Europe’s carbon pricing system is a central driver to achieve adoption of carbon capture and storage (CCS) in heavy industry and manufacturing on the continent, delegates at an Upstream webinar heard on Tuesday.
As the sector faces uphill struggles associated with high costs, strengthening Europe’s existing carbon pricing mechanism — where industries are taxed on the amount of carbon dioxide they emit — can act as an incentive for operators to invest in sequestration infrastructure.
There are two main forms of carbon pricing: carbon taxing and carbon emissions trading associated with caps.
“A significant increase of the carbon price, or the prospect of one, is a really important driver to [create a] level playing field,” Toby Lockwood, technology and markets director for carbon capture at the Clean Air Task Force, said during a panel discussion at the event.
“No one is going to do CCS if it only adds to the cost. Avoiding carbon pricing has to be an incentive for industry to be better off than just emitting.”
To be effective and drive adoption, the carbon pricing system has to be comprehensive enough and applicable to the sectors that could see CCS as a way to reduce their emissions footprint.
So-defined “hard-to-abate” sectors including steelmaking, cement and chemicals count among those.
While Lockwood defined Europe’s approach to cutting emissions as “less of a carrot, more of a stick”, he conceded the existing remit of carbon pricing might need to be expanded.
“It’s a challenge because, in Europe, industry is protected by free allowances,” he said.
The cost of investing in CCS infrastructure can vary depending on the source, but the fact that European carbon prices have increased steeply over the past couple of years has made the investment more palatable.
“With a carbon price nearing €100 per tonne of CO2, for many sources that’s enough [to justify CCS investment],” Lockwood added.
The interest over CCS has grown in line with energy companies taking a closer look at their emissions footprint as the debate over energy transition gains traction.
Helen Coleman, head of new energies at consultancy Genesis, argued that the thinking from oil and gas players as a whole has shifted tangibly.
“Ten years ago, environmental was something you did on the sides. Now it’s become way more prominent,” she said, adding, “clients are driven by a reputation case, too”.
Critics of CCS argue the technology is intrinsically linked to fossil fuels, and sequestering carbon is a way to preserve usage of hydrocarbons without drastically altering the business models and revenue streams of the companies involved.
Commenting on the greenwashing criticism, Rob Berra, group senior vice president, CCUS growth unit leader at Worley, said: “CCS is not a competitor to [deploying] renewables. We need all solutions to accomplish net zero. Even when fossil fuels are no longer developed, CCS has a role in industrial production.”
The UK and northern Europe have been developing CCS hubs, or clusters, which involve multiple interconnected facilities creating an ecosystem for capturing, transporting and storing CO2.
Jonathan Minnitt, vice president for business development at Aker Solutions, said the various components of the CCS value chain have to develop in sync for the system to function.
“Two words: moving parts,” he said on the challenges of cluster project planning.
Besides their high level of operational complexity, progress on the UK clusters has been slowed by the political turmoil with the host government, which led to important decision making being delayed.
Plans were to have two clusters up and running by 2025, but that timeline is looking increasingly out of reach, according to Michael Alsford, interim chief financial officer at Storegga.
“The industry has lost about one year,” he said.
“We’re hoping to get more clarity on the second track of the process early next year.”
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