This year we will witness a number of milestones in technology to capture, use and store carbon dioxide from industrial sources and power plants – technology we need to reach our goals to reduce greenhouse gas emissions. We will need continued policy and financing support, however, to accelerate deployment worldwide. Innovative research in finding uses for captured carbon will also be essential.
In 2016, the Emirates Steel Industries project in Abu Dhabi will be the world’s first steel plant with carbon capture, use and sequestration (CCUS) technology to begin operations. Globally, seven commercial-scale CCUS projects are under construction and many more are in the planning stages.
In the U.S., two notable CCUS projects are expected to come online soon, including the first-ever incorporation of CCUS technology at a bioethanol refinery at the Archer Daniels Midland project in Illinois and the incorporation of CCUS technology at the coal-fired power plant at the Southern Company Kemper project in Mississippi. Not far behind, in 2017, the NRG Energy Petra Nova project in Texas will also incorporate CCUS technology on coal-fired power generation.
These anticipated project developments reflect the fact that CCUS technology is advancing around the world. Fifteen commercial-scale CCUS projects are operating. Eight of those are in the United States, which has been a leader in this area.
Recent North American milestones include the retrofit of the SaskPower Boundary Dam coal-fired power plant project in Canada with CCUS technology in 2014. In April 2016, the company announced it had exceeded the carbon capture reliability goals established for the technology. SaskPower estimates it could cut costs up to 30 percent on future units based on the experience it has acquired. Also in Canada, in November 2015, Shell incorporated CCUS technology on hydrogen production at the Quest project in Alberta.
CCUS technology grows increasingly important as nations begin to implement their emission reduction pledges under the Paris Agreement. The Intergovernmental Panel on Climate Change Fifth Assessment Synthesis Report concluded that CCUS technology will be essential to meet mid-century climate goals of keeping global temperature rise within 2 degrees Celsius of preindustrial levels. In fact, without CCUS, mitigation costs will rise by 138 percent.
Even as nations take on climate change and diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise by 48 percent over the next 30 years led by significant increases in the developing world. In Asia in particular, power generation from fossil fuels is expected to continue to grow over the near term.
Earlier this spring, the International Energy Agency (IEA) published a study on retrofitting China’s coal-fired power plants with CCUS technology, which will be critical because China has roughly 900 GW of installed coal-fired power plant capacity and has committed to peaking its CO2 emissions by 2030. The IEA study concludes that one-third of the coal fleet in China is suitable for retrofitting with CCUS technology.
Aside from the power sector, CCUS is a critical technology for the industrial sector, which contributes roughly 25 percent of global emissions. Carbon dioxide (CO2) is a by-product of many manufacturing processes for chemicals, steel, and cement production as well as refining. There are no practical alternatives to CCUS for achieving deep emissions reduction in the industrial sector.
In some cases, the cost of incorporating CCUS technology into industrial processes may be lower than in the power sector because the CO2 stream in the industrial sector is often relatively pure, i.e. less mixed with other gases. A number of industrial CCUS projects are already operational including the Uthmaniyah natural gas processing project in Saudi Arabia that came online in 2015. In the U.S., the Air Products Port Arthur project in Texas incorporating CCUS technology on hydrogen production has been operational since 2013.
As new projects begin operating around the world, the Global CCS Institute concluded that policymakers can learn lessons for CCUS from the development of offshore wind in Europe. Those projects benefited from policy support from national governments through feed-in tariffs and long-term offshore wind capacity targets in national energy plans. The report also concludes that a multi-source approach to finance, including project finance, export credit agency support, multilateral institution lending, and green bank funding, will be helpful for CCUS technology.
Finding uses for the captured carbon will also be essential. At the January World Economic Forum meeting in Davos, Switzerland, the Global CO2 Initiative was launched to develop innovative approaches to transform CO2 into commercial products. Promising options include construction materials, plastics, chemicals, and agricultural products.
As researchers continue exploring new uses for captured carbon, CCUS project developments this year and next continue to highlight the significant potential for CCUS technology to contribute to global emissions reduction.
This blog post first appeared in the Summer 2016 edition of The Current, a publication of the Women’s Council for Energy and the Environment.