Rystad: Carbon capture capacity poised to surge more than 10 times by 2030

As the energy transition accelerates, global carbon capture, utilization, and storage (CCUS) projects are on track to pull more than 550 million tonnes of carbon dioxide (CO₂) out of the atmosphere every year by 2030, according to Rystad Energy research. This capacity growth represents a more than tenfold increase over today’s 45 million tonnes/year (tpy) of CO₂ captured.

Project announcements surged in 2021, with the current pipeline containing more than 200 developments, three times more than are currently in operation globally. This growth is set to build in coming years as countries and companies work to meet 2030 net-zero targets by reducing and offsetting their carbon footprint, Rystad Energy said.

Based on learnings from current developments and expected economies of scale, CCUS project cost is expected to land at $75-100/tonne of CO₂ captured by 2030. Total market value of the sector could reach $55 billion/year by 2030.

However, even with this rise, total carbon capture capacity could fall far short of the levels needed to limit global warming to meet Rystad Energy’s 1.6°C climate scenario or the International Energy Agency’s (IEA) net-zero scenario. Both require carbon capture of close to 8 gigatonnes (Gt) of CO₂ by 2050, a significant increase from the 550 million tpy predicted by 2030. If the world is to meet these targets, aggressive investment and deployment of CCUS technology will be required from 2030 onwards.

“With global CO₂ emissions rebounding to new record highs post-COVID-19, the demand for CCUS projects is accelerating. Amplified by widespread energy security concerns amid the Russia-Ukraine war, calls for faster decarbonization of the energy industry, especially in Europe, are growing louder,” said Yvonne Lam, Rystad Energy’s head of CCUS research.

As a result of supportive policies and incentives, Europe and North America will dominate the CCUS market by 2030, contributing 450 million tpy of capture capacity, more than 80% of the projected global total of 550 million tpy.

European capacity is projected to hit 222 million tpy by 2030, a sizeable jump from the 7 million tpy of CO₂ captured today. The continent’s emission allowances have been on a rollercoaster since Russia’s invasion of Ukraine, which is causing turmoil in the European Union (EU)’s emissions trading system. While no additional CCUS projects from the power sector or additional blue hydrogen production are expected in the future, Europe’s high carbon price is set to be a catalyst for CCUS project uptake. A third of the anticipated announcements are likely to come from the UK, the Netherlands, and Norway combined.

In North America, Canada recently announced a tax credit in this year’s budget, including a 60% tax rebate for direct air capture (DAC), 50% for traditional capture technology, and a 37.5% credit for CCUS transportation and storage equipment. This will significantly improve CCUS economics for projects in Canada, coming closer to the nation’s current average cost of emitting CO₂ of $30/tonne.

In the US, the tax credit provided under Section 45Q will increase to $85/tonne of CO₂ from $50/tonne if the Build Back Better bill is passed by the Senate. The US infrastructure bill passed yearend 2021 will provide the CCUS market with an additional boost.

Economic and financial constraints hinder advancement of planned CCUS projects, but more countries are starting to see the importance of providing support to such projects. Demand for carbon capture projects through to 2030 will be predominantly driven by policies and support, especially for hard-to-decarbonize sectors such as cement, steel, maritime, and chemicals, Rystad said.