A recent report by Wood Mackenzie highlights the importance of Carbon Capture Utilisation and Storage (CCUS) in global efforts to reach net-zero emissions by 2050. However, it warns that economic barriers are significantly hindering the deployment of CO2 utilisation technologies.
In Wood Mackenzie’s 2050 net-zero scenario, achieving more than 7 billion tonnes per annum (Btpa) of CCUS capacity is essential. Currently, 500 million tonnes per annum (Mtpa) of carbon capture capacity have been announced worldwide, with over 95 percent of this dedicated to storage and less than 5 percent (22.4 Mtpa) focused on utilisation.
“Expanded CO2 utilisation could bolster overall carbon capture economics, but current high costs, insufficient subsidies, and unsubstantial markets for green premiums are limiting appetite for utilisation growth,” stated Rohan Dighe, CCUS research analyst at Wood Mackenzie.
While CO2 mineralisation to high-purity limestone shows promise with competitive returns, other methods, like the production of e-Hydrocarbons using green hydrogen, remain economically unviable. These e-Hydrocarbons currently cost three times more than existing technologies, largely due to the high cost of green hydrogen, which makes up over 80 percent of production costs.
Though there is potential for significant markets, such as aggregates, which could reach more than 500 Mtpa, the current costs of conversion make these markets uncompetitive.
There is a need for robust policy support and tax incentives to promote CO2 utilisation. While incentives like the US 45Q and the Canadian Investment Tax Credit exist, they are limited in scope and fail to provide sufficient revenue to justify large-scale projects. The EU, which has a legislated CO2 utilisation mandate, limits its application mainly to e-fuels in aviation.
Without markets for these products, utilisation economics will be disadvantaged, the report said. Declines in feedstock and technology costs and the development of policy incentives are crucial for utilisation to become a legitimate, widespread enabler of carbon capture deployment.