A key technology to fight climate change
Carbon capture and storage (CCS) is a process where CO2 is captured from industrial facilities such as power plants, transported to a storage site, and injected below earth´s surface. It maintains the current level of CO2 in the atmosphere by preventing further emissions. This is opposed to direct air capture and storage, as done by Swiss-based Climeworks, where CO2 is removed directly from ambient air, removing emissions already in the atmosphere.
The IPCC has identified CCS as the most promising technology for the rapid reduction of global emissions, with up to 55% captured by 2100. In the nearer future, the International Energy Agency (IEA) roadmap to Net Zero Emissions (NZE) expects CCS to constitute 9% of the total emission cuts by 2035 and 15% by 2070. CCS is considered an important bridge to a more sustainable energy system. However, it should be implemented as a complementary solution for activities with unabatable CO2 emissions, playing a key role in achieving the climate goals set out in the Paris Agreement.
Current CCS technology and implementation
There are currently 30 commercial CCS projects in operation worldwide, with the majority localized in North America.
These projects are capturing and putting into storage close to 40 Mt per year, lagging the required levels by the IEA of 1150 Mt per year by 2030. Nonetheless, there is increasing interest into the CCS industry with over 120 projects in development. Such projects have a diverse mix of applications in different industries (e.g., low-carbon hydrogen, biofuel production, iron, steel, and cement).
The greatest challenges CCS projects encounter are high capital requirements and low economic incentives, which will undoubtedly halt the mass adoption of CCS technologies worldwide unless promptly addressed. The capital intensity of CCS technologies not only involves the investment on long-lived assets, but also the deployment of CO2 pipelines and geological storage resources, which amount to several hundreds of millions of dollars to appraise and build. Furthermore, there are the costs related to operating and monitoring the CCS infrastructure.
Bringing the costs down
The Global CCS Institute sets a reference cost at USD60 per ton of CO2 avoided. This amounts to USD 2.4 bn for the current rate of 40 Mt CO2 sequestrated and stored worldwide. To achieve lower costs, there needs to be public sector support with early investments and through market-based incentives or regulatory levers. For example, Section 45Q of the US Internal Revenue Code offers a tax credit up to USD 50 per m/ton of CO2 captured and stored. Other examples are the EUR 10 bn Innovation Fund from the EU to invest in CCS projects as well as the Infrastructure Investment and Jobs Act which reserves USD 12 bn dollars to support carbon management initiatives.
Investment opportunities
Investment opportunities in CCS include funding for research and development of new technologies through specific green bonds, investment in companies that develop carbon storage projects, or investment in carbon-offset projects such as reforestation efforts.
On the carbon capture side, Aker Carbon Capture, previously a division of the leading Norwegian engineering firm Aker Solutions, started developing its post-combustion CO2 capture technology in 2005. The technology uses a mixture of organic solvents and water to absorb the CO2 and can be applied to already operating plants or new builds. The company targets a capture capacity of 10 Mt of CO2 per year by 2025, which is equivalent to the CO2 emissions of 10 large cement plants or 50 waste-to-energy plants.
On the carbon storage side, we mainly find chemical or oil and gas companies. NextDecade is an American company focused on the development of Liquified Natural Gas (LNG) projects, its pipelines, and solutions linking the gas produced in the Permian Basin to the LNG global markets. Apart from its expertise in the LNG market, NextDecade has leveraged years of engineering and project management experience to develop a proprietary CCS process for industrial facilities. It will be implementing its CCS technology in its flagship project, Rio Grande LNG Terminal, where it expects to capture and store more than 5 Mt of CO2 per year, which is equivalent to the absorption power of 300 million trees or removing 1 million vehicles from the road.
