Is CCUS the solution?
Few people dispute that CO₂ emissions must decrease. But views of CCUS range from it being the saviour of the oil and gas industry to a cynical attempt to keep hydrocarbons flowing at any cost. Either way, it is urgently needed
If oil and gas professionals from around the world, braving the coronavirus and British winter, were expecting a warm welcome from the Energy Institute at International Petroleum (IP) Week in late February, they were in for a rude awakening.
“We need to remove greenhouse gases from our energy system as quickly as possible,” according to the Energy Institute president Steve Holliday in his opening address. “It may even challenge the very relevance and survival of this sector.”
He adds that the challenge remains “enormous” to “radically” change the energy system. He expects the November COP26 meeting in Glasgow to be about “just how ambitious we can be in constraining carbon”.
He is not content with the pace of decarbonisation—even if the entire industry followed Repsol, BP and others that have announced net-zero by 2050 pledges. “We need more, cleaner energy and we need it fast. When I hear all the talk of 2050, I have to say, I worry. It is a long way away,” he says, adding that such a distant target encourages a mistaken belief that action can be put off. “My own belief is that this decade… is the key. That is what will determine success or failure.”
The International Energy Agency (IEA)—which found a small decrease in CO₂ last year due to the strong growth of renewables, natural gas replacing coal and an increase in nuclear—takes an equally forceful but positive approach.
Call to action
Global oil and gas companies have a “huge opportunity” to “get a social license in the fight against climate change” by pushing carbon capture, utilisation and storage (CCUS), says Fatih Birol, executive director of the IEA. The energy sector is responsible for approximately three-quarters of greenhouse gas emissions, he notes. “But there are ways, options, that we can use to reduce [energy sources’] carbon footprints.”
Under current government policies, the global temperature will increase more than 4°C above pre-industrial levels by 2100, which Birol says, “would have catastrophic implications for all of us”. Even if all promised policies were implemented the rise would still be 3°C, well above the COP25 Paris Agreement target of ‘well below’ 2°C. “We have to bring emissions down,” he says. “The science is now beyond any reasonable doubt.”
Just as IP Week was dominated by climate change, to the grumbling of some delegates, Birol says the same can be said of the more secretive discussions at the World Economic Forum in Davos, where he has chaired the energy advisory board for 14 years. “It is the first time I have seen climate change dominating all the discussions… of the government leaders, the investors, the energy industry, everyone. The main topic was emissions.”
“The science is now beyond any reasonable doubt”
The IEA has identified three major areas through which this can be achieved: efficiency, renewables and clean energy technologies. Efficiency improvements and renewables are the “two bedrocks” for reducing emissions, says Birol. “The most critical technology, in my view, is carbon capture, utilisation and storage (CCUS).”
He is also in little doubt about who should take the lead. “Oil and gas companies, in my view, may be a very important driver of clean energy transitions because these companies have huge engineering experience,” he says, while also noting that they have deep pockets. “They can push some of the technologies which are not mature enough…such as CCUS, such as hydrogen.”
CCUS is the most plausible route for curtailing emissions while still benefiting from hydrocarbons and is certainly the favoured approach of the US. The question is the extent to which it can be rolled out, at what pace, to match the likely growth in energy consumption as perhaps another billion people join the middle classes by 2050.
The limiting factor is suitable geological storage sites. The UK has a lot of suitable sites in the North Sea and the east of the Irish Sea, probably equal to more than 100 years of UK emissions. If CCUS is to work globally on an industrial scale, it needs to work in the UK.
The UK emits about 400mn t/yr of CO₂ and the Committee on Climate Change, in its Net Zero report, sets out a scenario where between 75mn t and 175mn t of CO₂ is captured and stored each year by 2050. “That is potentially more than a quarter of the UK’s emissions being eliminated through CCS,” says Corin Taylor, principle consultant, DNV GL.
The UK plans to deploy carbon capture for storage, not utilisation. “It will effectively be storing a waste product, preventing it from getting into the atmosphere and causing climate change, which is the important thing. It could potentially take out millions of tonnes of CO₂ that would otherwise be in the atmosphere. That is why it matters, why CCS can be a big contributor.”
In other parts of the world there will not be so much capacity—it will vary country by country. “But ultimately, at some point, there will be a limit,” says Taylor. “We could not carry on doing CCS for a thousand years.”
CCS is very important because it can remove emissions from the sectors that are more difficult to decarbonise, such as “certain industrial processes, hydrogen production and for electricity when the wind is not blowing—and also for negative emissions,” he says. “Whether it is direct air capture or bioenergy with CCS, if you want net zero, you will probably need negative emissions to offset those residual emissions that are hard to get rid of. For me, CCS is important across the piece.”
