CCS is quietly gaining traction amid a growing realisation that reaching net zero will require more than renewables 

CCS is the transition’s dark horse. Written off not long ago as too expensive and risky, it is now emerging as one of the pivotal technologies in the push for net zero. Its star is rising as policymakers and emitters concede there will be a need to capture and permanently store residual CO₂ that the deployment of renewables and other technologies cannot abate.

The list of CCS projects proposed or under development is growing rapidly: Global Energy Infrastructure’s CCS database is tracking more than 500. Information provider S&P Global Commodity Insights talks of a “trend shift” in the sector, with its forecasts showing a sixfold increase in capture capacity by 2030.

The energy industry is leading the charge. ExxonMobil aims to close a $4.9b deal later this year to acquire independent Denbury, which operates the largest CO₂ pipeline network in the US, and ten strategically located onshore sequestration sites.

For ExxonMobil and its global peers, CCS is a licence to operate existing fossil fuel operations —and new businesses such as blue hydrogen—in a carbon-constrained world, a strategy condemned by some.

But oil and gas companies also have an eye on carbon management as a future business.  ExxonMobil recently signed a deal with Nucor, one of North America’s largest steelmakers, to capture, transport and store up to 800,000t/yr of CO₂ from a direct reduced iron plant in Louisiana. The deal takes ExxonMobil’s total CCS agreements with third parties to 5m t/yr.

In Europe, Germany’s Wintershall Dea is also betting on the carbon management business.

The company is evolving “from the leading European independent gas and oil company to a leading European independent gas and carbon management company”, COO Dawn Summers said during a recent strategy update. “CCS is safe and crucial for the fight against climate change,” she added.

Challenges

Despite its recent elevation to the top table of climate technologies, CCS still major faces challenges, notably on cost, regulation and public acceptance. The long-term implications of storing massive volumes of CO₂ in depleted oil and gas fields or other onshore geologies are unclear, with the risk of leakage difficult to ignore. Very long project lead times and huge upfront capital costs will also deter many investors and lenders.

Policy and regulatory frameworks are playing catch-up with the industry’s newfound momentum. International rules around cross-border shipment of CO₂ are inconsistent, hampering the development of large-scale projects such as those in the North Sea that are designed to take in emissions from several different European countries.

But operational costs look increasingly favourable, helped by state subsidies offered through tax credits in the US and through mechanisms such as contracts for difference.

Greensand, a CO₂ storage project in the North Sea which launched test injections earlier this year, would be viable at full scale at the current European carbon price of c.€90/t CO₂, according to Ineos Energy chairman Brian Gilvary.

Stuart Penson,

Editor