Energy organisations are increasing their focus on carbon capture, utilisation and storage in the creation of their pathways to net zero carbon emissions — but such projects' feasibility will require US government efforts to lower and regulate costs of CCUS.
Analysts, however, suggest getting the government to implement a carbon price in order to facilitate CCUS growth will be a legislative and economic challenge.
The challenge is significant, as the number of large CCUS projects needs to at least double every five years for the next 30 years to meet net zero goals, according to research by the Clean Energy Technology team at London-based research firm IHS Markit.
The analysis is in line with other pathways to net zero published by the International Energy Agency and Rystad Energy that say an acceleration of CCUS technology is vital for the US and other countries to meet global climate goals — primarily goals to reach carbon neutrality by 2050.
“CCUS projects are capital intensive compared to other decarbonisation solutions,” said Edurne Zoco, executive director of clean energy technology at IHS Markit. “The complexity of these projects and the small scale of the industry have kept costs high, particularly for sectors with low CO2 concentration.”
Analysts and organisations have called for greater incentives from the US government to promote large-scale CCUS projects, especially the establishment of a national carbon price — a process that could become complicated by legislative and economic obstacles.
“The sooner this type of policy is implemented, the quicker investors will gain confidence in the industry,” an IHS Markit spokesperson told Upstream. “If we want to expand the industry to meet net zero targets, carbon price will be required in the US.”
Barriers have kept CCUS projects from taking off in the past, including a lack of infrastructure that facilitates large-scale projects.
The IHS Markit research shows that 20 large-scale CCUS projects have been cancelled, mostly due to high capital costs and the lack of carbon storage regulation in some regions. Only 16 large-scale CCUS projects started operations around the world in the last decade.
“Federal carbon pricing will most likely be required if the country is to deliver on its ambitious infrastructure plan,” said Artem Abramov, head of shale research at Rystad Energy.
The regulation of carbon pricing could come in a variety of formats, with a variety of support. The American Petroleum Institute has expressed support for carbon pricing policy, ranging from a cap-and-trade system to a carbon tax, while Occidental Petroleum urges oil and gas companies to manage their own emissions so the government doesn't implement a carbon tax.
Abramov suggests establishing a national carbon price will be a long process. He said moving too quickly could lead to problems like ‘double taxation,’ where multiple parties are paying for the same emissions.
“I would think we can have something concrete in terms of proposed new carbon policy by the end of Biden’s first term, but I also think it might take longer time to implement this in practice,” Abramov said.
Marc Hafstead, director of the Carbon Pricing Initiative at Washington-based research institution Resources for the Future, said implementing carbon pricing in the US would take an act of Congress, and that the Biden administration has not necessarily embraced a carbon price in its climate policy package.
“I do not anticipate a carbon tax without either Senate Republican support or more Democrats in the Senate in the next Congress,” Hafstead said.