2022 saw the largest number of carbon capture project announcements in history. A total of 66 projects were announced according to decarbonization intelligence company Decarbonfuse.
Multiple carbon hubs are appearing across the region with projects clustering together around the largest emitter locations and sequestration sites are. The Midwest is seeing partnerships to capture CO2 from ethanol plants. The Gulf Coast now has multiple joint ventures that cover the entire process – from capture to transportation and sequestration.
Relevant: DOE Rolls Out $2.5 Billion Program To Scale Carbon Capture
“We anticipate 2023 spending to reach $13 Billion in carbon capture. The players in the market are working through the financial and operational risks associated with the carbon capture projects. Not every single project will move forward but there is significant momentum to demonstrate the economic, environmental, and social results to the investors” said Todd Bush, Managing Director at Decarbonfuse.
30% of the projects announced last year are for carbon storage hubs. Decarbonfuse estimate that they will require $33 billion to develop new sites and install carbon capture tech on existing plants.
The growth in the sector in the United States is attributed to the Inflation Reduction Act, which substantially increased 45Q tax credit amounts for a range CO2 capturing approaches – direct air capture, CO2 sequestration, and enhanced oil recovery. The last one is particularly important as it directly incentivizes the oil and gas industry to act on its emissions.
Canada is also seeing growth signs in the industry. Its carbon tax is having an impact on the decisions of the oil & gas industry on their emissions and the deployment of carbon capture. The tax is currently CA$65 per ton of emitted CO2 and will gradually rise to CA$170 in 2030.
According to the Decarbonfuse ProjectDB, there are now 155 active carbon capture projects in the U.S. and Canada, a number that is very likely to grow in the coming years, especially if a recent proposal for increasing the 45Q credit is enacted.
Read more: Bipartisan Carbon Capture Parity Act Proposes Tax Credit Increase