The global carbon capture, utilization and storage (CCUS) market is on the verge of a significant expansion, with a projected 50% surge in announced capacity by 2025, according to the 2023 CCUS market outlook by research organization BloombergNEF (BNEF), announced last week.
The industry is set to capture 420 million metric tons per annum (Mtpa) by 2034, propelled primarily by robust global policy support.
While historically centered on natural gas processing facilities, the market is swiftly diversifying into challenging sectors such as cement, iron and steel, and power.
Investments in carbon capture, transport, and storage infrastructure reached US$6.4 billion in 2022, and this year’s investments are anticipated to hit US$5 billion.
The industry has witnessed the announcement of over 140 million Mtpa of new capture capacity since 2022, with a projected compound annual growth rate of 18% leading to the 2035 target, constituting 1.1% of current global annual emissions.
Key sectors driving this expansion are ammonia or hydrogen production and power generation, expected to account for 33% of announced capture capacity.
Notably, proposed carbon capture capacity for the cement sector has seen a remarkable 175% increase compared to the previous outlook.
According to BNEF, the US is poised to maintain its market leadership with a 40% share in 2035, followed by the UK and Canada at 16% and 12%, respectively.
Challenges loom, particularly in transport and storage capacity, identified as a potential bottleneck for carbon capture deployment.
Despite efforts by governments and the private sector to commercialize these assets, policies such as the EU’s Net Zero Industry Act may not fully address the high costs associated with storage.
This is exacerbated by recent denials of transport and storage permits in the US.
Mergers and acquisitions have emerged as a strategic trend among oil majors, exemplified by the acquisition of CCUS company Denbury (NYSE: DEN) by ExxonMobil (NYSE: XOM) and that of direct air capture (DAC) company Carbon Engineering by Occidental (NYSE: OXY), known as Oxy.
Capture costs vary across industries, ranging from US$20 to US$28 per ton of carbon dioxide (CO2) for certain sectors, while total costs for transport and storage can escalate to US$92-US$130 per ton of CO2.
Notably, hard-to-abate industries are increasingly adopting carbon capture, driven by rising carbon prices and incentives, making it a financially viable solution.
The full report is available to BNEF clients here.