Summary

Carbon capture, utilisation and storage (CCUS) technologies involve the capture, transport, usage or storage of carbon dioxide (CO2). First technologies to capture CO2 from fuel combustion or industrial processes. Then the transport of CO2 via ship or pipeline, and either its use as a resource or its permanent storage underground in geological formations. CCUS technologies are of particular importance to net-zero goals because no other set of technologies has the potential to remove megatonnes of carbon from the atmosphere.

Viability (4)

CCUS is a variety of technologies with differing levels of maturity. CCUS has already proved viability with existing capacity to capture more than 40 MtCO2 each year, mainly ammonia production. The main challenges are commercial and political. Political action is required to incentivise private sector to invest in CCUS in particular the market for carbon sequestration needs a carbon price with only 21.5% of GHG emissions covered in 2021.

Drivers (5)

High level the commitments in the The Paris Agreement drive CCUS. Specifically, the need to reduce emissions from industry - mainly cement, steel and chemicals - which accounts for 25% of GHG emissions. These sectors need high-temperature heat, for which there are few mature alternatives to the direct use of fossil fuels. Demand for cement, steel and chemicals continues to grow as countries develop and urbanise.

Novelty (4)

Ability to retrofit to existing power and industrial plants. Cost effective solution to tackle heavy industries emissions including cement, iron and steel, and chemicals manufacturing. Captured CO2 is also a critical part of the supply chain for synthetic fuels from CO2 (potentially for Algae Fuel) and hydrogen – one of a limited number of low-carbon options for long-distance transport, particularly aviation.

Diffusion (2)

Planned pipeline of projects falls well short of delivering the 1.7 billion tonnes of CO2 capture capacity deployed by 2030 in the IEAs Net Zero by 2050 scenario. The lack of progress is because of the need for government action on a complex and interconnected policy area. Setting a carbon price is difficult and even more difficult is establishing a market for low-carbon materials like steel and cement.

Impact (3) Medium certainty

CCUS is forecast to be only a $7 billion market in 2030 up from $1.9 billion in 2020. Capture is likely to be largest segment, followed by transportation, utilisation and storage. Most usage will become from oil & gas, followed by power generation, iron & steel, chemicals, and then cement. Despite the small size of the market, CCUS along with Green Hydrogen are the only technologies that can materially reduce the emissions from heavy industries and as such is more important to reaching net zero than direct economic benefits. CCUS is very much a transitory technology helping reduce emissions until Green Hydrogen becomes cost competitive.

Timing (2025-2030)

For environmental reasons, we should already have more capacity. We have 40 MtC02 of capacity but there is no cost or learning curves that are pushing down costs. CCUS is therefore unlikely to be cost-effective any time soon without government subsidies. This makes timing particularly challenging as adoption will rely on unpredictable nation by nation politics.