Prospects for carbon capture received a boost in September when the International Energy Agency (IEA) said the emerging technology is “critical” to a clean-energy transition.

But experts consulted by GTM have acknowledged there is scant likelihood of scaling carbon-capture technologies to meaningful levels without a radical increase in carbon pricing around the world.

Carbon capture and storage (CCS) and carbon capture, utilization and storage (CCUS) are seen as increasingly vital components of achieving climate goals because the pace of clean-energy deployment does not seem fast enough to avoid significant levels of global warming.

Both technologies could mitigate climate change by removing emissions from existing fossil fuel generation or even pulling carbon out of the atmosphere. CCUS could go a step further by using sequestered carbon as a feedstock for industrial processes or synthetic fuels. 

This potential led the IEA to claim in September that CCUS “will need to form a key pillar of efforts to put the world on the path to net-zero emissions,” alongside electrification, clean hydrogen and sustainable bioenergy. 

But for this to happen, the IEA acknowledges that a major ramp-up of CCUS deployment will have to take place over the next decade. As it stands, even though the outlook for carbon-capture technologies is arguably better than ever the sector’s ability to scale is still deeply in question.

Low carbon prices bode poorly for CCS' prospects

The Global CCS Institute’s facilities database lists just 21 large-scale carbon-capture plants operating in the world today. The IEA said plans for more than 30 commercial facilities have been announced in the last three years, but that’s hardly going to stop climate change.

The slow rate of progress with carbon capture was underscored in August when three companies — direct air capture firm Climeworks, technology developer Carbfix and Icelandic geothermal asset owner On Power — announced what they said was a “groundbreaking” deal.

The companies claimed they would “significantly scale up carbon removal” with a new plant capable of capturing 4,000 tons of atmospheric carbon dioxide a year. For comparison, fossil fuels emitted 36.7 billion tons of CO2 last year.

For carbon capture to take off in a meaningful way, companies will need to have a clear financial incentive. That means having carbon pricing comfortably above the cost of capture, usage and/or storage. And the cost depends on where the carbon is coming from.

In natural-gas operations, for example, today’s technology could remove around 450 million tons of carbon worldwide a year at a cost of roughly $20 per ton, said Guloren Turan, the Global CCS Institute’s general manager of advocacy and communications, in an interview.

But to remove carbon from difficult-to-abate industrial processes such as the manufacture of steel or cement, an important target for CCS and CCUS, would cost more like $100 a ton. Economies of scale could reduce that figure significantly, Turan said, but, she added, “I don’t think it’s going to come down to $20 a ton.”

That’s not great news for carbon capture as things stand today. Of the fewer than 40 global carbon-pricing initiatives listed on the World Bank’s dashboard, only three outside of Europe show prices above $20 a ton.

And only one scheme in the world, in Sweden, prices a ton of carbon above $100. Clearly, policymakers around the world are going to have to push for much higher carbon prices before CCS and CCUS become commercially viable. How likely is it that they will? The answer is unclear.

Change is in the air, but will it be enough for CCS to prosper?

Last year, the World Energy Council included the prospects for CCUS growth in three long-term scenarios. In one, dubbed Unfinished Symphony, coordinated long-term planning and united global action help CCUS gain traction for decarbonizing industrial processes from 2030.

The technology tips into exponential growth around 2040 but still fails to make a dent in the energy sector because it will be applied to no more than 1.2 percent of global power generation capacity. And that’s the most optimistic scenario.

In a second model, called Modern Jazz, market-led forces result in more uneven economic growth, and the scale-up of CCUS doesn’t happen until around 2050, likely too late to meet climate targets. In a third scenario characterized by less global cooperation, CCUS never achieves mass adoption.   

Despite these sobering models, the World Energy Council remains bullish on CCUS.

“The energy transition has to take [into] account not just electrification pathways but also molecule and heat pathways,” World Energy Council Secretary General and CEO Angela Wilkinson told GTM in an interview. “CCS is a molecule play and a heat play.”

As well as potentially playing an important role in decarbonization beyond the energy sector, the growth of carbon capture could be poised to benefit from changing attitudes as the coronavirus pandemic hammers economies around the world, she said.

“We have to think about the social energy agenda, the jobs agenda, the affordability agenda and the equity agenda,” she said. “In the next 10 years, disruption and innovation are going to come from the demand side, which is going to shape supply-side economics and choices in a different way.”

An early signal that change is in the air came about this year when the World Energy Council complemented its long-term scenarios with models about how the world might emerge from the coronavirus crisis. Its energy transition “radar” measures how many of these signals of change each scenario presents.

The most promising recovery pathway, with more than 38 percent of signals detected, reflects high-ambition, high-trust action plans that might help accelerate progress to an Unfinished Symphony-style scenario in the future, with CCS being pulled from beyond the power sector, Wilkinson said.

But despite the World Energy Council’s optimism, other observers remain cautious about the future for carbon capture. 

European energy researcher Schalk Cloete said that if policymakers were to adopt the kind of carbon-pricing strategies that the IEA believes are needed to keep warming to within 1.7 degrees of current levels, “we’ll see lots of CCS.”

On the other hand, “if it stays like in the ‘stated policies’ scenario, there will be quite little,” he said in an email. “The biggest uncertainty is related to policy. In summary, if politicians get serious about a 1.5-degree-to-2-degree world, CCS will do its part. If this does not happen, it will be slow going.”