- Speaking at Wood Mackenzie’s Carbon Capture, Utilization and Storage Conference in Houston, Peter Findlay, research director and head of CCUS economics for Wood Mackenzie, said that despite a growing market for carbon capture, utilization and storage (CCUS), economics remain challenging, and many potential projects are at risk.
“The economics for CCUS are sometimes feasible, but often fickle,” said Findlay. “We are tracking 1,200 announced projects globally, but only 10% of those are now operational. More than 60% of those are in the early stage of development and they would need a lot more investment and market certainty to move into advanced development.”
Despite the market challenges, Wood Mackenzie analysis shows the potential for considerable market growth. In its base case scenario, which projects a 2.6 C global warming increase, 2,450Mpta of capture capacity is forecasted for 2050. However, more than 780Mpta is currently challenged with current market conditions, according to Wood Mackenzie.
“Most of the announced projects today are at risk,” said Findlay. “Implementation of appropriate CCUS regulation and support will be key in unlocking further capacity. Current incentives are insufficient to spur widespread deployment and developers need alternative revenue pathways, like credit generation and product premiums, to supplement current government support.”
Findlay noted that there are potential pathways for utilization products that could bring opportunities to the market, particularly in e-hydrocarbons, minerals and agriculture, and next-gen materials, such as fuel cells.
“Another case for optimism is the current funding and interest in the market,” said Findlay. “The US Department of Energy recently announced more than $2B in CCUS funding and a lot of major players are getting into the market. As competition increases, costs should come down. We estimate costs will fall 50% by 2050 in real terms.”
However, market certainty is elusive for current projects and many never may get off the ground in this environment, he said.
“Many of these projects will take decades from inception to completion and the current incentive system does not support these timelines,” he said. “If a policy may not be in place in 10 years, developers don’t have the certainty they need to move forward and invest.”
Source: Woodmac
