground. Citizen’s protests, fearing death risk due to CO2 leakages, have in some cases resulted in project cancellation, like in Barenderecht in the Netherlands where a project was halted in 2009 due to resident protests8. In Germany, on-shore storage has been banned since 2011 after a national referendum9.

Public opinion is often biased by the perception that CCS is unsafe and risky, as well as the fear for something “unusual” and not completely understood. Much R&D efforts however have been dedicated to understanding the risk of underground storage, concluding that with an accurate selection of the storage, and state-of-the art monitoring procedure, there’s no increased risk for the people and the environment10.

Main author: Guido Magneschi

Contributors: Mats Rinaldo; Myhrvold Tore; Jørg Aarnes; Marcel Eijgelaar

Editor: Peter Lovegrove

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