Carbon capture, utilization, and storage (CCUS) is generating much enthusiasm across the world, with the hopes that it could play a major role in the fight against climate change. However, amidst this enthusiasm, the industry suffered an apparent setback in mid-2020 when the Petra Nova facility in Texas, then the world’s largest CCUS facility for a coal-fired power station, was closed down. Since then, many commenters have questioned what this means for the industry and whether CCUS can really survive in the real world. “Carbon Capture, Utilization, and Storage (CCUS) 2021-2040”, a new report from IDTechEx, explored the technical and commercial factors key to the success of CCUS.
CCUS refers to a collection of technologies for first capturing carbon dioxide from industrial sources or directly from the atmosphere before either storing it deep underground or putting it to use in a variety of industrial applications. When attached to a fossil fuel power plant, carbon capture technology can reduce CO2 emissions by over 90% and could play a key role in decarbonizing many industries. The UN foresees CCUS technology as an important option in fighting climate change, estimating that CCUS technology could mitigate up to 6.3 gigatonnes of CO2 by 2050.
Reaching this level of emissions mitigation will be a major challenge for the industry, however. Global carbon capture capacity currently stands at about 40 megatonnes per year, less than 0.1% of the 30.6 gigatonnes of CO2 that are believed to have been emitted in 2020. Nevertheless, many in the industry are hopeful and, after a period of declining investment, CCUS has experienced a renewed global interest, with plans for more than 30 new integrated CCUS facilities having been announced in 2017.
In recent years, optimism around CCUS has grown, spurred on by government investment and the introduction of carbon pricing measures and tax incentives around emissions reductions. Nevertheless, scaling up CCUS to the point where it can have a meaningful impact on emissions will be a major challenge. Data source: IEA.
In the face of this optimism, the closure of Petra Nova in 2020 may be a jolt of reality about the size of the challenge facing CCUS. With an annual capture capacity of 1.4 megatonnes of CO2 per year, the Texas–based facility was the world’s largest installation of CO2 capturing equipment on a coal-fired power plant. However, during its three-and-a-half–year lifespan, it had faced several issues relating to commercial viability and unexpected shutdowns.
Like most current large-scale CCUS projects, the CO2 captured by the Petra Nova facility was used in enhanced oil recovery (EOR), a process where CO2 is injected into oil wells to boost the amount of oil that can be extracted. Because this process is more energy-intensive than conventional oil extraction, it can require high oil prices in order to be commercially viable. Petra Nova reportedly needed oil prices to be around $75 a barrel to break even, so it had already struggled throughout 2019, when the WTI price hovered just below this level. The crash in oil prices in the wake of the COVID-19 pandemic exacerbated the economic situation for the project.
Over its first three years of operation up to December 2019, the Petra Nova facility reported a 16% shortfall in the total amount of CO2 captured. This was primarily due to unexpected shutdowns of various parts of the process chain, with particular concerns being leaking heat exchangers and equipment scaling with calcium deposits.
So, are these issues a major red flag for the future of CCUS? Perhaps not. Although the issues with shutdowns may appear concerning, a major positive from the Petra Nova project is that there were relatively few issues with the core CO2 capturing technology, a solvent-based process developed by Mitsubishi. As the project continued, unplanned downtime fell significantly, with 95% of the target CO2 total being captured in 2019. As a result of the data obtained throughout the Petra Nova project, Mitsubishi has stated that the construction costs of its CO2 capturing process can be reduced by 30% and has also claimed to have developed an improved solvent. From a technical perspective, the Petra Nova project has been a valuable lesson that is likely to improve the next generation of carbon capture projects.
However, the economic issues faced by the project are unlikely to go away any time soon. CO2 utilization, where CO2 is converted into industrially useful products, is still in its infancy, and so enhanced oil recovery (EOR) is one of the only ways that the carbon capture and storage process can be directly monetized. Commercial viability through EOR relies on high oil prices and can lead to questionable sustainability benefits, especially if the oil that is produced is burned without CCUS.
The incoming 45Q tax credit system in the US that will provide up to $50 per tonne of CO2 permanently sequestered, alongside the carbon pricing schemes that are coming into force across the world, will help to alleviate some of the economic challenges of CCUS. However, the reality is that CCUS remains an expensive technology. Capturing one tonne of CO2 from the flue gas of a coal-fired power plant costs between $40-$80 using conventional technology, without including the costs required to transport it to a storage location and inject it into the ground. The process of capturing the CO2 from the flue gases is also energy–intensive, meaning that power plants fitted with CCUS equipment will have to burn more fuel to maintain the same level of power generation.
Through all this discussion on the Petra Nova facility, it’s important to remember that Petra Nova was primarily a technology demonstration to help identify any technical issues arising from scaling up the carbon capture process and refine the technology for deployment in new projects across the world. Its financial situation was also somewhat unique, relying on EOR and an array of tax incentives, grants, and credit. As the world moves away from oil, EOR is likely to be less of a driver of this technology, and as carbon pricing schemes become stronger and the market for CO2 utilization grows, the discussions over financial viability will begin to move on, too.
The next few years could be turbulent for the CCUS industry. However, it may be too important for the world to let it fail. Companies around the world are learning lessons from the Petra Nova facility, with R&D effort focusing on improving the cost efficiency of the carbon capture process and for developing methods for more effectively utilizing the captured CO2, such as through the development of more effective catalysts for converting CO2 into carbon-neutral fuels or commodity chemicals. The growing urgency of scale–up for CCUS deployment alongside the rapid pace of development in the industry is set to create numerous opportunities over the next few years. The report from IDTechEx, “Carbon Capture, Utilization, and Storage (CCUS) 2021-2040”, provides a comprehensive analysis of the technical and economic factors that are set to shape this growing industry over the next two decades.
For more information on this report, please visit www.IDTechEx.com/CCUS, or for the full portfolio of Green Technology research available from IDTechEx please visit www.IDTechEx.com/Research/GreenTech.
