Carbon capture and storage: Opportunities and challenges ahead

BY ANTHONY KING

The UN Panel on Climate Change has said technologies for the capture and storage of CO₂ will be a crucial player in keeping climate change tolerable. But how much can carbon capture and storage (CCS) really contribute – and at what cost? Anthony King reports

The Intergovernmental Panel on Climate Change (IPCC) has warned of a decreased likelihood of limiting global warming to 1.5°C without rapid emission reductions to reach net zero by 2050.

‘Large quantities of CCS will be needed,’ says Stuart Jenkins, a climate policy researcher at the University of Oxford, UK, noting that the time to start investing in CCS is now, to de-risk and find out what contribution it can make in the 2040s. This view has support, though there is also scepticism over how much CCS can contribute to emissions reductions in the face of high costs. In March 2023, the European Commission introduced the Net Zero Industry Act, which identified carbon capture, utilisation and storage (CCUS) as one of eight strategic net-zero technologies critical to reach the EU’s climate goals. It proposed a target of 50m t/year of CO₂ storage capacity should be developed by 2030, asking oil and gas producers to contribute pro rata on their share of the EU’s crude oil and natural gas production.

Some argue costs will be prohibitively expensive in many situations. One challenge is that, for now, there are few economic uses for huge quantities of CO₂. Currently, the only large-scale use for CO₂ is enhanced oil recovery, whereby CO₂ is injected into oil wells to enhance recovery. Initiatives such as Flue2Chem, involving SCI, Unilever and other organisations, aim to develop a new value chain to convert industrial waste gases into sustainable materials for consumer products. Launched in 2023, the two-year project was granted £2.68m from Innovate UK.

In the UK, policymakers are warming to CCS. The UK’s Climate Change Committee described CCUS as a ‘necessity, not an option,’ to achieve net zero by 2050. In December 2023, an official policy paper road-mapped a competitive market for CCUS, trumpeting the UK’s capacity to store 78bn t of CO₂ under the North Sea. It announced eight projects, underpinned by up to £20bn. Their proposal is that for the first decade, government will subsidise a contract-for-difference approach to build a CO₂ storage market to 30m t by 2030. 

In the US, meanwhile, the Congressional Budget Office noted in December 2023 that 15 CSS facilities have the capacity to capture 0.4% of the country’s total annual CO₂ emissions. With an additional 121 facilities being built or in development, this could ramp up capacity to 3% of annual CO₂ emissions. Already, over $5bn was spent from 2011 to 2023 on CCS research and related programmes, and the 2021 Infrastructure Investment and Jobs Act offers over $8bn for CCS programmes from 2022 to 2026.

The cement industry could face paying billions for emissions in future.

However, opinions on the value of CCS are sharply divided. One assessment of the relative costs to achieve the 1.5°C target in The Paris Agreement in December 2023 concluded that expecting CCS to mitigate even just one-tenth of emissions – the low-CCS pathway – is a tall order, requiring massive scale-up. Instead, the study by University of Oxford researchers noted that governments should banish ‘the idea that CCS is, or ever can be, a blanket solution’ and target efforts to industries such as cement and chemicals production.

‘There’s been a lot of talk, but not much really happens because CCS is not profitable,’ says the report author Rupert Way, a technology forecaster at the University of Oxford.

But not everyone agrees CCS has yet had a fair hearing. ‘There has been some progress in CCS, but we haven’t done enough of these projects, and we haven’t had enough experience with deployment at a scale to drive the costs down,’ says David Reiner, professor of technology policy at the University of Cambridge.

There have been false starts. ‘In 2007, the governments of Europe agreed to a Commission proposal for 12 CCS demonstration projects,’ but construction had not been authorised for any of them by 2015, says Chris Davies, director of CCS Europe. ‘The main reason we haven’t got CCS is political will.’ As a former MEP, Davies worked on CCS technical legislation for the European Parliament.

Proponents say it is now or never for gaining real world experience. ‘There’s been a failure to expand the amount we’re capturing and storing each year, but this is largely a policy not a technology failure,’ says Stuart Jenkins, a climate policy researcher at the University of Oxford. If emission targets are to be met by 2050, proponents of CCS say we need to find out soon what role it can play.

Currently there is no incentive for private companies to pay for CCS themselves; for now, they must be mandated or subsidised through payments or tax credits. In the Gorgon gas field, the Australian government mandated CCS and contributed $60m. The overall cost was estimated at around $2bn. The price of carbon emissions in Europe is around €70/t. This needs to be closer to €200 for CCS to break even, says Davies, though some say this figure is closer to €100. He expects the price to head towards €200 and for industries such as cement to pay tens of billions for emissions in Europe by the early 2030s, encouraging them to look at CCS. But they cannot do this alone. ‘You need financial support mechanisms from national governments to get CCS going, because otherwise there are too many risks,’ says Davies.

Why are carbon capture and storage costs still high?

In part, the nature of CCS technology has acted as a drag on costs. Capturing CO₂ from a concentrated point source such as a cement factory or power plant taps an almost century old process, relying on liquid amine solvent to absorb CO₂ gas from flue gas. The liquid absorbent is then heated to release the gas. A CCS plant is a chunky piece of engineering that extracts CO₂ gas and pumps it to an underground reservoir, Way notes. He believes it will be difficult to squeeze efficiencies out of a process that moves liquids and gases through pipes with valves and pistons, making cost reductions tricky for oil extraction and CCS. Meanwhile, the more modular and electronic technologies of solar and wind energy have seen costs slide, enabling them to compete directly with power plants.

