Schneider Electric: How will Carbon Capture, Utilization and Storage (CCUS) contribute to the global temperature goal of 1.5°C?

Let’s get started: what is carbon capture, use and storage and how does it work?

Carbon Capture, Utilization and Storage (CCUS) consists of a series of technologies to capture carbon (usually in the form of CO2) emitted by various processes, to then be used or stored in an underground reservoir.

Carbon capture can be carried out as part of an industrial process, such as the production of hydrogen, ammonia or ethanol or the processing of natural gas. CO2 can also be separated from the exhaust gases of power stations, cement factories or steelworks; or even be separated from atmospheric air. This direct air capture process requires handling a large volume of air, because the natural concentration of CO2 is very low.

There are different technologies to achieve this real capture, based on a chemical or physical absorption mechanism, or based on membranes.

There is still a lot of R&D going on to refine these processes which, so far, are mainly relevant for large installations; there is not yet a carbon capture technology that can be deployed to each individual gasoline or diesel engine.

  • The use of CO2 today is mainly in the oil and gas industry (enhanced oil recovery (EOR)), in the food and beverage industry, as well as for the production of urea. But the necessary volumes are limited and already well covered.

  • Other potential uses include absorption by algae, conversion of fuels and chemicals, and mineralization of inorganic materials (eg adding a carbonate layer around aggregates used for concrete). Conversion to different fuel types will of course result in the same amount of CO2 being released, this time likely in smaller applications or engines without carbon capture capability.

  • The CO2 can be stored in a saline aquifer (but this option will compete with the storage of natural gas, such as for the winter or the establishment of strategic reserves). CO2 can also be stored in a depleted oil or gas field, where it is injected via a refurbished production well. The CO2 will migrate throughout the underground reservoir and mineralize over time, eliminating any chance of a leak in the far future.

  • A relevant area of ​​research in the coming years is to find economic applications for the use of captured CO2 in a variety of industries, outside of geological storage.

So, is CCUS the solution to global temperature rise?

The recent COP26 in Glasgow gave a major boost to the future growth prospects of CCUS projects. Due to the growing political consensus among major emitting countries at COP26, the adoption of the IEA’s net zero carbon emissions target by 2050[1] increased. It is widely recognized that the contribution of CCUS is an essential element in reaching the goal of net zero carbon by 2050. As a result, the offer of CCUS will face significant expansion in the years to come, as the show the following data.

Today, only about 40 Mtonnes/year of CO2 emissions are captured, or 0.1% of the 40 Gtonnes/year of global emissions from industry and energy. To stay in line with the IEA’s net zero carbon emissions target by 2050, capture capacities should be increased to 850 Mtonnes/year by 2025 and to around 8 GT/year by 2050 CCUS is therefore definitely a technology worth investigating, especially for hard-to-reduce processes and industries.

But there is a major prerequisite for the development of this CCUS technology.

CCUS add a cost to existing processes, this cost can vary from around $20/tonne in the processing of natural gas, to around $50/tonne in the production of blue hydrogen. It varies from $40 to $80/tonne for electricity production and can exceed $100/tonne for steel or cement production. The cost of direct air capture can be between $140-$300+.

Unlike other decarbonization measures such as electrification or energy efficiency which may have a reasonable return on investment and/or generate added value on the process, the growth of CCUS will depend on government incentives, regulations on sustainability and the development of the global carbon market.

To facilitate the development of CCUS projects, the United States uses the 4Q tax credit structure which provides capturing parties with a tax credit of $35/ton for CO2 used in EOR operations and $50/ tonne for the CO2 directly stored in the geological formation. Such incentives, for example, support the development of the “Green Pipeline” (Denbury Resources) that transports CO2 from Gulf Coast facilities, for injection into EOR fields in Los Angeles.

