Traditionally, CCS deployments were primarily used for enhanced oil recovery EOR programmes in the US, Canada, Brazil, and, to some extent, in the Middle East. However, CCS still remains a niche technology whose adoption has been hindered by technology and financing challenges.

Geographic Trends

Listed below are the key geographic trends impacting the CCS theme, as identified by GlobalData.

Tax incentives supporting CCS adoption in the US

Industrial players in the US are offered a tax credit for capturing carbon emissions from their operations under the Section 45Q of the Internal Revenue Code (IRC). This incentive could encourage cement manufacturing, petrochemicals, and other carbon-intensive sectors to invest in CCS facilities. The ethanol industry in the US alone is estimated to generate around 50 million tonnes per annum (Mtpa) of CO2. The US is also considering policy initiatives for the development of infrastructure for CO2 transportation and storage. The country has traditionally been a leader in CCS with 14 active projects as of December 2020.

Majority of these projects used the captured CO2 to support EOR activities at mature oilfields. The country is now leading a new wave of CCS developments with 19 major projects in the pipeline by 2030. Around half of these projects are planning to permanently store the captured carbon in underground facilities, a noticeable change from the earlier preference for EOR.  New developments in the US are covering sectors with relatively low CCS penetration, including power generation, chemicals, cement, and waste-to-energy.

European countries taking advantage of industrial hubs and clusters for capturing CO2

Industrial clusters have been the engine of economic growth in Europe. However, these are also responsible for around 20% of the greenhouse gas (GHG) emissions in the region. Hence, decarbonisation of these clusters is critical for accomplishing the climate goals of the region. The European Union (EU) is recommending CCS as one of the essential technologies for emission reduction. It is working towards developing a framework for the development of business models for CCS.

The EU is providing technical and financial support for CCS projects, while also contributing to information exchange among industrial players to bring down the project costs. The Zero Emission Platform, which provides technical advice to the EU, has identified 12 major clusters across Europe. All these clusters emit CO2 in large volumes and hence are perfect for setting up commercial CCS projects.

CCS – the mainstay of Japan’s hydrogen ambition

Japan has set an ambitious target of achieving net zero carbon emissions by 2050. This goal will be achieved by increasing the share of hydrogen and renewables in the country’s primary energy mix. However, in the near term, the country will continue to rely on thermal power for its energy needs. To offset the emissions generated from power plants and other sectors, Japan is assessing the commercial viability of CCS facilities. It aims to retrofit all coal-fired power plants with CCS by 2030, which may sound unrealistic, but could accelerate technology development in the country.

In 2012, Japanese government began working on the first large-scale CCS demonstration project, located in the Tomakomai city on Hokkaido island. It intended to assess the potential of storing CO2 in a seismically active country. The gas was transported to offshore reservoirs for storage via pipeline. The idea was to inject CO2 for around three years to store 300,000t of the gas. This target was reached in November 2019.

The project is currently being monitored for leaks as well as for any potential seismic activity due to the reservoir. Japan is looking to further develop the CCS technology by collaborating with the US, Australia, and South-East Asian countries. It is likely to announce a formal partnership in this regard in 2021. The sole aim of this partnership is to commercialise CCS by 2030

China’s desire to switch to clean energy could support CCS development

China has emerged as one of the world’s leading energy consumers in recent decades owing to its rapid industrialisation and infrastructure developments. The economic growth achieved from these developments have also given rise to increased urbanisation and consumerism – both factors driving energy consumption upwards. Although, fossil fuels remain the major primary energy source for China, it has also started deploying clean energy sources to address urban pollution.

In September 2020, China announced its goal to become carbon neutral by 2060. This would require a phased effort from government and private enterprises in enabling the energy transition. CCS would play a key role in lowering the country’s carbon emissions, especially in sectors, such as power generation. Currently, three CCS projects are operational in the country with a cumulative capture capacity of around 1.2Mtpa. Sinopec, the largest national oil company of China, is retrofitting a chemical production facility and a power plant, both in the Shandong province, with CO2 capture technologies

Policy support enabling CCS deployment in Australia

The Australian government has introduced the Carbon Capture and Storage Flagships programme. This is aimed at increasing the adoption of CCS within the country by providing financial and technical assistance for demonstration projects. Under this programme, the country has provided funding for three demonstration projects – South West Hub in Western Australia; and CarbonNet and Otway Geological Storage and Monitoring Demonstration Project; both in Victoria.

The Flagships programme also supports R&D initiatives for development and commercialisation of large-scale CCS projects. Australia also offers the Low Emissions Technology Development Fund to finance commercial-scale low-carbon projects that would contribute towards achieving long-term emission reductions.

This is an edited extract from the Carbon Capture & Storage – Thematic Research report produced by GlobalData Thematic Research.