The world is at a tipping point regarding the transition towards clean energy. With global temperatures likely to reach 1.5 degrees warming above pre-industrial levels by the early 2030s, according to the latest IPCC report, there has never been a more pressing need for carbon capture and storage (CCS) technologies to remove as much emissions as possible.
One thing that is driving the momentum of carbon capture is rising carbon pricing. Prices for releasing carbon into the atmosphere have almost doubled in Europe in the past year, reaching €55 for a ton of CO2. According to the Bank of America Corp., carbon prices could reach €100 as soon as 2025.
“A carbon price of €100 obviously changes the game,” said Simon Virley, vice-chairman and head of energy at KPMG LLP and a former UK government official responsible for carbon capture.
What Would It Mean If Carbon Capture And Storage Cost Meet The Price Of Carbon?
Prices of buying permits equaling or exceeding the cost of capturing and storing carbon would mean it’s more economical for companies to capture their emissions instead of paying for releasing them into the atmosphere. Right now carbon capture technology costs as much as $120 a ton in cement production and power generation, according to the IEA – still some way to go to reach parity with carbon prices.
Another thing that is driving the adoption of carbon capture and storage is the business opportunity it provides. Credit Suisse Group AG forecasts that the market for this technology could reach $2 trillion if used to cut pollution from heavy industry.
Exxon – one of the biggest oil and gas companies in the world and heavy polluters, also predict carbon capture to be a $2 trillion market by 2040 and is investing extensively into CCS projects. It even proposed a $100 billion CCS hub to be built in Houston – an area of a large concentration of carbon-emitting industry players.
Large carbon capture hubs and projects are also being developed in the US, Australia, the UK, Norway, Netherlands and Canada. The Dutch government announced a spending of $2.5 billion for the first large-scale carbon capture and storage project on the continent. Norway is investing $1.9 billion and the UK – $1.4 billion over the next decade to create four carbon capture hubs.
The large-scale adoption of CCS is driving up the technology and bringing costs down. Rising carbon pricing is also supporting its widespread utilization and if it reaches €100 by 2025 that could see another wave of carbon capture investment worldwide.