Carbon capture and storage tech too risky an investment in absence of quality data and low commercial readiness, report finds
- There is a lack of quality data to prove that the technology is commercially ready and cost competitive, says analyst and report author Michael Salt
- World should prioritise renewable energy deployment, electrification and grid modernisation to support power generated by renewable energy
The risks of investing in carbon capture and storage (CCS) projects are still high, despite their potential and promise of driving down carbon dioxide emissions to mitigate climate change.
There is a lack of quality data currently to prove that the technology is already commercially ready and cost competitive, said Michael Salt, an energy economics and finance analyst. The global focus should remain on technologies that have been proven economical and mature, such as renewable energy deployment, electric vehicles and power grid modernisation, he added.
Salt has authored a report published by the US-based Institute for Energy Economics and Financial Analysis (IEEFA) this week, which has surveyed different types of CCS applications to see whether they are ready for investment and commercialisation.
“It is important for investors to distinguish between the type of CCS being discussed, as risks and opportunities differ in terms of technical and commercial maturity, environmental and social implications, as well as carbon mitigation potential,” Salt said.
The report’s findings are significant because under the Paris Agreement, the world must limit global warming to below 1.5 degrees Celsius by mid-century to prevent the worst effects of climate change. However, data from many credible organisations, such as the World Meteorological Organization, suggests it is very likely that the world will overshoot this temperature budget, and that CCS technologies are absolutely needed.
The CCS applications surveyed in the report include processes that capture carbon dioxide from sources such as power plants, as well as processes that capture it from the atmosphere.
Overall, it found that the availability and quality of data from testing and operations of CCS technology across all applications were generally weak, which creates uncertainty about real technology, commercial readiness and cost competitiveness.
CCS has been deployed widely only recently, so many of its applications are still emerging technologies. However, even in gas processing, where CCS has been applied since the 1970s, data for actual capture rates and performance is still generally unreliable, according to the IEEFA report.
In power generation, CCS has found meeting industry target capture rates challenging and is generally not seen as cost competitive with renewables, Salt said.
In industrial sectors such as steel, concrete, ethanol and fertiliser production, CCS has been viewed as a promising option for cost-effective, scalable emissions reductions. However, the validity of CCS applications is yet to be tested, as there are not enough commercial-scale projects for research to be conducted.
Additionally, the cost competitiveness of CCS in industrial applications is also challenged by other greener production pathways, such as using green hydrogen, a zero-emission fuel that is becoming cheaper.
The report also mentions other atmospheric removal technologies, such as Bioenergy with CCS and Direct Air CCS. These two methods use either plants or technology to capture carbon dioxide directly from the atmosphere, followed by either utilisation or storage.
Although they are not widely deployed yet due to high costs and early-stage technologies, once commercially ready, these direct carbon removal technologies have a huge potential for preventing global emissions from overshooting set targets, the report said.
The world should prioritise investments in renewable energy deployment, electrification and grid modernisation to make renewable power more stable and secure, Salt said. Other climate solutions, such as vehicle electrification to reduce tailpipe emissions and monitoring and abating methane leakage from gas extraction are also reliable and great investment opportunities.
“When CCS is consistently showed at commercial scale, project costs and technical performance will need to be made available and verified to understand the actual deployment and mitigation costs, to prove it is an effective abatement option,” he added.
Additionally, the permanence of carbon dioxide storage will need to be proven over millennia, and will require appropriate monitoring and verification standards, liability frameworks, and additional emissions buffers to protect the climate and public from carbon dioxide leakage, Salt said.