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While experts are sceptical about carbon capture and storage (CCS) technology, it’s not stopping companies worldwide from investing heavily in the equipment as a means of decarbonisation. As oil and gas firms strive to continue pumping oil for so long as demand and national regulations permit, they must quickly find a way to decrease their carbon emissions – enter CCS. Companies working in hard-to-abate industries have been repeatedly called out for greenwashing by environmentalists who see CCS as a band-aid on a bullet wound, while scientists worldwide simply believe that CCS is being massively overhyped, with few proven results. However, this is not stopping private companies and state governments from investing heavily in CCS in the hope that it will help them hit looming climate targets.
Scientists say that the success of CCS technologies on the scale that many companies are promising is a long shot. The integration of CCS tech into operations remains complicated and expensive, meaning that only companies in hard-to-abate industries are investing in the equipment. This has driven governments worldwide to provide funding for CCS tech to support decarbonisation efforts. In previous years, the U.S. government has spent billions of dollars in grants and tax credits on CCS operations at power plants. However, just 14 of these projects remain in operation, with around half using the cheapest forms of CCS equipment.
The passing of the Inflation Reduction Act (IRA) in 2022 is driving greater financing in CCS. Over 150 projects have so far been approved. But many will take between five and seven years to develop. The high cost of CCS installation and the complexities of the U.S. tax credit system have deterred companies from taking up the technology in previous years, meaning there is little to show from previous U.S. policy efforts to support CCS. And companies face further challenges in where to store the captured CO2, for which they must get permits approved by the Environmental Protection Agency.
There have been severe industry delays, which will likely continue unless the U.S. loosen its barriers to the installation of CCS tech in new and existing projects. James Lucier, the managing director at research group Capital Alpha Partners, stated “Not even tens of billions of dollars in carbon sequestration tax credits will make the pipelines move any faster.” Many are now concerned that what was proposed as a short-term solution could turn into a mid-to long-term solution, when companies should, instead, be looking to decarbonise operations at the source by using green energy.
Many major CCS projects in recent years have failed to perform at the level initially anticipated. For example, the Gorgon project in Australia, led by Chevron, has failed to operate at higher than 70 percent of its capacity since it was launched in 2019. Experts argue that CCS tech is becoming an unnecessary distraction from the green alternatives that could lead to lasting change.
Regardless of widescale criticism and scepticism, several major oil and gas companies are continuing to invest heavily in CCS. ExxonMobil expects the CCS market to achieve $4 trillion by 2050. The oil major is working with FuelCell Energy to develop a “game-changing” technology that is expected to capture CO2 directly from operations while also producing energy. This is expected to reduce both emissions and operational costs. The carbonate fuel cell (CFC) technology will be tested at its Rotterdam Manufacturing facility and if successful could be rolled out at Exxon’s other plants. CFC tech aims to capture CO2 emissions directly from an industrial emissions source while producing low-carbon power, heat, and hydrogen, which could bring in further revenue. Exxon recently announced plans to spend $20 billion in lower carbon energy by 2027, with half going towards CCS technologies, marking the third increase of its planned investment in the tech.
At the recent COP28 climate summit, the question was raised about whether countries should be able to use “unabated” fossil fuels so long as they capture emissions from operations. However, prior experience suggests that CCS activities are not extensive or reliable enough to allow this strategy to move forward. Some recent studies found that CCS can be a valuable tool for reducing emissions from certain hard-to-abate activities, such as cement production. But its use remains limited.
Countries and private companies have spent billions on CCS projects, which have repeatedly failed to come to fruition. Fatih Birol, the executive director of the International Energy Agency (IEA), stated “Carbon capture and storage definitely could be a critical technology.” However, he emphasised, “the history of carbon capture to date has largely been a disappointment.” According to the IEA’s recent road map, carbon capture will account for just eight percent of the world’s total emissions cuts between today and 2050. In contrast, most emissions reductions come from a shift away from fossil fuels to greener alternatives.
While there is potential for CCS technologies, and many believe they are particularly useful for decarbonising hard-to-abate industries in the short- to mid-term, many remain sceptical about their efficacy and the ability of companies and governments to roll out commercial-scale CCS projects in the timescale needed to meet climate pledges and support a green transition.
