CCUS in Clean Energy Transitions – Analysis - IEA (2024)

Carbon capture, utilisation and storage (CCUS)will need toform akeypillar of efforts to put the world on the path to net-zero emissions.A net-zero energy system requires a profound transformation inhow weproduceanduseenergythatcanonly be achievedwith a broad suite of technologies.Alongsideelectrification,hydrogenand sustainablebioenergy, CCUSwillneed toplayamajorrole. It isthe onlygroup oftechnologiesthatcontributesboth toreducingemissions in key sectorsdirectlyandtoremoving CO2tobalanceemissions that cannot be avoided –acritical partof“net” zero goals.

Stronger investment incentivesand climate targetsarebuildingnew momentumbehindCCUS.After years of slow progressandinsufficientinvestment,interest in CCUS is starting togrow.Plans for more than 30 commercialfacilitieshave been announcedinthe last three years.Andprojectsnow nearing a final investment decision represent an estimatedpotentialinvestment ofaroundUSD 27 billion–more thandoubletheinvestmentplannedin 2017.Thisportfolio ofprojectsisincreasinglydiverse– including power generation, cement and hydrogen facilities,andindustrial hubs – andwould double the level of CO2captured globally,fromaround40 million tonnes today.

Support for CCUS in economic recovery planscan ensure theCovid-19crisisdoes not derailrecent progress.DespitealmostUSD 4 billionin government and industry commitments to CCUSso farin 2020, the economic downturnis set tounderminefutureinvestment plans.CCUS is in a much stronger position to contribute to sustainable recoveries than it was after the 2008-09 global financial crisis. Sincethen,deployment has tripled (albeit from a small base),the range ofdemonstratedapplications has expanded, costs have declined,and new business models have emerged.

CCUStechnologies contribute toclean energy transitionsinseveralways:

• Tackling emissions from existing energy infrastructure.CCUScan beretrofittedto existing power and industrial plantsthatcould otherwise emit600 billion tonnesofCO2over the next five decades– almost17years’ worth of current annual emissions.
• Asolution for some of the most challenging emissions.Heavy industriesaccount foralmost 20% of globalCO2emissionstoday.CCUSisvirtuallythe onlytechnologysolutionfor deepemissionsreductionsfromcement production. It is alsothemostcost-effectiveapproachin many regionsto curb emissionsiniron and steel and chemicalsmanufacturing.Captured CO2isa critical part of the supply chain for synthetic fuelsfromCO2andhydrogen–one of a limitednumber oflow-carbonoptions forlong-distance transport, particularlyaviation.
• Acost-effectivepathwayforlow-carbonhydrogen production. CCUS can support a rapid scalingup of low-carbon hydrogen production tomeetcurrent and futuredemand fromnew applications intransport, industryandbuildings.
• Removing carbon from the atmosphere.For emissions thatcannot be avoided orreduceddirectly,CCUS underpins an importanttechnologicalapproach forremovingcarbon anddeliveringa net-zero energy system.

In a transition to net-zero emissions, theroleofCCUS evolves and extends to almost all parts of the global energy system.In the IEA’s Sustainable Development Scenario

• in which global CO2emissions from the energy sectordeclinetonetzero by 2070
• the initial focusofCCUSis onretrofitting existing fossil fuel-basedpower and industrialplants andsupportinglow-carbonhydrogenproduction.By 2030,more than halfof the CO2captured is from retrofittedassets.Over time,the focusshifts toCO2capture from bioenergy and the air for carbon removal–and as a source of climate-neutral CO2forsyntheticaviationfuels.In this scenario, around 60% of CO2captureis linkedto fossil fuels, andthe rest is from industrial processes, bioenergyandthe air.

