Just a few years ago, Carbon Capture and Storage (CCS) was expected to be the saviour of the oil and gas industry, as major fossil fuel firms invested heavily in CCS activities aimed at decarbonising operations. Governments worldwide have encouraged companies to invest in CCS in recent years, funding green energy projects to help reduce the carbon emitted from oil and gas operations, and to allow countries to continue using fossil fuels to bridge the energy gap over the coming decades. However, as we see delays in the rollout of CCS projects and more evidence that suggests most CCS installations do not work as well as anticipated, many are questioning whether investing in this type of decarbonisation is viable.
CCS involves capturing carbon dioxide at emission sources, to be transported and stored or buried in a suitable deep, underground location. There is now a range of CCS technologies being used in fossil fuel and industrial operations worldwide, including conventional CCS installations and direct air capture (DAC), which removes CO2 directly from the atmosphere.
Following significant support from governments and fossil fuel companies worldwide, the CCS market could attract as much as $80 billion in investment by 2030, to support an anticipated 270 million tons of carbon dioxide capture a year. However, many scientists now suggest that financing CCS is a waste of money, as the technology does not work as effectively as previously expected, and it could detract from funding long-term green energy projects. A new report suggests that globally, the maximum reduction that CCS operations could achieve for the atmosphere would be 0.7 degrees Celsius, which is far short of the 5 °C to 6 °C industry and governments claim.
The U.K. has committed $40.5 billion to CCS technology in support of its net-zero emissions aims for 2050. The country hopes to find a way to reduce emissions in the mid-term as it gradually incorporates more renewable energy capacity into the energy mix, while it continues to rely heavily on oil and gas for power and heating. However, getting CCS projects off the ground has been no easy feat, with decades of delays under several governments.
The increased funding into CCS technology in recent years is supposed to have led to technological improvements and design innovation that will help suck more carbon from the sky. However, technology glitches and the high costs associated with installing CCS equipment have delayed projects and deterred companies from investing in CCS operations. Thilo Trabner, a business development manager for the Zurich-based CSS provider ABB, explained, “First-of-a-kind technology challenges continue to contribute to delays in some projects, and reliance on subsidies and offtake agreements continues to play a critical role in project viability.”
Some of the projects for the U.K. include a gas power plant on Teesside in the north of England, which is expected to be operational by 2028, with plans to capture 95 percent of its emissions – around 2 million tonnes a year, and capacity to transport and store up to 4 million tonnes of carbon a year. Another three projects in the first round of the project pipeline are under negotiation, with plans to capture carbon from a methane-based blue hydrogen plant and energy from waste.
Related: Supermajors Slim Down to Protect Shareholder Payouts A government committee has questioned the cost-effectiveness of the planned CCS projects, warning against an over-reliance on CCS activities rather than investing in the country’s long-term green energy goals. The government has already acknowledged that its target to capture between 20 and 30 million tonnes of carbon dioxide a year by 2030 is no longer viable. Related: Greenpeace Blockade Forces LNG Tanker Diversions From Belgian Terminal
In Switzerland, one of the world’s most well-known CCS companies, Climeworks, announced in May that it would be cutting its workforce by more than 10 percent, citing economic uncertainty and “reduced momentum” for CCS technology. Climeworks is famous for constructing the world’s first DAC facilities. However, the company has come under fire as two of its flagship plants in Iceland were found to be capturing significantly less carbon than originally anticipated. Climeworks said that it was uncertain whether a third facility planned for the U.S. would go ahead due to the uncertain energy environment under President Trump.
DAC technology is much more expensive than conventional CCS equipment, but many companies have invested in DAC activities in recent years in response to government pressure to decarbonise. Now, recent reviews suggest that DAC technology is struggling to grow out of the pilot phase, as interest in the sector wanes. Climeworks said that at its flagship Mammoth plant in Iceland, which is thought to have a carbon capture capacity of 36,000 tonnes of carbon dioxide a year, the equipment captured just 750 tonnes in the first 10 months of operations.
The outlook for CCS technology is uncertain. In recent years, several governments, industries, and oil and gas companies have invested heavily in CCS technology in a bid to decarbonise. However, many of the planned projects have been delayed due to technological constraints and high costs. Now, reports on existing CCS activities suggest that the technology may not be working as successfully as anticipated, which has cooled investor interest in the sector and could cause progress in the CCS rollout to stall in the coming years.
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By Felicity Bradstock for Oilprice.com
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