Powering the world’s global economy and staying on the road to net zero requires abundant carbon capture. This has been evident for some years and at last, it seems, governments are turning words into investment action.

In the US, the Administration’s Inflation Reduction Act (IRA) is arguably a game changer for carbon capture and storage (CCS) or its utilitarian cousin carbon capture, use and storage (CCUS). The IRA is designed to extend the deployment of carbon capture through a combination of tax credits and other forms of project support, the result being that the US is set not only to steal a march on its neighbours in the Americas, but also other countries in Europe and elsewhere.

‘The IRA has definitely increased interest in CCS in America,’ says Jessica Oglesby of the Melbourne-based Global CCS Institute. ‘We haven’t seen the funding yet from the 45Q tax credit, but the commitment is there.’

Calling for strong leadership 
Other countries are introducing similar inducements, although not on the same scale as the $300bn package that constitutes the IRA. In the UK, the £20bn support for CCS announced at the last budget is a big number says Ruth Herbert, CEO of the London-based Carbon Capture and Storage Association (CCSA), but now is the time to underwrite strong leadership with the urgent scaling up of projects – before it’s too late.

‘The UK was the first country ever to launch a CCS competition for coal-fired power, but there have been all sorts of political delays and the government needs to show leadership,’ says Herbert. ‘I do expect the £20bn to accelerate a lot of projects and the government needs to respond to that.’

Herbert’s own experience harks back to the early days of offshore wind when she spent nearly a decade in central government, helping to create a market in which this form of renewable energy development could flourish. She went on to set up a low-carbon contracts company to implement the contracts for difference (CfD) scheme for both renewables and nuclear energy.

CfD guaranteed developers a fixed price for the energy they produced over a given period and the market responded to the point where renewable energy now accounts for more than 40% of the UK’s electricity supply.

Funding support
The UK government’s ambitious budget pledge could achieve similar market stability for CCS believes Herbert, providing developers can get themselves into a position where they qualify for funding support – and governments of whatever political persuasion are prepared to stick by the commitment. ‘Operators,’ she says, ‘have to spend a lot of capital to develop a CCS-enabled project before being eligible to take part in the competition process.’

The new gas-fired power station at Keadby in Lincolnshire is a case in point. The cost of Keadby 2, providing electricity for nearly a million homes, is £350mn. The cost of developing Keadby 3 with a CCS plant attached could be double that, according to its operator SSE. However, with government support, once the station is up and running, the project will become viable, both at Keadby and at other CCS-enabled stations around the country.

‘Keadby 3 could be the UK’s first gas-fired power station with a CCS plant attached to it which will be able to capture and store between 90% and 95% of emissions,’ reports Helen Saunders, Head of Policy and Sustainability at SSE Thermal.

The point here is that gas-fired stations like Keadby, and indeed the new generation of nuclear if they ever get built, become an expensive but must-have back-up for the growing share of the electricity load delivered by wind and solar – 70% plus in the next decade or so as the UK accelerates its drive towards net zero. While demand for electricity is expected to rise by 40–60% by 2035, the government says that by then all the UK’s electricity will come from clean sources, realistically making CCS an essential part of the mix.

A global footprint
The latest report by the Global CCS Institute confirms that CCS is in government-backed acceleration mode throughout the West, and in China too.

In Canada, for example, where Shell operates the Quest CCS facility, it notes that the government has established a C$2.6bn ($1.9bn) credit for CCS projects, while in Europe four of the first seven projects selected under the EU’s Innovation Fund are CCS-enabled. Meanwhile, CCS features prominently in net zero plans for Australia and Japan; it is also being heavily promoted in China, where no less than 10 policies and guidelines have been issued relating to the technology.

In the UK, warns Herbert, the country needs to ramp up fast in order to take advantage. ‘It should be about what we can do to help other countries as well as cleaning up our own emissions,’ she says. This is why a smaller country like Denmark has announced €5bn ($5.4bn) in subsidies for CCS, while Norway will spend NKr1bn ($10mn) to support three large blue hydrogen projects.

CCUS, you could argue, is the virtuous circle, whereby around 80mn tonnes of CO₂/y are still being used for enhanced oil recovery, while another 30mn tonnes play a part in food and beverage production and yield-boosting in greenhouses. Capturing carbon and using it to help power and sustain a low-carbon, ultimately net zero global economy is the name of the game.  

The £20bn being made available by the UK government is timely, says Herbert, given that four low-carbon industrial clusters are due to be up and running by 2030. Clean energy and clean manufacturing must be part of their modus operandi while at the same time keeping operating costs at a level where an industry such as cement or steel manufacture can remain competitive.

The underlying factor is that these industries are energy intensive and until we get clean hydrogen at scale, fossil fuel and CCS will stay part of the mix, notably as an industrial fuel source.

The UK government’s funding for those that meet the criteria should mean that companies are subject to the same operating costs with CCS as without. As in the case of offshore renewables: ‘There is a pump priming role for government,’ comments Herbert.

Eventually, she says, industry will become uncompetitive without CCS and for those who take up the baton there are opportunities for a CCS-supported green economy. ‘There’s a strong economic case for CCS both in terms of storage – eg the geology of end-of-life oil wells – and creating the low-carbon products which can be used and exported.’

Last year alone, notes the Global CCS Institute, there was a 45% increase in CCS projects announced, accounting for 244mn t/y. This, it has to be said, is from a low base and there is a long development cycle before a project is up and running. In September 2022, there were just 30 carbon capture facilities in the world, notes the Institute, almost all of them attached to industrial plants carrying out such activities as natural gas processing or fertiliser production.

Finding new uses for CO₂ is an important part of the solution. In Norway, for example, the Norsk-e fuel plant could be the first large scale synthetic fuel producer in the world. It would combine point-source and air-captured CO₂ with electrolytic hydrogen to produce 25mn litres of sustainable aviation fuel (SAF) by 2024 and up to 100mn litres by 2030.

Similar projects could be operating in Canada, Chile and the US by 2025, while in Denmark sourcing CO₂ from a bio-fired power plant for use in fuels is being explored as part of the Green Fuels for Denmark project.

‘Last year alone there was a 45% increase in CCS projects announced, accounting for 244mn t/y... this is from a low base and there is a long development cycle before a project is up and running.’ – Global CCS Institute

Scale of the challenge
The International Energy Agency reminds us of the scale of the challenge, noting that the world will need to have 7.6bn t/y of CCS capacity to reach its net zero by 2050 scenario. The downside, argue environmental campaigners, is that CCS is used to justify the continuing use of fossil fuels at a time when renewable energy, nuclear and large-scale hydrogen must be brought onstream and further developed to take up the load.

In the short and medium term this is unrealistic, suggests Herbert, as CCS must play its part in a new type of green economy, taking up the slack in partnership with renewable energy and helping to provide the UK and other countries with a still competitive industrial base.

‘CCS is an opportunity for the UK to gain more market share,’ she says, ‘which we haven’t had for a long time, and we should be backing this to the hilt. Investors are saying you have to have a credible pathway for all your emissions – and this includes CCS, which is a pan sectoral solution.’