Europe could see $35bn in CCS spending to 2035

It has been a long and costly two decades of carbon capture and storage (CCS) studies and test centres. Now Europe has reached a stage where big-scale developments make financial sense and could trigger up to $35bn in development spending until 2035 – by which time as much as 75mn tonnes of CO₂ could be captured and stored per year on the continent, according to Rystad Energy analysis.

In Europe alone there are around 10 larger projects with CCS that are planned and have a high chance of being operational by 2035. Most of them are located around the North Sea in Norway, the UK, Denmark and Netherlands, but there are also projects on the drawing board in Ireland and Italy.

Although most of the projects are expected to be underway from the middle of this decade, investments and contracts awarded to suppliers will already start to grow significantly from 2021–2023, as most projects have a development timeline of three to five years, reports the market analyst. Total capital investment for these projects is expected to reach $30bn, in addition to operational expenditure totalling $5bn until 2035.

About half of the capex will be consumed by the facilities at the source, with CO₂-capture equipment and facility construction making up the largest part. Storage investments will make up 15% and will mainly comprise well-related services to store the CO₂ safely in underground reservoirs. Transport and operations take 35% and relate to trunk lines, shipping and infrastructure maintenance costs.

The first three projects that are due to become operational are Acorn CCS, Northern Lights and Porthos, which will be game-changing as they will de-risk the overall CCS uncertainty, says Rystad Energy.

More than twice as many projects, in count and size, are likely to follow.

With the projects so far planned in Europe, the consultancy expects that 3mn t/y of CO₂ capture and storage capacity will be added each year from 2021 to 2025, then jumping to 7mn t/y in the next five-year period 2026–2030. By 2035 it puts total installed capacity at around 75mn t/y, with almost 80% coming from UK projects.

Currently, there are only two full-scale CO₂ projects operational in Europe – the CO₂ injection projects at Norway’s Sleipner and Snohvit offshore fields, with a combined CO₂ capture and storage capacity of around 1.5mn t/y.

Looking at the bigger picture, Europe has about 1,000 larger industrial sites, such as cement plants, steel producers, fossil power and waste-to-energy plants, that could all be candidates for capturing CO_2,, says Rystad Energy. About 250 of these of these have reasonable shipping distance to send CO₂ to be stored under the North Sea.

Worldwide there could be around 6,000 industrial plants suitable for CO₂ capture, according to the market analyst. Although only a fraction of these sites are expected to utilise CCS technology, the number represents a massive potential for more investments to bring down global CO₂ emissions in the decades to come – which could bring new opportunities to contractors that currently get most of their business from the oil and gas industry.

‘Several European policymakers and non-governmental organisations (NGOs) have previously indicated they are ready to rule out CCS as a climate mitigation tool, saying the technology is not proven and available and has unrealistic expectations. For CCS to have a significant future, it is therefore important that Northern Lights and Acorn run through their pilot stages to show that this can be a proven technology,’ says Rystad Energy’s Head of Energy Service Research Audun Martinsen. ‘As standard renewable technologies that have some maturity in Europe such as solar installations and offshore wind farms are increasingly gaining market share, CCS projects will face competition and have to prove cost-worthy.’

Figure 1: Spending related to CCS projects in Europe between 2020–2035, in $bn
Source: Rystad Energy