As an example of a functioning CO2 market in the first major global carbon market of the EU Emissions Trading System (EU ETS), EU ETS carbon prices have exceeded the threshold of €60/tonne at the end of 2021. Some analysts estimate that it is on track to reach €90/tonne by the end of the decade. These can create additional incentives for industries to reduce C02, especially as liquidity improves as well as prices. Investors are also increasingly pressuring publicly listed companies to have appropriate policies leading to C02 reduction – creating another strong incentive given the potential impact on their share price.

Recent advances on government incentives for CCUS at COP26

COP26 produced good news in this regard. More strongly supported by the United States, the Net Zero initiative announced significant financial and technological assistance to accelerate the implementation of CCUS; as well as other mitigation technologies in partner countries from now in 2022. This new initiative aims to accelerate the decarbonization of the global energy system. It will help partner countries achieve net zero in their energy systems. It will develop technical roadmaps, then fund technical assistance and capacity building, including access to expert assistance in the United States, particularly from national laboratories and financial support to national technical institutions .[2]

Additionally, at COP26, the US Department of Energy (DOE) launched two initiatives aimed at catalyzing the growth of a global carbon dioxide removal (CDR) industry; including CCUS, but also storage, enhanced mineralization, direct air capture, among others. The aim is to stimulate the removal and sustainable storage of gigatonnes of CO2 for less than $100/t this decade. This is the first major US government effort in CDR innovation, with a “whole of government” approach. It aims to catalyze a global CDR industry by increasing R&D, harmonizing LCAs and techno-economic analyses, and facilitating pilot testing, to reach 100 million tons of CO2 per year by 2030.[3] Cooperation on CCUS was also specifically mentioned in a joint agreement between the United States and China during the COP.

Large private companies that are already implementing CCUS projects also lobbied at COP26 to increase public and private funding for CCUS technologies, including government policies and public investments to scale up the deployment of CCUS projects.[4]

CCUS Criteria for Success in the Wake of the Energy Crisis

Another condition for the success of the CCUS, in addition to national (and probably regional) incentives and regulations, will be the creation of an ecosystem, or hub, or cluster, as already highlighted by the most mature projects. Such a hub will need one or more CO2 “supplier(s)”, but also a network of pipelines, a depleted oil or gas field, the right injection facility, and monitoring in the complete system time, including CO2 inside the tank.

This implies the need for CCUS clusters to be located close to a depleted oil and gas reservoir and will also require the appropriate pipeline infrastructure to collect the CO2 and inject it into the reservoirs.

There are such potential locations around the North Sea or in Texas (Permian Basin/Houston/LA region), where some of the initial projects took root – some led by large oil and gas (now energy) companies, but the countries lack Korea or Japan does not have access to such training.

Those countries without such training and inherited oil and gas infrastructure are exploring either carbon capture as a solid powder (not as CO2) or various utilization options, making carbon capture an integral part of the design of industrial installations.

Finally, there is another often overlooked condition for the success of CCUS projects.

We are talking about large installations, adding around 10% cost and “hardware” to an already large process like power generation or a steel or cement plant. There is little experience with carbon capture processes on an industrial scale. Developers and EPCs must ensure the right design, define the right power and process architectures, optimize operations and maintenance. Security and cybersecurity should not be neglected either.

Building the pipeline infrastructure needed to collect/transport and inject the CO2 into the reservoirs can represent up to 20-30% of a CCUS project. Such infrastructure must be used by industries that capture CO2.

Some oil and gas companies have historical experience in the safe and reliable transport of CO2 and are becoming major players by partnering with industry to meet transport needs, either by repurposing existing infrastructure and/or building new ones. news.

Building CCUS assets and ecosystems, depending on government subsidies and regulations, will require the industry to also develop partnerships with the right automation, energy and software technology providers who can support them in this journey to repurpose or develop the new infrastructure and ensure that they are managed and operated using the appropriate technology.

Stay involved in the discussion – read the latest articles where we discuss climate goals and energy management considerations for the oil and gas industry.

Contributors: Jean Acquatella PHD Environmental Policy

[1] COP 26 refers to the 26and Conference of the Parties to the United Nations Climate Change Convention (UNFCCC) recently held in Glasgow, UK




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