The global capacity for carbon capture in 2030 is set to increase sixfold from today’s level, to 279 million tons of CO2 captured per year. Over $3 billion has been invested in carbon capture in 2022 so far.
- Carbon capture storage and use capacity is expected to grow dramatically, with projections for 2030 up by half since 2021.
- There is a shift from enhanced oil recover to carbon storage as part of long term decarbonisation plans.
- New technologies are being accelerated. Investment in direct air capture (DAC) in 2022 is already equivalent to historical investment to 2021.
Drastic growth in the market has led to a 44% increase in expected 2030 capacity compared to the outlook in 2021. The amount of CO2 being captured today is 43 million tons, or 0.1% of global emissions.
If all the likely projects that have been announced come online, there would be 279 million tons of CO2 captured every year by 2030, accounting for 0.6% of today’s emissions.
The projections come in the latest from research company BloombergNEF’s (BNEF) 2022 CCUS Market Outlook. That means the analysis covers not only carbon capture and storage, but also its potential for use – the transformation of emissions into product.
BNEF considers the projected 2030 annual capture of 279 million tons of capacity as just the tip of the iceberg. Julia Attwood, head of sustainable materials at BNEF said: “We haven’t seen the full impact of these credits yet, making this outlook a fairly conservative view of the future of carbon capture and storage. We expect to see another jump in announcements in 2022, especially in the US as developers there rush to make sure they meet the 2032 deadline for credits.”
How the market breaks down
Today, most capture capacity is used to collect carbon dioxide (CO2) from natural gas processing plants and used for enhanced oil recovery (EOR). By 2030, most capture capacity will be used for the power sector, for the manufacture of low-carbon hydrogen and ammonia, or to abate emissions from industrial sources (Figure 1).
Given the importance of CCSU for net zero, more has to be done faster
Carbon capture, utilisation and storage (CCUS) is a key technology needed to decarbonize hard-to-abate sectors such as petrochemicals and cement, and to provide 24/7 clean power through gas plants fitted with capture equipment.
Still, despite significant acceleration in the sector in the past two years, the world’s capacity for carbon capture is not being deployed fast enough to meet climate goals at the end of the decade, according to BNEF research.
Market shift from EOR to storage
The destination for captured CO2 is also due to change significantly from the status quo. In 2021, some 73% of captured CO2 went to enhanced oil recovery operations.
By 2030, storing CO2 deep underground is expected overtake oil recovery as the primary destination for CO2, with 66% of it going to dedicated storage sites.
This change is being driven by legislation that incentivizes storage over CO2 utilisation, and by projects that aim to use carbon capture and storage (CCS) as a decarbonisation route and must store the CO2 to meet their goals.
“CCS is starting to overcome its bad reputation,” said David Lluis Madrid, CCUS analyst at BNEF and lead author of the report. “It is now being deployed as a decarbonisation tool, which means the CO2 needs to be stored. A lack of CO2 transport and storage sites near industrial or power generation point sources could be a major bottleneck to CCS development. But we are already seeing a big increase in these projects to serve that need.”
Expansion is needed if the sector is to contribute effectively to net zero
Despite rapid growth in capture project announcements, the industry is still far from making a dent in global emissions. In order to be on track for net-zero and less than 2 degrees Celsius of warming by 2050, between one and two billion tons of CO2 would need to be captured in 2030, an order of magnitude higher than current plans. Legislators have recognized this mismatch and are ramping up their support for the industry.
The Inflation Reduction Act passed in the US increased tax credits for CCUS by 70%, making a viable business case for the technology in petrochemicals, steel, cement, and in some regions, power.
Incentives like these mean that countries, such as the US, will remain global leaders for CCUS. The US tax credits are now very generous, and the law is set to supercharge project announcements in the ethanol and petrochemicals sectors, as well as in direct air capture (DAC), to provide high-quality carbon offsets for the voluntary market.
While a nascent technology DAC is attracting attention
Venture capitalists have poured more than $1 billion into Direct Air Capture in 2022 – more than the total amount invested in DAC up to this point.
Companies are already becoming more ambitious in their projects. Soon after the US passed its Inflation Reduction Act, LA-based Carbon Capture announced its 5 million tonne carbon removal project in Wyoming, Project Bison. It is partnering with Frontier Carbon Solutions and, when completed, is expected to be the first direct air capture project in the US to use Class VI wells designed specifically for permanent CO2 storage.
