Carbon capture projects failing but still to play role in energy transition

The US Department of Energy provided over USD 1.1 billion for carbon capture and storage for coal plants and industrial facilities since 2009, but most of the projects never got off the ground. The technology for removing CO2 in industrial production and directly from the atmosphere is still experimental, but it may have a shot with a proper funding scheme and the development of a functional market.

The world is in a daunting race against global warming, which is caused by greenhouse gas emissions. The energy sector is their greatest source by far, so governments and international bodies are pushing for decarbonization and energy efficiency measures. One of the tools, still in its early phases of development, is carbon capture and storage (CCS) or carbon capture, utilization and storage (CCUS) technology.

The idea is to prevent carbon dioxide from fossil fuels in industrial processes such as steel and cement production from reaching the atmosphere. In the electricity sector, total costs for wind and solar power are already mostly lower than for coal-fired plants, which is increasingly making carbon capture commercially unviable.

The carbon capture, utilization and storage solutions are used in power plants and industrial production while direct air capture is a technology that enables sequestering CO2 from the atmosphere

The CCS technology has a long way to become efficient in the first place, while having to compete with hydrogen, electrification of the industry and the competitiveness of renewables at the same time. It helps when the stored CO2 can be turned into products, which is where the utilization factor and CCUS come in. There are small-scale endeavors for turning carbon into construction material and fuel or even diamonds and vodka.

Global emissions are set to soon surpass sustainable levels, determined in the Paris Agreement on tackling climate change. Given that emission cuts seem to be insufficient to cap global warming, the United Nations Intergovernmental Panel on Climate Change (IPCC) has acknowledged the need to also catch carbon directly from air. The concept is also called carbon removal or direct air capture (DAC).

The report may contribute to the development of CCS solutions in electricity production and the industry, too, since hydrogen and electrification also have a long way to go before all sectors can be covered.

US government must improve management of CCS incentives

The United States Government Accountability Office recently found most of the 11 carbon capture and storage projects that the Department of Energy backed with more than USD 1.1 billion since 2009 didn’t succeed. The agency warned the management of funding must be improved, citing cases of bypassing cost controls.

Two out of three industrial endeavors were completed and only one of the eight projects for coal power plants entered operations, but it got shut down. NRG Energy’s Petra Nova facility in Texas was placed in reserve in May 2020 after a three-year demonstration, during which it underperformed.

The first and currently the only large CCS unit installed at a coal plant, in Canada, suffered last year from outages, while another one was shelved over high costs

It was turned off one year later over high costs, though with a possibility to be brought back online. Petra Nova was powered by a gas-fired plant in the same complex, which meant more emissions. On the positive side, the CO2 was pipelined to a location where it was injected underground to extract oil.

The first and only active large-scale CCS unit in a coal-fired plant in the world is in Saskatchewan in Canada. Its owner SaskPower said the system at its Boundary Dam facility captured 43% less CO2 last year than in 2020 due to technical issues. It served as an argument for critics that the technology is unreliable and that renewables are cheaper anyway.

Billions still pouring into support schemes

But the governments and enthusiastic startups and investment funds aren’t giving up. The US passed an infrastructure bill in November that includes USD 12 billion in support for CCS and DAC. Within its green agenda, President Joe Biden’s administration is working on the elimination of emissions in the electricity sector by 2035.

Of note, the Congressional Research Service found in 2021 that the Department of Energy spent USD 7.3 billion since 2010 for carbon-related activities including research. Last year it launched the Carbon Negative Shot program for scaling up DAC and the solutions for storing CO2 underground.

The US committed the biggest sums for spurring carbon capture endeavors

The world’s biggest direct air capture and storage unit called Orca came online in September in Iceland. Climeworks, the startup that operates it, is turning carbon into rock.

Norway has teamed up with a group of companies in the Longship (Landskip) project for sequestering, transporting and storing carbon dioxide from a cement factory and other plants under the North Sea. Other notable endeavors are in the development phase in the United Kingdom and the Netherlands.

Elon Musk, the world’s richest person and the chief executive of Space Exploration Technologies (SpaceX) and Tesla, launched the USD 100 million XPRIZE Carbon Removal competition last year. He revealed a month ago that SpaceX would start a program for capturing carbon dioxide from the atmosphere for the production of rocket fuel.

EU has ambition to create first market for direct air capture

Almost simultaneously, the European Commission pledged to help develop an internal market for capturing, using and storing carbon from the atmosphere and the necessary cross-border CO2 transport infrastructure. It set the annual removal and storage target in the European Union for 2030 at five million tons.

A functioning market could be one of the key elements to accelerate growth both in CCUS and direct air capture. Four economists argue in an opinion article published by Politico that an “advanced market commitment,” a mechanism applied in the development of pneumococcal vaccines for poor countries, could be the solution.

Namely, companies, governments and charities could form funds that guarantee to pay for stored carbon and set a benchmark price, NPR reported. It would hopefully incentivize research and development and enable innovators to get loans and private funding.