The planned capacity of carbon capture, utilization and storage (CCUS) globally totals 905 million tonnes per annum, with over 50 new projects set forth this quarter. The data comes from Wood Mackenzie’s CCUS Market Update for Q2 2022 report.
“Despite continued momentum in the CCUS pipeline, much more progress is required to meet 2050 greenhouse gas targets,” said Lucy King, Senior Research Analyst and author of the report. “Currently, the CCUS capacity pipeline is close to aligning with Wood Mackenzie’s 1.5-degree pathway to 2030, but it will need to grow seven-fold by 2050 to reach the capacity required for net zero.”
King said the biggest challenge ahead is the lack of embedded policy and regulation for CCUS projects. According to her, in many cases, the rate of growth and demand for CCUS is larger than a government’s legislative abilities. Yet, she said, 2022 is expected to be a crucial year for the technology, “with many countries formulating strategies, policies, and regulations to support its deployment.”
The U.S. is a global CCUS leader, and in 2008 the country launched a 45Q tax credit incentive for carbon sequestration. Last month, President Joe Biden signed the Inflation Reduction Act (IRA) to further extend the 45Q tax incentive.
Currently, the U.S. planned CCUS capacity is nearly 250 million tonnes per annum. IRA will accelerate this capacity, give incentives to smaller-scale carbon capture projects, and promote investment in technology such as Direct Air Capture.
Licensing in geological CO2 storage in the second quarter of 2022 has also seen progress. Licensing activity increased in Norway, Russia, and Australia and the UK initiated its first CO2 storage licensing round that includes 13 North Sea areas.
The study identifies Noth America and Europe as hotspots for carbon capture, utilization and storage, with North America currently holding more than two-thirds of the global capacity.
North America’s share of CCUS is expected to decrease by 2030 as Europe scales up on the technology. The forecast for the 2040s is that China and Southeast Asia will see an increasing demand for CCUS, but more regulations and policies are needed in the region, the research concluded.