The CCUS revolution: Market potential for carbon-capture technology

The role of carbon capture in decarbonisation efforts

Carbon capture, utilisation, and storage (CCUS) are set to play a pivotal role in global decarbonisation efforts. These technologies capture CO2 emissions, transforming them into valuable products or storing them to prevent atmospheric release. Despite the long-standing existence of carbon capture methods, the challenges of high costs and complex logistics hinder rapid deployment. However, with the potential of significantly reducing emissions from industrial processes and creating low-carbon fuels, CCUS is essential for meeting ambitious climate targets and revolutionising the energy landscape.

Current situation and challenges faced

Carbon capture, utilisation and storage (CCUS) describes a suite of technologies to capture CO2 that would usually be emitted in a chemical process. The CO2 is then either utilised to create products with additional value or put into long-term storage to prevent its release into the atmosphere. CO2 emissions to be captured can be differentiated by source as fossil CO2 from combusting coal or gas, biogenic CO2 from processing forestry or agriculture products, or atmospheric CO2 directly residing in the atmosphere. Despite huge efforts, we will not be able to reach global net zero within the aspired timeframe without capturing significant volumes of CO2 emissions in three main areas:

Capture and storage of fossil-based CO2 in process industries, in particularly those where CO2 is intrinsic to the process rather than energy related. While it cannot just be used as an excuse to continue “business as usual” in industry, CCS looks like a key tool in decarbonising the manufacture of basic materials such as cement, steel and fertiliser
Capture and storage of biogenic/atmospheric CO2 to remove CO2 from circulation in a process known as technical carbon-dioxide removal (CDR) offsetting emissions in other parts of the economy
Capture and utilisation of CO2 to create low-carbon e-fuels when combined with hydrogen. These directly replace fossil fuels to decarbonise the transport sector

Carbon capture itself is not a recent or novel idea. As an industrial scale chemical process, it has been around for almost 100 years and is an everyday process in the fertiliser and chemical sectors. The transport and injection of CO2 into sub-surface geological structures is also not particularly new. CO2 has been captured, transported and injected into US oil fields since the 1970s as a way of enhancing the oil production.

CCUS process overview

The CCUS process encompasses the capture of CO2, its utilisation in physical CO2 markets, or long-term storage, along with the associated revenue streams

Note: Transitioning away from fossil fuels requires switching entirely to biogenic CO2

Source: AFRY

CCUS today suffers from two primary challenges:

Fitting CCS to directly decarbonise a process requires significant capital and operational cost increases. A 1Mt carbon capture unit may cost more than USD 400 million. Using CDR to offset emissions or using e-fuels instead of regular fuels will increase costs, at least until carbon emissions are sufficiently penalised.
Scaling CCUS requires linking together a new complex physical chain, including long transport chains and subsurface exploration, in a very rapid timeframe using newly emerging business models and doing so in many regions simultaneously.

Looking ahead

The current global capacity of CCUS projects is less than 50MtCO2 per annum, which is the equivalent to roughly 0.1% of global greenhouse gas emitted. The global project pipeline for CCUS projects currently stands at over 320MtCO2 per annum, with around 110Mt in Europe alone. The pipeline indicates the rapid potential development of the market and interest in emerging business models over the next decade. The need for such a continuous, rapid scale-up in CCUS is well illustrated in IEA’s global energy research. In IEA’s Net Zero Emissions by 2050 scenario, CCUS is expected to scale up from ~50MtCO2 per annum in 2024 to ~6,000MtCO2 per annum by 2050. Some scenarios developed by the IPCC and others show even more ambitious volumes, with carbon capture reaching over 10,000MtCO2 per annum in the second half of this century.

Announced regional carbon capture capacity by 2030 (Mtpa¹ )

Carbon capture rates are projected to reach 326 Mtpa by 2030, equivalent to approximately half of Germany's total annual CO2 emissions in 2022

2: MENA = Middle East and North Africa

Source: AFRY, Our World in Data

The complex and long value chain presents a further interesting angle. Developing thousands of new capture projects will also require transport and storage solutions for much of this CO2. For example, the European Commission has estimated a need for 20,000km of CO2 pipelines by 2050 in Europe only.

CO2 storage is another exciting area. Global oil and gas majors, offshore service providers and specialised new players are entering the market to secure rights to good injection sites.

While the challenges of high costs and physical value chains are indeed significant, the opportunities available are equally vast. In 2050, the market for physical CO2 could amount to USD 3-4 trillion per year, roughly the same size as the physical oil market today. There is a strong feeling from market players in the oil and gas industry, utilities and process industry areas that if they don’t act as first-movers, it could be too late to establish a winning position and develop viable business models.