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Carbon capture’s crucial decade

  • Article

Technology can help world achieve net-zero emissions, but companies must be attracted

Carbon capture and sequestration is one of the few technological options for deep decarbonisation in emissions-intensive sectors such as cement, steel and iron. But while some large-scale plants have been operating for over 20 years, its adoption pales in comparison to wind and solar and it currently lacks the market and corporate optimism surrounding ‘green’ hydrogen as a future energy source.

However, as the world increasingly targets net-zero emissions goals, interest in carbon capture is rising, with Europe emerging as a potential future global carbon-capture player. It offers a potential 90% reduction in CO2 from carbon-intensive processes and can be deployed quite quickly, unlike forests, which take much longer to sequester CO2.

Captured CO2 can be a key input in producing low-carbon synthetic fuels for long distance transport, including synthetic kerosene for aviation.

That said, carbon capture isn’t a cost-effective solution for all types of emissions: renewables, energy efficiency or hydrogen can be better trade-offs. The costs of carbon capture should fall as the technology is more broadly deployed, but the whole carbon capture and sequestration value chain also often requires bulky infrastructure.

The $4.5bn invested in carbon capture last year is small in the overall energy transition. Meeting global climate ambitions by 2050 could require constructing a 1m-tonne a year CO2 capture plant every other day for the next 30 years – whereas only one or two are currently being built each year.

New carbon-capture plants can cost hundreds of billions of dollars and attracting private capital has been a struggle: corporate investment often relies on direct policy support or government involvement.

Carbon capture has also suffered from image issues, including whether it should be given priority for funding over ‘greener’ alternatives, whether it is a way to continue long-term fossil-fuel use, and its cost-effectiveness. To highlight the slow pace of adoption, the International Energy Agency set a target in 2009 of developing 100 large-scale projects by 2020 to store around 300m tonnes of CO2 a year, but actual global capacity today is still only around 13% of that.

And despite the current renewed interest, there is a danger of that the previous ‘lost decade’ could be repeated.

Unless the technology gains a solid foothold in coming years, it risks stagnating and potentially being overlooked in the race towards decarbonisation. Without meaningful progress in the 2020s, it could be difficult for carbon capture and sequestration to scale up in future decades – when it might be needed.

Policy support will be crucial for generating the investment and momentum that is central to the industry delivering cost reductions and establishing a credible track record. By the end of this decade, carbon capture needs to be at a point where it can start tapping into private capital with a market structure that suitably rewards investment.

In a scenario where carbon capture does not successfully build on the current project pipeline and is deployed only in certain countries or in niche industrial applications, we estimate global capture capacity could be about 350m tonnes of CO2 a year by mid-century. However, with a conviction to act and following up net-zero ambitions with policies and funds, we think 2050 carbon capture capacity could be closer to 1 billion tonnes CO2 a year.

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