LONDON – A surge in markets that put a price on planet-warming emissions could make technology to capture and sequester carbon dioxide commercially viable after decades of false starts.
A report by the United Nation’s Intergovernmental Panel on Climate Change (IPCC) on Monday made clear the world would face catastrophic consequences if targets to limit climate change are missed.
Some experts say carbon capture and storage (CCS) technology is essential to meeting the goal of a net-zero economy by 2050 because behavioral change alone will be insufficient.
But environmental campaigners tend to be wary of CCS because industry can use it to justify the continued use of fossil fuels.
CCS transports carbon dioxide from where it is emitted and stores it, usually underground, to prevent its release into the atmosphere.
Although the technology has existed for decades, it has yet to be widely deployed because it was considered cost-prohibitive — until now.
This year, the price of producing carbon, which was far too cheap to deter many big emitters, has reached record highs.
On the most established carbon market, the European Union’s Emissions Trading System, pollution permits in July reached their highest level yet: nearly €60 ($70.33) a ton.
Many analysts say a European carbon price of around €100 is within reach by the end of this decade, tipping the balance in favor of CCS.
Another big economy, Canada, also faces a rise in carbon prices after the country’s supreme court in March gave the go-ahead for an increase to C$170 ($135.67) a ton by 2030, from C$30 now.
In order to meet goals set under the Paris Climate agreement and limit a rise in global temperatures to below 1.5 degrees Celsius, most plans require a vast increase in CCS.
For companies and countries that get it right, the opportunity is huge. The world would need to go from its current capacity of capturing 40 million tons of carbon dioxide a year to 7.6 billion tons a year in 2050 to realize the International Energy Agency’s net-zero scenario.
Apart from the increased interest because of rising carbon prices, greater deployment of CCS would lower costs and help to make it profitable because of economies of scale.
“Part of the reason so many people are now talking about CCS is the movement in the carbon price and higher tax costs,” said Syrie Crouch, VP of CCS at Shell, which has a target to capture and store 25 million tons of carbon dioxide a year by 2035.
Shell is involved in CCS projects in Europe, Canada and Australia.
IEA data finds the cost of capturing carbon dioxide, excluding transport and storage, ranges from $15 per ton at a natural gas processing plant to over $300 a ton at a direct air capture (DAC) plant, which sucks emissions out of the atmosphere and is the only negative-emission solution.
The cost variation depends on factors such as the concentration of carbon dioxide in the gas being captured.
Transport and storage costs also vary depending on what infrastructure exists, how far the carbon dioxide must be transported and the structure used for storage.
Total CCS costs are already starting to be manageable for some emitters, says Nick Cooper, CEO of project developer Storegga.
Storegga is leading development of the Acorn CCS project in Scotland, which aims to use existing oil and gas infrastructure to store 5 million to 10 million tons of carbon dioxide a year by 2030. Its partners are Shell and the oil and gas company Harbour Energy.
The majority of existing and developing CCS projects are at power plants or natural gas processing sites, but experts say more projects are needed to put CCS filters on smokestacks for industries such as steel and cement.
Large industrial companies such as HeidelbergCement, LafargeHolcim, ArcelorMittal and Nippon Steel are among those considering CCS to meet their climate targets.
“If you are an industry with high emissions, and you aren’t actively planning for how these emissions are going to be avoided or stored in the future, you are running the risk of stranding your assets, and that risk goes up the more that carbon prices go up,” says Mark Freshney, an energy analyst at Credit Suisse.
Chemicals giant Ineos hopes to eventually store around 1 million tons of carbon dioxide from its Scottish Grangemouth plant at the Acorn site, and in July signed a memorandum of understanding (MoU) with Storegga.
“Had it not been for that movement (in carbon prices) we wouldn’t be having this conversation on CCS. It has definitely led to a sea change,” says Colin Pritchard, Energy Business Manager at Grangemouth.
Ineos is also developing the Greensands CCS project off the coast of Denmark that it hopes could eventually store up to 8 million tons of carbon dioxide a year in depleted oil and gas fields.
The sudden eagerness, especially from oil companies that can use carbon dioxide to increase pressure in old fields to extract more fossil fuel — currently the most common use of CCS — leaves climate campaigners suspicious, even though they grasp the urgency of finding all possible solutions to controlling climate change.
“Putting carbon capture technology on greenhouse-gas-emitting facilities enables those facilities to continue operating, effectively providing those emitters with a licence to pollute indefinitely,” a group of over 500 international, U.S., and Canadian organizations said in an open letter to their policymakers in July.
At the same time, some existing projects have struggled with technical problems.
Australia’s A$3.1 billion ($2.3 billion) Gorgon CCS project, a joint venture including Chevron, Shell and ExxonMobil, was designed to store 4 million tons a year of carbon dioxide at a liquefied natural gas project.
Since the start of injecting carbon dioxide in August 2019, three years later than scheduled, it has injected a total of 5 million tons of carbon dioxide-equivalent.
“Like anything of this scale, there are technical challenges to overcome,” Shell’s Crouch said. Lessons from the project would be shared with the industry and governments and help future projects to progress, she said.
In the longer term, supporters of the technology say it will play an essential role in removing carbon dioxide from the atmosphere, rather than just capturing at the source, through methods such as direct air capture or bioenergy, derived from renewable biomass with carbon capture and storage (BECCs).
British power generator Drax is seeking to develop BECCs at its biomass units, which it said could make it the world’s first negative emissions power plant by 2027.
Drax CEO Will Gardiner said it would take the company an initial £2 billion ($2.8 billion) investment to build the plants capable of removing 8 to 9 million tons of carbon dioxide a year, with the CCS costing around £100 per ton.
“As carbon prices rise globally, and if we are going to achieve a 1.5-degree pathway, they will have to rise. This will be a very cost-effective way of taking carbon dioxide out of the atmosphere,” he said.
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