3 reasons why the future of carbon capture looks promising

Less than eight years. That’s how long the world has to cut global emissions in half as part of the race to achieve net-zero emissions by 2050. And yet, in a world of increasing urbanization, energy demand continues to grow.

As the planet races to meet these net-zero targets, meeting this energy demand while balancing sustainability is crucial for global societies to thrive. While it is an urgent challenge, there are several promising technologies to help us deliver these multifaceted needs.

Carbon capture, utilization and storage (CCUS) is one of those critical technologies. Often called carbon capture, it is the process of capturing carbon dioxide emissions from industrial facilities and reusing or storing them, instead of releasing them into the atmosphere.

For heavy-emitting industries like power, steel, cement, oil and gas, and chemicals, carbon capture has the potential to radically reduce environmental footprints, capturing more than 90% of carbon dioxide emissions.

These industries play a key role in the energy transition, providing the energy and resources that our world depends on to prosper while delivering lower-carbon steel products for wind turbines and solar panels, as well as hydrogen and other renewable energy sources.

Net-zero emissions for these heavy industries isn’t just a pipe dream. A 2019 IEA report that modeled scenarios to achieve the Paris Agreement goals found that carbon capture is expected to contribute 27% of the needed emissions reductions in the cement, iron, steel and chemicals industries.

This proven technology has been around for decades but faces economic challenges. While there is potential for the captured carbon to be a revenue stream as a feedstock for products like synthetic jet fuels and lithium-ion battery chemicals, it is primarily just that – potential.

As operators consider adding carbon capture to existing facilities, they must balance sustainability needs with economics. Carbon capture can consume up to a third of a facility’s power capacity, raising costs and putting the financial viability of carbon capture projects at the razor’s edge. Some carbon capture facilities are currently non-operational due to these costs. The current hyper escalation and inflation in the market are driving further challenges, making finances the largest hurdle to unleashing carbon capture’s potential.

Yet, despite these headwinds, there are three key reasons the future of carbon capture is more promising than ever.

Heavy industries are embracing carbon capture as a realistic pathway to decarbonization and making significant investments, with more than 100 new facilities announced in 2021. HeidelbergCement, a global cement manufacturer, is developing eight carbon capture initiatives across the globe.

Aramco, the world’s largest oil company, is developing one of the largest carbon capture facilities of its kind to support hydrogen production. ArcelorMittal, the largest steel manufacturer in the Americas and Europe, is relying on carbon capture as one lever of its multi-billion-dollar investment programme. All three companies have committed to achieving net-zero emissions by 2050.

The facilities are following in the footsteps of demonstration facilities that capture more carbon dioxide than anticipated while attaining better than expected reliability, cost and storage performance – demonstrating they can be operated economically. Owners are scaling up carbon capture technology and moving from pilot projects that capture 400 tons of carbon a day to up to 13,000 tons and more.

This summer, the United States passed the Inflation Reduction Act of 2022, which increases carbon capture tax credits by 70%. Canada is accepting grant proposals to advance the viability of carbon capture technologies, as part of a $319 million investment. Carbon capture tax credits have also been proposed. Governments like Australia, the European Union, the Netherlands and the United Kingdom have launched similar incentives.

However, while these government incentives are crucial, the economic models for carbon capture are often still challenged.

The carbon capture value chain has launched a united effort to mitigate these financial headwinds on a previously unseen scale. Rather than the traditional, transactional contracting model, every member of the value chain is collaborating to develop solutions to move these projects forward. From owners, technology licensors, engineering, procurement and construction (EPC) contractors, to suppliers, it’s a new level of partnership.

Contractors are engaging with owners and investors at projects’ early stages on best uses of government incentives and helping to secure funding. Cognizant of financing requirements, owners and EPC contractors are working together to mitigate risks through innovative contracting models that yield realistic performance guarantees and schedule terms to reduce overdesign and better control costs.

True engagement and collaboration are also extending further down the value chain. EPC contractors and licensors are engaging with material suppliers and subcontractors in a project’s early stages on economic paths forward for materials and design.

For example, technology licensors are sharing amine, a key chemical used in carbon capture, compositions with piping and pump suppliers to determine the most fit-for-purpose gaskets to reduce costs. This type of collaboration is also yielding innovative solutions that reduce project footprints by 30% and require less material to purchase and install.

In addition to reducing material costs, this upfront planning also results in a more fully developed design that mitigates risks and removes unnecessary contingency costs that can often reach to 30% of a total budget. The result is more accurate estimates for both private and government grant financing and economically viable projects.

With strong industry engagement, government support and innovative supply chain solutions, carbon capture can buck the financial headwinds and deliver a competitive solution for achieving net-zero targets. The future is more promising than ever for this technology.