3 Key Challenges for CCUS

As world leaders and regulators step up the fight against climate change, the large-scale deployment of carbon capture, utilization, and storage (CCUS) is an important technology that allows for rapid decarbonization of existing energy systems.

While CCUS technologies have been around for decades it was, until recently, considered uneconomic. But the technologies - which capture and store carbon released during power generation or other industrial processes – are now being seen as an important tool in the fight to reduce carbon emissions.

Some environmentalists are opposed to the widespread deployment of CCUS as they believe it detracts from investing in alternative energy sources and maintains fossil fuel dependence.

However, others believe that if the world is to meet its carbon reduction goals in the short term, all solutions must be on the table. According to the IEA, the world got more than 80% of its energy supply from fossil fuels (natural gas, coal, oil) in 2019. Fossil fuels are, and will continue to be, an essential part of our energy systems for the foreseeable future.

As Charles McConnell, Executive Director, Carbon Management and Energy Sustainability at the University of Houston told Oil and Gas IQ recently in an interview, carbon capture is critical to helping the world meet its climate goals.

“We need to keep our eye on the ball,” he says. “Our goal is not to eliminate fuels and technologies. Our goal is to eliminate emissions.”

The IEA says that the world needs to dramatically increase investment in CCUS. It forecasts that the world will need 1.7 billion tonnes of C02 capture capacity by 2030 but the current pipeline of CCUS projects will fall well short of delivering this.

So just what are the challenges that need to be overcome to increase capacity in line with net zero emission goals?

At our recent “Decarbonizing Oil and Gas” conference in Houston, leading experts shared their views on the task ahead.

Challenge #1: Economics

The cost to capture and store post combustion emissions is very high, even though the technology has been around for a long time. Government support to tip the economics in favor of CCUS is critical to promoting the use and deployment of CCUS.

In the United States, the Biden administration has included more than $12 billion in CCUS investments as a key component of its bipartisan infrastructure bill. The Build Back Better bill proposes increasing the 45Q tax credit (which gives polluting companies tax credits for carbon that is captured and stored) from $50/metric ton to $85/metric ton carbon. Many see this the economic tipping point that would allow for a wider variety of emissions to be captured and stored.

Matthew Bright, Policy Manager, Carbon Capture at Clean Air Task Force says that tax credits such as 45Q have already made a real difference to the deployment of CCUS.  

“We’ve already seen the effect of just raising it to $50. Carbon capture is in a great place right now,” he says.

He says that if the Build Back Better bill becomes law and raises the 45Q to $85/metric ton, it will support a flurry of new CCUS projects.

That’s something that resonates with Ash Shepherd, Director of Business Development Carbon Capture Storage and Utilization at Talos Energy. Talos is an offshore exploration and production company that has pivoted into developing carbon capture and storage as part of its offering.

Shepherd says that oil and gas companies are ideally placed to develop CCUS technologies, but you need to figure out how to optimize the whole value chain to make it an attractive business proposition due to the high costs.

Challenge #2: Long permitting process  

It can take as long as 5-6 years to get Class VI permitting for underground sequestration through the EPA, says Clean Air Task Force’s Mathew Bright. That’s challenging for investors as it’s an incredibly long-term horizon.

Talos Energy’s Ash Shepherd says that they’ve seen an average application process time of 4 years. But that’s with the EPA only processing a small handful of projects nationwide now.

“What’s going to happen when that increases exponentially?” he asks.

Regulators need to take a hard look at how they can reduce red tape to speed up permitting for CCUS projects.

Challenge #3: The chicken and egg problem of infrastructure

New infrastructure needs to be developed to support the nascent CCUS industry. For instance, many of the industrial sites where where carbon capture will be to be used is not at geologically optimal locations for storage. Common infrastructure, such as pipelines, will be needed to transport captured carbon from industrial sites to storage facilities. Who will build and operate these pipelines?

Similarly, there is an investment challenge. Who would build and operate pipelines until there are potential customers? But how can customers capture and store their carbon emissions if there is no way to get their emissions from their site to a storage facility?  

The solution will require industry partnerships and collaboration on a broad scale. The Biden administration is working to create a clear set of guidelines to direct the deployment of CCUS as part of its Build Back Better agenda.

Despite these challenges, the future for CCUS technology looks bright as humanity seeks solutions that rapidly and effectively reduce the amount of carbon that we are pumping into the atmosphere.

Interested in learning more about this topic? 

If you’re tasked with reducing emissions in your operations, join us at Decarbonizing America's Industrial Sector, taking place at the Palm Springs Convention Center September 13-15, 2022.

Find out how you can build an actionable emissions reduction road map that links decarbonization to strategy, identify where efficiency gains can be made, factor emissions reduction into operational planning and build a culture focused on decarbonization.  Find out more about the event here.