Can CCS infra be affordable but not a burden?
Carbon capture and storage (CCS) infrastructure must be as affordable as possible without becoming a burden, a U.S. government official told Gas Outlook.
Carbon capture and storage (CCS) infrastructure must be as affordable as possible without becoming a burden on communities that have been affected by the extraction of fossil fuels in the past, a U.S. government official told Gas Outlook.
“As we strive to meet our net-zero goals, and to put as many renewables on the grid as possible, we will still have sources of carbon dioxide that will require carbon capture,” said Dr. Shuchi Talati, Chief of Staff at the U.S. Department of Energy’s Office of Fossil Energy and Carbon Management.
“We are dedicated to making sure this CCS infrastructure is as affordable as possible while also deploying it responsibly,” she noted.
Talati stressed that the U.S. government is keen to avoid placing the burden on “communities who have faced issues from the fossil fuel sector in the past,” adding that burden denotes the pollution and public health impact of fossil fuel extraction and combustion in frontline communities.
“We’re focused on ensuring that sustainability and justice are core to how we think through CCS deployment. And we must invest in demonstrations on natural gas and industrial plants, which has not been done before,” Talati said.
The United States has a goal of achieving a carbon free economy by 2050, according to the U.S. Department of Energy (DOE).
Under the Bipartisan Infrastructure Law, passed last month, the DOE plans to deploy approximately US$10 billion in new direct carbon management funding over the next five years for several research, development, demonstration, and deployment areas, said Talati.
As a part of that law, the DOE will deploy around $6.5 billion in new carbon management funding over five years, largely for Direct Air Capture (DAC) and carbon dioxide storage. That includes the deployment of an additional $11.5 billion of related DOE activities on carbon capture pilots and demonstrations, along with hydrogen hubs.
In addition, for the 2022-26 period, the DOE has allocated $3.5 billion to lead development of four DAC hubs.
These hubs, which will each have the capacity to capture and store and/or utilize one million metric tons of carbon dioxide (CO2) per year, will be structured as DAC project networks that include potential CO2 off-takers, transportation infrastructure and storage infrastructure.
The hubs will be selected based on geographic diversity, scalability, jobs, costs and other considerations to advance just and sustainable carbon dioxide removal, according to the DOE.
Sharing the cost burden
CCS is a way of reducing carbon emissions, to help tackle global warming, involving the capture of CO2 emissions from industrial processes, such as steel and cement production, or from the burning of fossil fuels in power generation. This carbon is then transported from where it was produced, via ship or pipeline, and stored deep underground in geological formations.
Dr Bassam Fattouh, the Director of The Oxford Institute for Energy Studies, in his paper entitled CCS: The perspective of oil and gas producing countries, published in June, argued that CCS could play a central role in oil and gas exporters’ low-emissions strategies, enabling them to continue monetising reserves and retaining the competitiveness of their oil and gas sectors, while meeting climate goals.
According to Fattouh, given the international nature of the oil and gas business, it is imperative that policies and mechanisms are put in place to generate revenues for CCS deployment that would offset part of the associated costs.
“The common global goal of avoiding the dangerous impacts of climate change means that the cost of CCS should be shared between producers and end users, rather than be focused on one or the other resulting in, probably, sub-optimal deployment of the technology,” he said in a podcast broadcast in September.
A key role here falls to the Paris Agreement which offers many opportunities for collaboration either through bilateral or multilateral initiatives including the creation of clubs with common interests, he said.
While several countries are taking steps to incentivise and fund, capture, store, and transport carbon emissions, some are critical of CCU deployments, saying they are not being deployed on a large-enough scale.
“To date, many CCU deployments have been approached from a project developers’ perspective, meaning they can often be ‘flagship’ or one-off projects. To keep global warming within 1.5 degrees, carbon capture, utilisation and storage (CCUS) needs to take place across industries at scale,” said Asam Rafi, Vice President of Global Sales at Carbon Clean, a UK-based CO2 capture technology and services firm.
He said there is a need to decarbonise ecosystems across geographies and that they are underpinned by legislation, business action, and infrastructure developments.
“Major businesses should support the development of end-to-end CCUS, covering the initial capturing of CO2 through permanent storage or utilisation. This can be done through-large scale operations, such as Equinor’s Northern Lights project. Finally, we need a cross-sector commitment to expanding CCUS infrastructure, comprised of heavy-industry players, technology providers and infrastructure developers,” he added.
According to the Paris-based International Energy Agency’s Energy Technology Perspectives 2020 report, of the 35 Mt CO2 captured today from industrial activities in large-scale CCUS facilities, nearly 80% is captured from oil and gas operations.
Reflecting CCUs in offsets
Overall, market participants said reflecting CCUS in offsets can allow and incentivise companies to mobilise them.
Rafi said: “Reflecting CCUS in offsets can allow and incentivise companies to employ a variety of activities to produce these offsets – including the capturing and storage of carbon that would otherwise be emitted into the atmosphere.”
Meanwhile, Paul Verrill, director of the UK-based energy consultancy Enappsys, said: “An effective global carbon market that delivers a meaningful carbon price will support the development of CCS/CCU projects in countries that otherwise will build unabated technology, as in normal carbon emitting power stations.”
Verill emphasised that if developing countries cannot benefit commercially from the additional capital expenditure of sequestration or abatement of carbon, then those countries won’t invest in it.
“For example, why build a CCS/CCU coal plant in a developing country if you receive no commercial benefit from the carbon reduction and the government does not mandate that you have to do it,” he said.