Carbon capture, use and storage (CCUS) is a solution technology that helps industrial sectors as well as power sequestrate and store carbon dioxide safely and permanently. The International Energy Agency (IEA) points out that if no deep decarbonisation solution is provided, the existing and planned infrastructure stock in power and industry are set to consume 95 per cent of the carbon emissions allowances for limiting global warming to 1.5°C.1

The IEA also estimate that CCUS deployment for Paris goals will require investment of around USD9.7 trillion.2 The bulk will come from the financial sector but only one large scale CCUS facility has received commercial financing today. Uncertainties around whether CCUS can help solve climate and insufficient evidence of how the technologies can achieve commercial scale are the key barriers preventing flows of capital to CCUS.

This paper by the HSBC Centre of Sustainable Finance aims to showcase the practical opportunities available for the financial sector to support the Paris Agreement goals through CCUS. It does so by addressing the following questions:

  1. How do the CCUS technologies work?
  2. When can the applications of CCUS support significant emissions reductions in alignment with Paris goals?
  3. What is enabling the large scale deployment of CCUS?

Key messages

  • Achieving economies of scale will increase the chances for CCUS to become a cost effective decarbonisation solution. There are three key enablers of CCUS deployment at scale: i) Concentration of large emitters in a production / industrial region; ii) Supportive policy and government grant funding; and iii) Proximity to existing transport and storage infrastructure or the opportunity to build new infrastructure in partnership. Large CCUS projects are increasingly shaping up as a network of large emitters that take advantage of their relatively close proximity to either trade CO2 as a production material or share transport and storage infrastructure to geological sequestration.
  • The IEA estimate 115GtCO2 to be addresses with CCUS between 2018 and 2060 for Paris goals (13 per cent of all required carbon emissions), but 93 per cent of the emissions cuts will be through geological sequestration. There is sufficient underground storage potential with the top 12 countries offering a sequestration opportunity of hundreds of billions of tCO2. Most advance storage projects moving to commercial stage have received public support for appraisal and feasibility studies, which can spin several decades.
  • Because of lower carbon capture costs, commercial scale has been achieved mostly in activities like gas processing, hydrogen production from natural gas, and fermentation of biomass (84 per cent of the facilities). Projects entering the pipeline are testing technologies that aim to make carbon capturing cheaper in other sectors like cement and steel.
  • CCUS applications in heavy industrials, hydrogen production, and flexible power generation from natural gas and bioenergy are discussed in the paper as they help achieve deep decarbonisation even after considering life-cycle emissions. Life-cycle emissions mean all associated emissions of the activity, from the manufacturing process to the use of the goods. The EU Taxonomy provides concrete guidance in this regard.

1 IEA. 2019. Transforming Industry through CCUS

2 IEA. 2019. The Role of CO2 Storage

 

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