The recent Green House Gas Technologies Summit (GHGT), the biggest global event on carbon capture, was a good place to reflect on a technology that perhaps has the biggest gap between the aspiration of energy models and the investment reality on the ground, between the disappointments of the past decade and a gathering new wave of optimism.
In some circles, it is fashionable to write down this technology, carbon capture, utilisation and storage (CCUS). For some, CCUS is everything that needs to be left behind in the clean-energy transitions: big centralized facilities based on chemistry and mechanical engineering rather than big data, ongoing investments by large conventional energy companies that should be going the way of dinosaurs, and the continuous use of fossil fuels.
Some scepticism is understandable. The first IEA CCS roadmap, from 2009, makes for sobering reading. Consistent with the Group of 8 commitments adopted a year earlier, the report expected CCS projects totalling 22 GW in power generation and 170 million tons in industry by 2020 With a year to go, the current status for CCS falls well short of these goals: only 0.4 GW in power and around 32 million tons in industry.
But we should not dismiss this technology – in fact, CCUS is going to be critical to the global clean energy transitions, and why the IEA held a major CCUS Summit, with the UK Government, on 28 November in Edinburgh bringing governments and industry together to give the technology a new start.
Theoretically it is possible to achieve climate goals without CCUS. The recently published IPCC report has a pathway (P1) that arrives at climate stabilization without CCS by emphasising restraints on energy demand. However, this pathway entails energy demand declining to an extent which as the IPCC righty emphasised would be unprecedented. For example, the average annual decline of oil demand from today till 2030 in this scenario would be twice as large as the decline triggered in 2008/2009 by a combination of USD $140 per barrel and the global financial crisis.
A robust energy efficiency effort is certainly the first pillar of any serious climate policy and it is very much incorporated into the IEA’s analysis. For example in our Energy Technology Perspectives a high speed train network replaces a third of domestic aviation in the United States by mid-century. Even with such assumptions, the decline in oil demand is much slower than what the IPCC scenario described above would demand. It would be highly desirable to achieve this without a recession by global cooperation and bottom up, voluntary lifestyle changes. Nevertheless, ancient Greek dramas are so enjoyable today precisely because there has been much less change in human nature than in our technological capability. We better have technological solutions ready for the eventuality that human nature remains unchanged for another 20 years. The other IPCC pathways, which don’t have such demand restraint, have large scale application of carbon capture to deal with ongoing fossil fuel consumption, and eventually remove carbon from the air.
At this stage it is also useful to dispel some misunderstandings. Carbon capture is not an alternative to wind and solar deployment and should not stop reallocating investment from fossil fuels to clean energy. A credible climate stabilization pathway like the IEA’s Sustainable Development Scenario has an amazing scale up of wind and solar as the backbone of the transition, deployment way above the current investment activity that will stretch the limits for mobilizing investment and require major changes in electricity network.
Likewise, CCUS is not a pretext to stop investment reallocation. From a financial point of view the largest fossil fuel asset by far is oil upstream, which is intimately connected to transport, a sector where, due to dispersed and mobile emission sources, CCUS will not play any meaningful role. The largest application of CCUS is likely to be on coal whose upstream has an order of magnitude smaller financial valuation.
And even for coal, as one compares a “business as usual” trajectory with the Sustainable Development Scenario, around 85% of the reduction in coal plant emissions came from efficiency and renewables, leading to fewer coal plants running less hours and only a minority from capturing the emissions from continuous operation.
The role of CCUS is something different and focuses on overcoming three often neglected asymmetries. The first is the age profile of coal. There are countries that implement coal phase out policies, but they tend to be ones like the UK where coal mining peaked a century ago, and where the last coal plants were built in the 1970s. However, due to the massive investment wave of developing Asia, one third of coal plants in the world are less than 10 years old. They each represent a USD $2 billion capital investment and run on a cheap, well distributed and geopolitically secure energy source. Shutting them all down would be unrealistic given their role energy security. Retrofitting them with CCUS could be a feasible alternative.
The second asymmetry is between the truly amazing success of wind and solar and the slow progress in low carbon options for the heavy industry that represent a third of global emissions. To produce steel without carbon emissions would require the equivalent of all the solar panels in California to produce hydrogen and use it instead of coal in steelmaking – all for a single steel plant. This is possible and certainly worth researching and innovating, but should not be framed as an obvious cheap and easy alternative.
Last but not least, the third asymmetry is between the current momentum of the energy system and the uncomfortable facts of climate science. In the absence of a sudden transformation of social and political attitudes, the CO2 concentration will overshoot and carbon will need to be removed from the air.
The GHGT summit displayed an exciting mixture of a sense of urgency, an appreciation of the scale of the challenge but also a “this time for real” feeling due to positive developments in policy and technology. The most important policy development is in the United States, which introduced new investment incentives for both carbon storage and utilisation.
Importantly, whereas previous approaches tended to support specific projects, handpicking technology and location with a mixed tracked record to put it mildly, the new policy is a broad-based tax incentive putting a value on avoided emissions and unleashing the creativity and innovativeness of the private sector. It was refreshing to meet people who were hired as Head of CCS Business Development by major corporations, a job title inconceivable not long ago. A lot of the new US capture investment seems to go to gas rather than coal, which is understandable in the light of the unfolding gas revolution in the US economy.
GHGT also had a strong participation and commitment from China, the country representing half of global coal demand and perhaps the most advanced coal technologies. China took the first step towards CCUS with the first large scale integrated coal conversion/carbon capture project now under development. It has a very smart approach focusing on capturing an almost pure CO2 stream from a coal to chemicals process, enabling the high value added and clean utilisation of the country’s abundant coal resources. Game changer is an overused term, but China moving to CCUS in a systematic fashion would certainly qualify for it.
It was also very visible how innovation into both technology and business models are reshaping the prospects of CCUS, especially the interactions between carbon capture and hydrogen. The resurgence of strategic interest to hydrogen is strongly connected with carbon capture in multiple ways. The most basic is the source of hydrogen: today it is fossil fuels with over 10 tons of CO2 emitted for a ton of H2.
Capturing it is one of the possible pathways for clean H2. There are already operating projects in Canada, the United States and the United Arab Emirates. Those use the hydrogen locally in an industrial process, but there is a serious initiative to produce H2 from Australian coal with CCUS and export it to Japan.
The other pathway, wind and solar based electrolysis, is gathering momentum and likely to become robustly competitive. And even that has a carbon capture connection: in regions that have a large heavy industry but less attractive storage geology, attention and investment are shifting towards carbon utilisation. In many cases the basic concept is to combine the captured CO2 with renewable based H2 and then let imagination fly around various chemical pathways. All of these still require innovation and investment to scale up, but the commitment and optimism was already visible.
After the decade of disappointments, there may be some legitimate scepticism. Still, CCUS’s moment has arrived. And we should hope so, for the stake of the global energy transition.