Carbon Capture and Sequestration technology—does the piece fit the Net Zero Emissions puzzle?

According to The State of Climate Ambition, UNDP report (December 2022), Small Island Developing States (SIDS) have suffered significant economic losses due to climate change-induced hazards. From 1970 to 2020, these losses amounted to a staggering US $153 billion. It is important to note that, despite being responsible for only 1% of global greenhouse gas (GHG) emissions, SIDS are the most vulnerable to the impacts of climate change.

This vulnerability is further exacerbated by the fact that their adaptive capacities are constantly being eroded due to the burden of recovery from these climate change-induced disasters. To address these challenges, SIDS are advocating several approaches. These include pushing for additional funding for the Loss and Damages Fund. Additionally, SIDS are also focused on mobilizing financial pledges through changes in the international climate finance architecture at the upcoming COP 28. These financial pledges are essential in ensuring that SIDS have the necessary resources to adapt to and mitigate the impacts of climate change.

Moreover, SIDS are calling for the phasing out of fossil fuel subsidies and advocating for emission-disparity-driven climate financing. This approach considers the emissions disparities between developed and developing countries and seeks to allocate financial resources accordingly. One of the key action areas for COP 28 identified by the 2nd Caribbean SIDS High-level Dialog, which took place in Grenada in September 2023, is implementing mechanisms of legal action against major emitters.

The International Energy Agency’s World Energy Outlook report for 2023, under the Stated Policies Scenario (STEPS), makes a significant prediction regarding the future of fossil fuels. According to the report, we are entering a new phase where the growth era for fossil fuels is ending. This prediction is based on careful analysis and forecasting, indicating a decline in coal, oil, and natural gas demand in the coming years.

The report suggests we will reach peak demand for these fossil fuels by 2030. However, it is important to note that even after reaching this peak, the projected demand is still insufficient to meet the ambitious goals of the Net-Zero Emissions (NZE) scenario. This raises concerns about our ability to transition to a more sustainable energy future. Moreover, the report highlights significant disparities in demand trends for different fossil fuels, posing challenges for global energy security.

These projections highlight the environmental implications of continued reliance on fossil fuels and the economic and financial obstacles associated with new oil and gas projects. It becomes evident that we need to explore alternative solutions to address these challenges and drive investments towards the NZE scenario in the fossil fuel sector. One solution is to adopt Carbon Capture Utilization and Storage (CCUS) technologies. These technologies can play a crucial role in reducing carbon emissions and capturing greenhouse gases, thus mitigating the negative impact of fossil fuel consumption.

By investing in CCUS, we can take significant steps towards achieving our sustainability goals. Furthermore, the growth of CCUS technology itself is expected to align with the expansion of hydrogen energy and other clean technologies. This presents an exciting opportunity to reduce our carbon footprint and promote the development of innovative and sustainable energy solutions.

CCUS is a crucial component of the NZE scenario, accounting for 8% of total emissions. It is the only available technology that can directly or indirectly remove carbon dioxide emissions from the air. However, a major challenge that hinders heavy investments in CCUS technologies is the limited utilization of the captured underground carbon dioxide. The sequestered carbon dioxide is primarily used in manufacturing urea and polymers, with potential uses including methanol generation. However, to achieve feasible and scalable net zero emissions, the manufacturing processes must rely on renewable sources, and the carbon dioxide should mainly come from direct air capture.

Although CCUS plays a critical role in sectors that are difficult to decarbonize, such as the aviation, steel, and cement industries,. Therefore, making renewables more affordable and accessible can directly impact the cost of implementing CCUS technologies. One major application of CCUS technologies is in Enhanced Oil Recovery (EOR) applications, which presents a dilemma. On the one hand, it provides a strong case for investing in CCUS technologies, but on the other hand, it can perpetuate dependence on fossil fuels due to economies of scale.

This raises the question of the extent to which CCUS is a viable option. While CCUS is an indispensable step towards achieving the NZE scenario, it is essential to consider carefully the level of investment it should receive relative to other clean technologies. These are significant arguments that need to be considered when discussing the future of CCUS.

Historically, the fossil fuel sector has made significant investments in CCUS technologies. These investments have primarily been driven by the successful use of this technology in EOR operations. As a result, a utility chain centered around EOR, which is solely controlled and monitored by the oil and gas sector, has been established. To ensure the success of CCUS in the NZE scenario, it is crucial to disrupt this utility chain. A decentralized chain, particularly one where storage is handled separately, is vital to creating a sustainable market for CCUS technology.

In conclusion, to achieve this, policy design should allow other market players with niche portfolios to enter the utility chain. Different rules, regulations, risk-reduction protocols, and infrastructure improvements will need to be implemented to compensate for the lack of funding for CCUS technology designed explicitly for the NZE scenario 2050.

• Aditi Chaturvedi (This article was originally written on December 16, 2023.)

Aditi, a member of the Island Policy Lab, is a doctoral student in energy and environmental policy at the University of Delaware.