DNV’s Energy Transition Outlook (ETO) reveals a concerning trajectory leading us toward 2.2°C of global warming. With record yearly greenhouse gas emissions anticipated in 2023 and 2024, the roll-out of CCUS (Carbon Capture, Utilization and Storage) has never been more important.
Hydrocarbons and the evolution of global energy systems
DNV’s ETO [1] research examines our future energy systems, including the role hydrocarbons will play. Fossil fuels currently provide around 80% of primary energy supply globally. DNV forecasts that by mid-century, they will still supply 48% of primary energy, with natural gas forecast to be the largest energy source. Whilst substantial increases in renewable energy and efficiency improvements will be seen, it is clear that hydrocarbons and their associated CO2 emissions, are likely to be features of energy systems in the coming decades.
Decarbonization solutions and beyond
The importance of achieving Net Zero is well understood and widely accepted. With Net Zero absolute and energy systems expected to incorporate hydrocarbons, CCUS is a must. CCUS is a technology that can be retrofitted to existing emission sources. In industrial sectors such as cement, steel, and chemical production it is one of the only feasible decarbonization solutions. CCUS infrastructure can also enable Carbon Dioxide Removal (CDR) at scale; providing the means to store CO2 removed using technologies such as Direct Air Capture and Bio-energy CCS.
Advancing CCUS deployment
To keep global warming below the Paris Agreement’s 1.5°C target, CCUS deployment must accelerate rapidly. Today, policy and regulatory challenges are the main hurdles for implementation; the technology itself is well-proven, with over 40 large scale CCUS facilities in operation. Amine-based CO2 capture, today’s state-of-the-art post-combustion capture technique, is well-understood and available commercially. More than 5000 miles of CO2 pipelines are in operation in North America, and CO2 has been stored in the subsurface there for over 50 years.
Progress is being made. According to the Global CCS Institute’s 2023 Global Status of CCS Report, the CCS project pipeline has grown more than 50% annually for the last 3 [2] years; reflective of supportive policy and regulatory frameworks. A number of high-profile projects have taken final investment decision including Porthos in the Netherlands; the first CCS project in an EU member state. Despite this growth, following the current trajectory, CCUS technologies are forecasted by DNV to capture approximately 6% of remaining emissions in 2050 [1], illustrating the disparity between deployment and what is needed for Net Zero.
Most Net Zero scenarios require CCUS to scale up from today’s operational capacity of 49 Mtpa over 100 times by 2050; a significant challenge. Collaboration between industry, the financial sector, and governments will be essential to enable such levels of deployment. Industry must identify prospective carbon capture projects and the value chains necessary to bring them to operation. The financial sector has a crucial role to play in ensuring that CCUS is part of climate change strategies, and that the technology is eligible for sustainable finance. Policies and incentives should be developed by governments to support a portfolio of projects and be repeatable. Mechanisms should increasingly shift from enabling individual projects to enabling an industry.
Navigating the path to Net Zero: Essence of CCUS in hard-to-abate industries
In conclusion, to achieve net zero emissions, CCUS is a must, especially in hard-to-abate industrial sectors such as cement, steel, and chemical production. Policy and regulatory challenges are the main hurdles for CCUS implementation, but the technology itself is well-proven, with large-scale CCUS facilities in operation today. In the coming decades, CCUS deployment must accelerate significantly, requiring collaboration between industry, governments and the financial sector.
Unlocking investment potential: Join the dialogue on the inflection point for CCUS deployment
Have we reached an inflection point where CCUS transforms into an attractive investment opportunity? Join this dialogue at our 1-hour hybrid breakfast seminar for the finance community on 17 January 2024. As part of DNV's "Financing the Energy Transition" series, the seminar explores the financing landscape for CCUS deployment, featuring expert insights from:
- Albena Vassileva, Executive Director Infrastructure, IFM Investors
- René van der Meer, Head of Business Development New Energy, Neptune Energy
- Jamie Burrows, Head of CCUS Venture, DNV
- Martijn Maandag, Director Due Diligence, DNV
Whether in Amsterdam or via live stream, secure your spot by registering here: Financing the Energy Transition: Have we reached the inflection point for CCS deployment?
[1] DNV Energy transition outlook 2023
[2] Global CCS Institute - Global Status of CCS 2023
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