06 woodmac.

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Future energy: carbon capture & storage

Central to decarbonisation strategies

bold targets to become net-carbon neutral.

Governments, too, will head in that direction.
But how to get there? Carbon capture
and storage (CCS) is invariably central to
the strategy. I asked Ben Gallagher, lead
analyst on emerging technologies, about the
opportunity and the challenges.

What is CCS?
A method of removing the carbon dioxide (CO2) released in the processing or
combustion of hydrocarbons. CCS can be applied in power generation, natural-gas

There’s now a search underway to use the carbon or embed it in materials – what’s
called carbon capture utilisation and storage.

Why’s there so much interest in CCS?

Few think the global economy can thrive for the next few decades without coal, oil
and gas. The world will be emitting carbon for decades yet; the trick will be to capture
and store it. Commercial, scaled-up CCS means we can use fossil fuels while greatly
reducing CO2 emissions until energy consumption is fully decarbonised. It’s going to
be hugely important for hard-to-decarbonise sectors like cement and steel.
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How is CO2 captured?

There are four main processes, each with its own complexities. First, pre-combustion.
A gas mix of hydrogen and carbon monoxide (CO) is processed converting the CO into
CO2. The CO2 is then removed using solvents.

Second, post-combustion. Sulphur and nitrogen-based gases and any trace

solvents, releasing CO2.

Third, there’s oxy-combustion, where enriching the fuel-burning process with oxygen

a nascent technology that removes CO2 from the atmosphere. It’s very energy-
intensive but may play a part longer term.

How is the carbon stored?

pipeline. The Global CCS Institute reckons there’s almost 400 years’ worth of storage

climate targets. Geological stability is among the environmental criteria for this to
work. There are also long-shot contenders for storage – such as low-grade coal
seams and saline reservoirs.

Could the carbon be used?

Yes – to enhance oil and gas recovery, extending the economic life of a productive
reservoir. New concepts being considered include: embedding CO2 in concrete and
other building materials; purifying it for carbonation; transforming it into polyurethanes
for use in home furnishings and other materials; and turning it into food products.

What are the challenges?

The idea of CCS has been around for decades, but it still hasn’t really got off the

same, and a lot of technology is proprietary.

Instead we look at ‘cost of CO2 avoided’ – the carbon price that makes a project
economic. We estimate that a minimum carbon price of US$90/tonne is needed for
most applications, about three times today’s traded price in Europe. Costs do vary

to-decarbonise sectors like steel, it’s up to US$120/tonne; and cement

up to $194/tonne.

Costs need to come down. R&D will help, as will, in time, scale and a modular,

adequate return on equity.

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How much investment is needed?

Today, it’s a tiny part of the decarbonisation story – the 42 million metric tonnes of
installed capacity are capable of capturing just 1% of annual global emissions. Most
are attached to power plants. We think capacity will double by 2030. As the power
sector transitions to renewables, blue hydrogen production makes up an increasing
proportion of the CCS development pipeline.

If the world is to get onto a 2-degree pathway, we could need up to 4 billion tonnes
of capacity by 2050, 100 times what we have today. Exponential growth will require
exponential investment. That will only happen if the incentives are there – high
carbon prices, policy support or, most likely, both.

How will Big Oil invest in CCS?

and Equinor (Sleipner and Snovhit, Norway) have projects already in operation.

Second, injecting post-combustion CO2 to enhance oil recovery – Occidental is one

Thirdly, and a big growth opportunity, is to partner in high-emitting but hard-to-

decarbonise sectors. Total has teamed up with Lafarge and Svante in Canada to pilot
CO2 capture and reuse from Lafarge’s Richmond cement plant in British Columbia.

Global carbon emissions by scenario and CCS capacity to meet AET*-2, WoodMac’s 2-degree scenario

40000 ~3 °C warming trajectory 6,000

35000 ~2.5 °C
warming 5,000 DAC: Directed air capture
trajectory Sinks
Sink: Forestry projects
30000
4,000
Mt CO2-e

DAC
25000 ~2 °C
Mt

warming
trajectory 3,000
20000

15000 2,000
CCS

10000 1,000

5000
0
2025 2030 2035 2040 2045 2050
0
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050

*Accelerated Energy Transition (AET)

Source: Wood Mackenzie