According to International Energy Agency (IEA), Carbon capture, utilisation and storage (CCUS) is an important part of the technology portfolio for meeting net zero ambitions. In the IEA’s Net Zero Emissions by 2050 (NZE) Scenario – which lays out a pathway for the energy sector that aligns with the Paris Agreement goal of limiting global warming to 1.5 °C – around 1 billion tonnes of carbon dioxide (CO2) per year are captured and stored by 2030.
There is progress towards this goal. Our latest update to the IEA CCUS Projects Database reveals that 2023 saw continued year-on-year growth in project announcements, final investment decisions (FIDs), and plant commissioning. Yet as we get closer to the 2030 milestone, reaching the level of capture and storage capacity in the NZE Scenario will also require project lead times to be drastically shortened. New business models centred on creating CCUS hubs could help, and recent policy developments have revived interest in CCUS more broadly. But is this enough to put announced projects on a path to deliver in full and on time?
How does momentum track against net zero?
In 2023, announced capture capacity for 2030 increased by 35%, while announced storage capacity rose by 70%. This brings the total amount of CO2 that could be captured in 2030 to over 430 million tonnes (Mt) per year and announced storage capacity to around 620 Mt of CO2 per year. While this momentum from announcements is positive, it will need to accelerate to align with the NZE Scenario.
Moreover, announcements are just the first step: whether all projects materialise continues to be an open question. In 2023, around 10 capture facilities entered operation and almost 20 projects reached a final investment decision. But capacity that is either already in operation or has reached FID still accounts for just 20% of announced capture capacity for 2030. For storage, this drops to around 15%.
The IEA's Net Zero Scenario sees CCUS playing a particularly important role in decarbonising hard-to-abate industries and the power sector, facilitating the production of low-emissions hydrogen and ammonia, and in efforts to remove carbon from the atmosphere. Two-thirds of FIDs taken in 2023 involved these use cases, versus only 40% in 2022. But greater ambition is needed in some sectors – particularly industry, which currently makes up less than 10% of announced capacity. It would need to reach a quarter of all of CO2 captured by 2030 in the NZE Scenario.
Countries are recognising the value of collective action and strategic signalling
With renewed recognition of the need to collectively do more on CCUS, the past year has seen the creation of significant new initiatives. Launched at the Major Economies Forum in April 2023, the Carbon Management Challenge features a joint call to action for governments to accelerate the deployment of CCUS technologies. By the beginning of 2024, 19 countries and the European Commission had signed on to the Challenge, which aims to raise ambition by supporting a global goal of managing at least 1 billion tonnes, or 1 gigatonne (Gt), of CO2 annually by 2030, in line with the NZE Scenario. To date, CCUS commitments from the participants represent just under 15% of the 1 Gt goal.
Several countries have also advanced strategic plans to support CCUS. For example, Canada finalised its Carbon Management Strategy at the end of last year, while the European Commission released its Industrial Carbon Management Strategy in early 2024, which sets out a comprehensive policy approach to help the European Union develop at least 50 Mt of capacity by 2030 and 280 Mt by 2040.
The Strategy, which aims to establish a single market for CO2 in Europe, comes one year after the proposed Net Zero Industry Act identified CCUS as a strategic technology, and as other European countries (including France and Germany) are developing their own plans to signal the strategic importance of CCUS.
This signalling is already helping enable cross-border projects between European countries. In March 2024, Denmark and France signed a new arrangement removing a key international regulatory barrier and making it possible to transport and store CO2 between the two countries. Such deals are required under the London Protocol, an international agreement that regulates the cross-border transport of CO2 for offshore storage.
Recent policies have sparked renewed optimism for CCUS but take time to be implemented
In 2021, the United States passed the Infrastructure Investment and Jobs Act (IIJA), which provides approximately USD 12 billion across the CCUS value chain through 2026. Just one year later, the Inflation Reduction Act (IRA) increased the so-called 45Q tax credit for CCUS projects to USD 85 per tonne of CO2 permanently stored, USD 60 per tonne of CO2 used in enhanced oil recovery or other industrial uses, and up to USD 180 per tonne of CO2 extracted by direct air capture (DAC) projects.
Together, these two pieces of legislation promoted a flurry of activity, with project announcements almost doubling between the 2022-23 period and the 2020-21 period. The IRA has boosted geological storage development in particular, with announced capacity tripling between February 2022 and February 2024. Read more, see diagrams !
source: iea.org (Mathilde Fajardy, Energy Analyst, - Carl Greenfield, Energy Analyst in the Carbon Capture Utilisation and Storage Technology Unit)
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