WoodMac: For net-zero by 2050, carbon capture, utilisation and storage needs ‘seven-fold’ boost
As global carbon capture, utilisation and storage (CCUS) capacity is nearing 1 billion tonnes per annum, the new U.S. energy bill – the Inflation Reduction Act (IRA) – is expected to boost the uptake further, however, Wood Mackenzie, an energy intelligence group, believes that more is needed to meet net-zero by 2050 goals.
Wood Mackenzie pointed out on Friday that the planned global CCUS capacity pipeline has reached 905 million tonnes per annum (mtpa), with more than 50 new projects announced this quarter. This Verisk business confirmed that these findings come from its ‘CCUS Market Update for Q2 2022’ report.
Commenting on this, Lucy King, Senior Research Analyst and author of the report, remarked: “Despite continued momentum in the CCUS pipeline, much more progress is required to meet 2050 greenhouse gas targets. Currently, the CCUS capacity pipeline is close to aligning with Wood Mackenzie’s 1.5-degree pathway to 2030, but it will need to grow seven-fold by 2050 to reach the capacity required for net-zero.”
The energy intelligence player underlined that the U.S. is “a global leader” in CCUS, supported by its 45Q tax credit incentive for carbon sequestration launched in 2008. On 16 August 2022, President Biden signed the Inflation Reduction Act into law, which will enhance and extend the 45Q tax incentive.
“The Inflation Reduction Act bill will further accelerate the U.S.’ planned CCUS capacity pipeline, which is currently at almost 250 Mtpa. It will incentivise smaller-scale capture projects, attract more industries, and promote investment into technologies including Direct Air Capture,” added King.
Furthermore, Wood Mackenzie highlights that great strides have been made for licensing and permitting geological CO2 storage throughout the second quarter of 2022. In line with this, an increase in licensing activity has been seen in Norway, Russia and Australia, with the UK launching the “first of its kind” CO2 storage licensing round which consists of 13 areas across the North Sea.
“The biggest challenge is the lack of embedded policy and regulation for CCUS projects. For most countries, the rate of growth and demand for CCUS is outpacing the respective government’s ability to legislate. Despite this, we expect 2022 to be a pivotal year for CCUS, with many countries formulating strategies, policies and regulation to support its deployment,” underscored King.
Moreover, the energy intelligence firm emphasised that North America and Europe continue to emerge as hotspots for CCUS activity. According to Wood Mackenzie’s research, North America accounts for over two-thirds of current global capacity in 2022, with activity mainly focused in Alberta, the Gulf Coast and U.S. Midwest.
The company expects North America’s share of global CCUS capacity to reduce to 50 per cent by 2030 as hub projects across Europe scale up. On the other hand, China and Southeast Asia are anticipated to have the biggest demand for CCUS in the 2040s, which Wood Mackenzie expects to require further regulatory and policy implementation.