The Circular Carbon Economy
To ensure a successful transition to sustainable, climate-neutral growth by mid-century, carbon management solutions should be an essential part of any emissions reduction strategy, along with renewables and electrification.
Carbon management can take two forms. Nature-based solutions such as afforestation or investment in clean energy technologies capture, store, and/or use carbon dioxide (CO2) emissions to optimize biological and industry processes.
Carbon Capture Use and Storage
Engineered solutions aim to control anthropogenic releases of CO2 emissions through technology. One such technology is Carbon, Capture, Use and Storage (CCUS).
The process involves capturing CO2 emissions from hydrocarbon production, coal, and natural gas power plants, and from heavy industry such as steel and cement manufacturing.
Most CCUS facilities globally are tied to natural gas processing and made economically viable through enhanced oil recovery (EOR). CCUS can also lead to the creation of industry clusters through pooling CO2 streams for energy generation, waste management and product manufacturing.
Notwithstanding market hurdles and public acceptance issues, key international organizations cite the importance of CCUS as a critical solution to emissions reduction and achieving net-zero climate strategies.
Today, about 40 million metric tons (Mt) of carbon is captured per year. To reach climate goals, however, CCUS deployment must reach 5.6 Gigatonnes (Gt) of CO2 according to the Global CCS Institute (GCSSI), accounting for a fifth of emissions reductions needed by 2050.
Without CCUS, the cost of energy sector transitions could increase by more than 70 percent and several countries view CCUS as a "mitigation and adaptation" technology as was highlighted at the US Summit on Climate Change on 22-23 April 2021.
Despite recent progress in deploying CCUS facilities, a multitude of industry-scale CCUS projects will have to enter operation to permanently store or use carbon dioxide, facilitate the launch of new energy carriers such as hydrogen, and reduce the carbon dioxide emissions that renewables and nuclear power alone cannot displace.
Several obstacles persist toward reaching economies of scale for CCUS. These include large upfront costs and energy penalties, poor market signals, regulatory hurdles, and a lack of public acceptance due to safety and other concerns. These challenges can be resolved through creative incentivization programs, placing a price on carbon, ramping up research, development and deployment (RD&D), and enforcing regulations that address CCUS liability issues - solutions that need to be fast-tracked to expedite CCUS investment.
CCUS projects also require far greater government support to accelerate economy-wide deployment. Beyond more comprehensive CCUS strategies that offer investors greater certainty and governments guarantees policy goals will be met at an acceptable cost, an international CCUS mechanism set up in collaboration with governments, market stakeholders, and international organizations could help broaden the scope of CCUS policies and help catalyze investment.
IEF maintains that a more comprehensive approach to CCUS will enhance access to sustainable finance for industry, strengthen physical financial market stability, and broaden public acceptance and support for energy transition and climate change goals in both producer and consumer countries. Reducing real and perceived hurdles to CCUS by formulating comprehensive strategies is essential for a swift, secure, and sustainable recovery that meets affordable energy access and climate goals.