Population growth is rapidly increasing energy consumption. It is predicted that by 2040 the energy demand will rise up to 30%. This rapid increase in demand poses a challenge in the context of climate change. As such, world leaders have agreed under the Paris Agreement to reduce their CO2 emissions and to move their energy production towards more sustainable solutions like wind or solar energy. However, abrupt changes to production methods are highly unlikely. As a result, technology solutions like Carbon Capture and Storage (CCS) technologies are essential for this transitional period. According to the latest IPCC report, the Paris Agreement targets cannot be reached without CCS technology.
What are CCS technologies?
CCS technologies refer to the methods developed to capture the CO2 produced by the coal and fossil fuel industry during the production of heat or electricity and its subsequent storage in different geological regions to avoid its release in the atmosphere.
There are three types of carbon capture commonly used for commercial purposes:
Post-combustion capture by separation of CO2 from the products of combustion,
Pre-combustion capture by de-carbonation of the fuel prior to combustion
Oxyfuel combustion by re-engineering the combustion process to produce CO2 as a pure combustion product.
The most promising technique is the post-combustion capture, as it can be easily retrofitted to existing units.
CCS technologies have been working safely and effectively for over 40 years. Currently, there are 18 large-scale facilities in commercial operation around the world. The technology is in use across a variety of industrial and power applications. The International Energy Agency (IEA) has highlighted that as much as 350 Mt of CO2 should be captured annually in 2030 through CCS technologies, to meet the “sustainable development scenario” target of 7.72 Gt of CO2 emissions in the power sector.
A stronger policy environment is required for a broader adoption of CCS technologies
CCS technologies are predicted to play a major role in decarbonising the industrial sector in the context of 1.5°C and 2°C pathways, especially in industries with higher process emissions, such as steel and cement.
However, several uncertainties surrounding the technology are causing delays in its commercial establishment. Governments have, overall, failed to implement policies that support a business case for investment in CCS technology and deliver the policy confidence required to mobilise private capital. Improved policies will attract long-term capital investments, resulting in a virtuous cycle of investment and cost reduction.
Five nations have relatively advanced regulatory frameworks regarding CCS: The United States, Canada, the United Kingdom, Australia, and Denmark. Yet, most countries have not seen any significant change to their models in the past years, indicating that further opportunities to improve domestic frameworks may have been overlooked and remain low-priority activities.
The US, where most CCS plants are located, have seen some of the most interesting policy changes recently. Carbon reductions from carbon capture technologies are now allowed to participate in its low-carbon fuels market. Furthermore, a protocol on CCS including strict regulation was put in place, creating favourable conditions for CCS to participate in the cap-and-trade market. In addition, the 45Q amendments, which introduce a tax credit for carbon storage, pave the way for attractive investments in CCS for investors and companies.
Following the example of the US, governments are required to take effective action introducing measures such as tangible carbon value, economy-wide emission reduction targets and sector-specific emission reduction targets. Such measures will provide a signal to investors that investments in CCS are an intended consequence of policies, not an accidental outcome.
In an unequal race of world economies to achieve a low carbon energy supply, the decarbonization of fossil fuel technologies seems inevitable. Current and future CCS technologies seem to offer part of the solution but should be backed up by policies and frameworks to attract investors’ support, in an effort to secure our sustainable future.