Carbon capture, utilization, and storage (CCUS) could significantly mitigate carbon emissions in our warming planet. However, its success hinges on evolving legal and regulatory frameworks, along with consistent government support globally.
According to a 2022 report by the International Energy Agency (IEA), "CCUS stands as the sole suite of technologies capable of delivering substantial emission reductions in critical industries, such as heavy manufacturing, while also facilitating CO? removal from the atmosphere."
Despite this potential, CCUS encounters numerous hurdles. The process, which involves capturing CO? at its source, transporting it, and either sequestering it underground or repurposing it, struggles with economic viability and navigates a nascent regulatory environment. Conversely, emerging government incentives, global standards, and policy strides are paving the way for its success, with the necessary technology already in place.
As of July 2023, the Global CCS Institute noted that the total CO? capture capacity of public CCUS projects either under development, construction, or operational had surged by nearly 50 percent from the previous year. Major projects are underway in countries including Australia, Brazil, Norway, the United Kingdom, and the United States.
It’s crucial for stakeholders to adopt a long-term perspective, reminiscent of the decades of subsidies, regulatory changes, and technological advancements that allowed renewable technologies like wind power to achieve profitability on a large scale.
As per the report published by BIS Research, the global carbon capture utilization and storage (CCUS) market was valued at $2,100.0 million in 2021 and is expected to reach $12,159.6 million by 2031, growing at a CAGR of 19.2% between 2022 and 2031.
The development of CCUS infrastructure by the industry can be segmented into four main components:
Carbon is mainly captured at the emission source using various technologies. Pre-combustion capture technologies, which are commercially available, are typically employed in industrial settings. Post-combustion methods isolate CO? from the emissions at industrial sites or power plants. Additional techniques include oxy-fuel combustion (burning fossil fuels in pure oxygen instead of air) and direct air capture (DAC), which is more costly but growing in popularity with 130 DAC facilities currently in development globally.
This sector is predominantly managed by industrial operators who are intimately familiar with their facilities and processes. While some operators manage integrated projects from capture to storage, there is potential for third-party providers to aggregate CO? from multiple sources for the next steps in the chain. Projects like Northern Lights have successfully implemented this model.
Transportation of CO?, whether by ship, truck, or pipeline, is essential after capture. This stage faces challenges such as the asphyxiation risks of CO? and regulatory complexities, especially concerning international transport. The U.S. boasts a robust CO? transport industry. Developments like capture hubs and shared infrastructure are driving scale economies, facilitated by mergers in the CCUS sector.
The International Organization for Standardization (ISO) is also crafting global standards for CO? pipeline transport. Meanwhile, amendments to the London Protocol now allow cross-border CO? transport for geological storage, though ratification of these changes remains pending, introducing uncertainties. Some countries are forming bilateral agreements to expedite specific projects.
CO? is permanently stored in geological formations, either onshore or offshore. Operations like the Northern Lights network in Norway illustrate integrated storage solutions. Regions such as Australia, the UK, the US, and various Nordic countries have refined their storage regulations, often adapting existing petroleum storage frameworks.
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Repurposing captured CO?, for example as a raw material in chemicals, fuels, and building materials, adds value. Currently, 78% of captured carbon from operational projects is utilized for enhanced oil recovery (EOR), which involves injecting CO? into oil wells to extract trapped oil. While some argue that EOR makes oil extraction more environmentally friendly, critics contend it's ultimately counterproductive.
Following are the demand drivers for the global carbon capture utilization and storage market:
• Favorable Government Policies Driving the Deployment of CCUS Technology
• Increasing Demand for CO2 for Enhanced Oil Recovery (EOR)
• Rise in Adoption of Net-Zero Emissions Targets
The market is expected to face some limitations too due to the following challenges:
• High Initial Cost of Carbon Capture Utilization and Storage Process
• CO2 Leakage from the Underground Storage Reservoirs
Nevertheless, decades of EOR experience have proven the feasibility of CO? injection and storage in geological formations. Without a mature carbon credit market, EOR remains one of the few profitable avenues for many operators, though advancing pure storage initiatives continues to be challenging.