Why Does CCS Matter?

Carbon capture and storage (CCS) technologies have seen a slow evolution over the years, but they continue to be viewed as essential to mitigating climate change.

According to the International Energy Agency (IEA), CCS can catch 95 percent of the emissions that result from the combustion of carbon-based fossil fuels – coal, oil, and natural gas – in power generation and industrial processes. However, that IEA’s own World Energy Outlook 2020 “Stated Policies“ scenario shows fossil fuels still supplying more than 70 percent of the world’s energy in 2040 – versus five percent for wind and solar combined.

Even in the best-case forecast for renewables (“Sustainable Development”), fossil fuels meet almost 55 percent of the world’s energy needs in 2040 – triple the contribution of wind and solar. In addition, the U.S. Department of Agriculture projects that, by 2050, the world is set to add another $80 trillion in real GDP and more than 2 billion in population – a steady drumbeat of “more” that could easily benefit all sources of energy, including fossil fuels. 

Generally less expensive and more reliable, fossil fuels are especially attractive for the still-developing countries (non-OECD), where a growing 85 percent of the world lives. Beyond even climate worries, the United Nations has made clear that eradicating poverty is the “highest priority” and an “‘overriding issue.’” As an abundant domestic resource, coal overwhelmingly supplies 60 percent and 45 percent of the energy used in China and India, respectively. The European Climate Foundation-funded Carbon Brief is quietly tracking 500,000 megawatts of new coal power capacity in the works, or nearly a 25 percent expansion of the current global fleet. Many of these state-of-the-art facilities are designed to stay online for many decades.

As rightfully pointed out by some wind and solar groups, however, there is no question that higher costs remain a significant barrier for CCS. One way to help is to incorporate “utilization” to turn CCS into “CCUS,” making captured CO2 a product to open up revenue streams. For example, CO2-EOR, a tertiary oil recovery operation where injected CO2 helps lower the viscosity of crude left in a reservoir after primary and secondary operations, could even potentially yield “carbon negative” oil. Potentially a multi-trillion dollar business, there is a growing list of other ways for using captured CO2 as a product to help reduce the overall costs of carbon capture, such as in the steel and cement industries.

The Global CCS Institute reports on about 65 “‘commercial’” large-scale facilities, with nearly 25 of those in operation. As is commonly assumed for wind (especially offshore) and solar projects, CCS costs will continue to decline as the build-out and learning-by-doing extends. A 2018 study from the Imperial College London concludes that “in the long-term, CCS is found to be very cost effective when compared with other mitigation options.”

A real chance at de-carbonization includes a suite of solutions, where CCS combines with renewables, hydrogen, small nuclear, carbon extraction, demand response, and a variety of other still-evolving technologies. In the U.S. especially, CCS might just be the bipartisan starting point to bring Republicans and Democrats together on climate policy, particularly in the R&D space. The oil and gas business is also onboard to promote its sustainability and regain favor with lenders. Chevron, for instance, has invested $1.1 billion in CCUS projects. The IEA has consistently stated the case bluntly: “CCS must be deployed to make deep cuts in CO2 emissions.” If not, the world’s CO2 mitigation costs for power generation alone would jump by an additional $2 trillion by 2050, asserts the Global CCS Institute.

Not to say that any of this will be easy: the Global CCS Institute argues that goals for net-zero emissions require a hundredfold expansion of CCS capacity by 2050. Morgan Stanley concludes that the potential of CCS in meeting the Paris Agreement on climate would require capital investment of approximately $2.5 trillion by 2050. Possible approaches to make CCS attractive to investors long-term have included government policies that incentivize emission cuts and put a price or credit on emissions avoided and stored.