Why capturing & using/storing carbon is essential for a low carbon energy future

Mott MacDonald’s CCUS Global Lead, Dr Adina Popa, says carbon capture, utilisation and storage (CCUS) has the potential to achieve much more

CCUS has proved to be too costly to be commercially viable, and governments have largely failed to offer policies to support the technology. However, the widespread adoption of CCUS is crucial for meeting the Paris Agreement’s goal of limiting the rise in the global temperature to well below 2°C. As ambition increases in the pursuit of net-zero energy system emissions, the role of CCUS becomes even more pronounced. According to international energy and climate change agencies, wider deployment of CCUS is especially important to decarbonise the industrial sector, where emissions are among the hardest to abate.

There is a new wave of interest to seriously revisit CCUS technologies and bring them back to the climate change agenda. However, the difficult commercials of a low margin business are not compelling for the traditional oil and gas operations and therefore investors are less likely to commit to CCUS unless they are sure of government support in a shifting market. Policy makers can accelerate the low-carbon transition by supporting policies that promote the technology. Rollout, however, depends on subsidies and the need to deliver value for money. Support for carbon dioxide infrastructure will be an essential element of policy incentives for CCUS. Competing concepts are required, with hydrogen to be used as an intermediary transition pathway.   

Economies of scale

The infrastructure for CCUS and hydrogen is initially expensive to roll out; but, with the right policies in place, costs will fall.

Leading governments are realising that CCUS can play a key role in future-proofing high-emissions industries, enabling them to compete in an increasingly carbon-constrained world. Policies are beginning to be implemented to provide sufficient incentive for businesses to consider CCUS through higher carbon prices, tax incentives and greater support for individual projects.

Government support around the world has been a key factor in reducing costs, sparking innovation and expanding renewable power generation. Similar support would have a similar impact on CCUS.

The UK is already a leader in developing business models for emerging technologies. The combination of a regulated asset base (RAB) funding model, which provides secure payback and return on investment for developers, and an off-take arrangement that guarantees a purchase price to enable developers to secure investment, is a potential way forward for funding CCUS and hydrogen projects worldwide.

Expansion of CCUS and hydrogen use would produce a virtuous circle of reduced costs, greater innovation and faster delivery. CCUS industrial hubs offer cost advantages because of proximity to geological storage, existing pipeline infrastructure and/or a high concentration of stationary emitters. Additionally, clusters/hubs maximise economies of scale and lower the unit costs of developing CCUS infrastructure and hydrogen networks, the same as repurposing existing assets.

However, scaling up requires a network of suppliers, investors and users. While key policy developments are likely sufficient to trigger new investments, remaining uncertainty among investors may impede this.

Levelling up

The benefits of CCUS go further than helping the countries to meet their 2050 carbon ambitions. Investment in CCUS would also support governments in a post-COVID world to create and maintain high-value jobs and infrastructure in industrial heartlands.

Without CCUS, there is little prospect of relatively quickly decarbonising industries and processes that require high-grade heat, with the result that many businesses will be forced to relocate overseas where the ambitions are less stringent.

The 2050 Calculator allows users to create their own energy pathways. It can support governments to assess technology and development channels for all applications, including with CCUS in the mix. By enabling comparison of trade-offs to all parts of the economy, the Calculator can have a real impact on reducing greenhouse gas emissions through evidence-based policy decisions. 

Written by Adina Popa