‘We don’t think there is much need for power plants to have CCS as there are now cheaper ways to provide clean and reliable electricity,’ says Way. In many places, it is cheaper to build a new solar farm than keep operating a gas-power station, he adds. Take-up of CCS remains tepid, with only 50m t of CO₂ captured in 2022. Even achieving the low-CCS scenario would require a ‘50-fold expansion in just 25 years,’ the report by Way and colleagues noted.

CCS proponents blame government slowness for the current lack of expansion, arguing that what is needed is a regulatory framework that provides confidence to investors. There are some landmark CCS projects out there, nonetheless. The Sleipner and Snøhvit fields in Norway have been operating since 1996 and 2008, respectively, together accumulating over 20m t of CO₂. Despite these offshore fields being extensively studied, CCS ran into difficulties. At Snøhvit, the storage site began to show signs of ‘rejecting’ CO₂ within 18 months. While stored gas at Sleipner run by Equinor (previously Statoil) began to rise until it was fortuitously trapped in a shallower formation contained by rock above.

In Australia, Chevron is running the world’s largest CCS system as part of the Gorgon liquefied natural gas facility. Carbon dioxide is taken from offshore gas reservoirs and pumped into a giant sandstone formation 2km below Barrow Island. Chevron was mandated to inject at least 80% of the CO₂ from the gas fields that supply its export plant. Gas extraction kicked off in 2017, but CCS was delayed due to technical problems until August 2019. It has since failed to reach targets. In July 2023, local newspaper WA Today reported that less CO₂ was expected to be injected in 2023 than for 2022. This was confirmed in a November 2023 article in the Financial Times, which notes that reduced CO₂ storage was because of pressure management issues caused by excess water in its reservoirs, which Chevron reportedly aims to remedy in the next couple of years.

Davies points out that both the Netherlands and Denmark are now moving forward with CCS, because there is the political will. The UK, on the other hand, has a lot down on paper. Economist Gordon Hughes at the University of Edinburgh is scathing about the cost and performance of CCS. ‘We can now say, unambiguously, that all these projects have been failures,’ he says. ‘They’ve been less successful in terms of amounts of CO₂ captured and way more expensive to build than intended.’

He cited budget overruns at the Petra Nova Carbon Capture Project in Texas, which aimed to decrease CO₂ emissions by 90% at the Parish plant, cited by an MIT study as one of the worst US CO₂ polluters. It captured 92% of the CO₂ over a three-year period, but cost around $1bn, and shut when the price of oil fell and the field where the CO₂ was injected for enhanced oil recovery closed. The project restarted in 2023. Controversially, the US offers a tax credit of up to $60/t of CO₂ captured and used for enhanced oil recovery.

Hughes says CCS suits coal-fired power plants over gas. With wealthier countries switching to cleaner gas for power, coal power resides mainly in China, India, Indonesia and Russia. ‘These countries don’t feel under pressure to reduce carbon emissions and are not interested in increasing the costs of their power generation to capture carbon in this way,’ says Hughes. He adds that CCS is prohibitively expensive to retrofit into facilities, making it even less attractive for existing coal plants.

Hughes is critical of government spending on CCS. ‘This is a self-sustaining research area, which has never been subjected to serious market tests,’ he says. He warns about ‘an R&D mirage that somehow, something is going to come out of the far horizon and change everything.’

But a counterpoint is that CCS has not yet received enough sustained support for liftoff. ‘There isn’t a policy suite in place today to incentivise a big upscaling in the use of CCS,’ says Jenkins.

‘You need governments to be providing not just millions in subsidies, but a billion,’ adds Reiner.

Others point to massive increases in CO₂ emissions over the past 20 years by developing countries as a reason for action. ‘By importing manufactured goods from China and India in particular, Europe and North America are effectively offshoring their own CO₂ emissions to countries which lack regulatory barriers for reducing CO₂ emissions,’ says technology consultant Peter Reineck, who also founded SCI’s Energy Group.

Carbon capture: The way forward

‘Because the application of CCS for emissions reductions is at an early stage, direct policy support is crucial to get it off the ground, which is what the UK government is currently doing,’ says Esin Serin, a climate policy fellow at London School of Economics and Political Science. ‘But it needs to be supported also with a high enough carbon price.’

Reiner applauds the buy-in from industrial clusters and the strategy of negotiating with eight different projects, rather than the government placing all bets on one or two. Humber Zero in North Lincolnshire, for example, has signed up a power station, steel works, chemical park and oil refinery and will inject CO₂ into offshore geological structures 3km beneath the seabed. Building the infrastructure jointly should help, say supporters. ‘Part of the reason why carbon capture has struggled is you need to capture, transport and store the gas, so you need more than one firm,’ says Reiner.

Myles Allen discusses the Carbon Takeback Obligation initiative.

Jenkins believes government rules on capturing CO₂ generated by fossil fuel use will be necessary. He has worked with Myles Allen at Oxford on a plan that would mandate fuel suppliers to sequester a percentage of the CO₂ contained within products sold. Initially this could be small, say 10%, which would have little impact on UK pump prices, says Jenkins. It would also need to be applied during the import of fuel or other products, to level the field for all suppliers. If applied in the UK and Europe, this will require customers to gradually pay more for high-carbon products, with the additional cost earmarked for permanently storing CO₂ emissions.

‘You clearly have bad actors who never really care about the climate, but have been using this as a fig leaf, a delaying tactic,’ says Reiner.

While renewables have won the day in terms of decarbonising electricity supply, the merits of CCS for steel, chemicals and cement making have yet to be determined. According to Davies, ‘ammonia and fertiliser production are the low hanging fruit, because they emit almost a pure stream of CO₂, so capture costs can be very, very low.’ CCS Europe is focused on the hard to abate sectors, such as cement, where CO₂ is released as part of the chemical reaction, he says. Whether carbon capture can make a significant contribution to reducing carbon emissions overall, however, remains open to heated debate.