The surge in interest and initiatives in carbon capture, utilization, and storage (CCUS) is remarkable, yet the translation of aspirations into tangible action lags behind, according to a recent report by the International Energy Agency (IEA).
Despite the announcement of over 400 new CCUS projects globally in the last three years across 45 countries, the IEA’s fresh toolkit delineates the policies required to realize these ambitions.
The report, titled CCUS Policies and Business Models – Building a Commercial Market, highlights the emergence of novel business models in the CCUS sector, spurred by the entry of new market players.
This transformative shift is reshaping the landscape for future CCUS projects, offering potential investment opportunities.
However, obstacles persist in realizing CCUS’s potential to contribute significantly to global net-zero emissions, as outlined in the IEA’s Net Zero Roadmap.
The next decade is pivotal for CCUS deployment to align with the ambitious goal of achieving net-zero emissions in the global energy sector by mid-century.
The upcoming COP28 climate conference provides a platform not just for governments to elevate CCUS ambitions but also for the oil and gas industry to demonstrate a genuine commitment to emissions reduction, the IEA said, highlighting CCUS as a potential focal point in these discussions.
The report underscores that prevailing CCUS policies, primarily aimed at cost reduction, have steered early projects toward low-cost applications.
To foster broader deployment, governments worldwide are adopting varied policy approaches, learning from experiences in other energy system domains to adapt to evolving business models.
Historically, the oil and gas industry has championed full-chain CCUS business models; however, the focus on using captured CO2 for enhanced oil recovery needs to transition to dedicated CO2 storage, the IEA cautioned.
A shift is observed with the rise of “part-chain” business models, involving specialized entities handling distinct phases of the CCUS value chain.
While the oil and gas sector retains influence, the entry of specialized players enhances access to expertise, infrastructure, and innovation, contributing to cost reduction.
Innovation is imperative for CCUS projects, especially as around three-quarters of the envisaged capture capacity by 2050, per the IEA’s Net Zero Roadmap, relies on technologies still in the demonstration or prototype stage.
The report identifies the need to address high energy use and costs in CCUS applications compared to unabated technologies.
Although new business models can mitigate challenges, they introduce complexities, necessitating coordinated government efforts across the value chain.
Therefore, the IEA’s report and policy toolkit are aimed at guiding governments in fostering conditions conducive to long-term private investment in CCUS, tackling economic, lead time, innovation, and complexity challenges hindering widespread deployment.