CCUSis one ofthetwomainways to producelow-carbonhydrogen.Global hydrogenusein the Sustainable Development Scenarioincreases sevenfold to 520 megatonnes(Mt)by 2070.The majorityof the growth inlow-carbonhydrogenproductionis fromwaterelectrolysisusing clean electricity, supported by 3 300 gigawatts (GW)of electrolysers(from less than0.2 GW today). Theremaining40% oflow-carbonhydrogencomes fromfossil-basedproductionthat isequipped with CCUS, particularlyin regions with access tolow-cost fossil fuelsand CO2storage.CCUS-equipped hydrogen facilities are already operating in seven locations today,producing 0.4 Mt of hydrogen -threetimesas muchhydrogenasisproducedfrom electrolysers.

A faster transition to net zero increases the need for CCUS.CCUS accounts for nearly 15% of the cumulative reduction in emissionsin the SustainableDevelopment Scenario.Moving the net-zero goalposts from 2070 to 2050 would require almost 50% more CCUSdeployment.

Underpinned by CCUS, carbon removalplays an important role in the net-zero transition.Technology-based carbon removal approachesare neededto balance emissions that are technically difficult or prohibitively expensivetoeliminate.When net-zero emissionsisreached in the Sustainable Development Scenario,2.9 gigatonnes(Gt)of emissions remain,notablyinthe transport and industry sectors. These lingeringemissionsare offsetbycapturing CO2from bioenergy and the airand storing it.

Direct air capturetechnologieshavesignificantpotential to acceleratethetransition tonetzero,butcostsneed tocome down.Capturing carbon directly from the air and storing is analternative tocapturing it from bioenergy.Direct air captureplants are already operatingon asmallscale,buttheircosts are currently high.With further innovation, the availability ofdirectair capturetechnologiescould offer an importantbackstop or hedge in the event thatother technologies fail to materialise or have slower-than-anticipated pathwaysto becoming commercially viable.

Infrastructure to transport and store CO₂safely and reliably isessentialforrolling outCCUStechnologies.The development of CCUS hubs – industrial centres that make use of shared CO2transport and storage infrastructure – couldhelpacceleratedeploymentbyreducingcosts.At least12CCUS hubsare in development globally–includingin Australia, Europe and the United States–andmanyof them arelinked tolow-carbonhydrogen production.Norway’sNorthern Lights project,a large offshore CO2storage facilityin the North Sea,could provide a solution foremissionsfrom neighbouring countries.

MajorCO2emissionssourcesare within reach ofpotential storage.Our detailedanalysisin this reportof CO2emissions from power and industrial facilities inthe People’s Republic ofChina, Europe and the United States finds that 70% of theemissions are within 100 km of potential storage, arelatively practical andcost-effective range for transporting the captured CO2.In the United States, CO2captured at existing facilities is transported an averageof 180 km.Butshorter distances can reduce costsanddecrease infrastructure development times.The overall technical capacity for storing CO2worldwideis vast,but detailed site-specific assessmentisneeded.

We need to take urgentstepsto ensure CCUSis availabletocontribute to net-zero goals.Amajor ramp-upofCCUS deployment isrequiredin the next decade to put the global energy system on track for net-zero emissions. Governments havea criticalrole to playthroughpoliciesthat establisha sustainable and viable market for CCUS.Butindustry must also embrace theopportunity. No sector will be unaffected by clean energy transitions–and for some, including heavyindustry,thevalue of CCUS is inescapable. Oil and gascompanies havetheengineeringexpertise, project management capabilitiesandfinancial resourcesto driveCCUS developmentand deployment.

Four high-level priorities for governmentsand industrywouldacceleratetheprogressofCCUS over the next decade:

1. Createtheconditions forinvestment byplacing a value on reducing emissions and direct support for early CCUS projects
2. Coordinate and underwritethe development of industrial hubs with shared CO2infrastructure
3. Identify and encourage the development of CO2storagein key regions
4. Boostinnovation to reduce costs and ensure that critical emerging technologiesbecome commercial, including insectors where emissions arehardtoabateand forcarbon removal.