The only way to get to 1.5°C is with CCUS because it enables you to remove CO₂ from the atmosphere, says Nigel Jenvey, global head of carbon management at consultancy Gaffney, Cline & Associates (GCA). “It is not only a fossil fuel technology, it is a technology for the wider industrial landscape, to decarbonise a lot of hard-to-abate sectors such as steel, cement, pulp and paper production and allow the world to achieve a net-zero, 1.5°C future. Because those factors, there is so much more engagement in CCUS in the last two years.”
It can take a few years to organise planning permission or permitting, design and funding for projects in the UK. Industrial clusters that have done feasibility studies and are now looking at Feed studies, funding and planning applications, could look to start construction around 2024 and capture emissions two years later.
Jenvey has seen false dawns for CCUS before, not least in the aftermath of the financial crisis. “But post Paris [Agreement] the investment community has been active around the greening of the financial system, with the Task Force on Climate-related Financial Disclosures (TCFD), and questions around the long-term nature of oil and gas. There has been a lot more interest about CCUS as well as nature-based solutions,” he says.
The commitment of the industry to tackling carbon emissions is of course mixed. An IEA study published in January found that the oil and gas industry is investing just 1pc of capex globally in the so-called non-core businesses of renewables and clean energy technologies—although the leaders may invest 10pc of capex. “There is substantial room to improve to quantify [that] we are investing in both domains,” notes Birol.
North America leads the world in the development and deployment of CCUS, where its use for enhanced oil recovery (EOR) is a major economic driver.
Of the world’s 51 large scale projects, 19 are fully operational, four are under construction and 28 are in development, according to the Global CCS Institute. The 51 are estimated to have combined capture capacity of 96mn t/yr.
The National Petroleum Council, a US federal advisory committee, reported in December 2019 on its two-year study that aimed to provide clarity of what it would take to deploy CCUS at scale in the country. A tax credit to support CCUS is on the statute books and is awaiting the IRS to provide workable details.
The IEA’s sustainable development scenario entails c.3bn t of CCS globally, from c.35bn t of CO₂ emissions from energy today, so it could reduce emissions by one-tenth. “If it is developed at massive scale, it can make a pretty good contribution,” says Taylor. “In the US, the regulatory processes are a bit quicker. There is quite a lot of CCS in the US already and they also have a tax credit to fund it. The US has a more visible route to market so I imagine CCS will develop more quickly there.”
“It is not only a fossil fuel technology, it is a technology for the wider industrial landscape, to decarbonise a lot of hard-to-abate sectors”
Jenvey, Gaffney, Cline & Associates
Europe has been relatively slower to commit to CCUS, instead focusing on renewables. While capital has not yet been deployed at scale, there is considerable momentum for projects to leave the drawing-board stage. In the UK, BP, Eni, Equinor, Shell and Total have signed a memorandum of understanding (MoU) for Net-Zero Teesside, the first decarbonised industrial cluster in the UK set to be operational by 2030. Similarly, Equinor, in partnership with Shell and Total, signed an MoU last September for its Northern Lights project, with seven firms to investigate the possibilities for CO₂ storage under the Norwegian Continental Shelf (NCF).
In the Middle East there are grand plans to build out already large-scale projects. For example, Adnoc can capture 800,000 t CO₂/yr at its Al Reyadah facility. It announced on 25 February that it is on track to expand CCUS capacity “at least fivefold” by 2030, which would absorb as much CO₂ as a forest twice the size of the UAE. “As we drive our CCUS targets, we are focusing on innovative and cost-effective solutions that make economic sense,” says Ahmed Al Jaber, UAE oil minister and CEO of Adnoc.
While the industry seems firmly behind CCUS, it divides the green movement. “As it will take a long time to develop renewables at scale, in the meantime CCS gives us some options to abate emissions on a big scale,” says Taylor. “Other people do not like CCS as they see it as just getting more of the problem out of the ground.”
He says we need to be “pro everything” in order to really tackle the scale of the challenge including CCS, hydrogen, battery electric vehicles, wind, solar, nuclear and gas: “We need all these if we are to get to net-zero emissions.”
Indeed, it is highly unlikely that a single technology could sufficiently reduce emissions. “It is impossible to come to the desired level of emission reduction only by one fuel, one solution,” says Birol. “If we take it seriously, we need all clean energy technologies implemented.”