The topic of technological carbon dioxide removals is becoming mainstream. Higher climate ambition, the need for economy-wide decarbonisation, and recent advances in technologies and projects are bringing it into the spotlight. How can European policymakers take advantage of this momentum?
Alongside nature-based solutions, permanent carbon removals will play a vital role in the 'race to zero.' But efforts to scale up technological carbon dioxide removals are facing systemic challenges. This blog considers what these challenges are, and how policymakers in particular can help scale carbon removal activities within and beyond Europe.
Carbon capture utilisation (CCU) and storage (CCS) – collectively referred to as CCUS – includes all activities that remove carbon dioxide from the atmosphere or prevent it from being released in the first place, and which then use this carbon dioxide as a resource by either creating valuable products or storing it permanently underground.
There is a slight but important difference here. While CCS involves the permanent storage of CO2, CCU focuses on applications and uses of the captured CO2. As the CO2 is not permanently stored in the latter scenario, CCU is not considered as carbon dioxide removal, but CCU technologies can still play a big role in a circular economy by allowing us to work with raw materials that we've already got rather than having to extract more.
There has been a growing interest in exploring the potential of CCU technologies to transform heavy industrial processes. This has been the case in the steel and cement sectors, for example, where there is a lack of cost-effective emission reduction alternatives. From 'scrubbing' CO2 directly from the atmosphere and having it absorbed into biomass, or storing it in materials like concrete, CO2 removal projects can take many shapes, as different technologies continue to mature.
Technological CO2 removal projects like these are a key tool in the fight against climate change. When the storage of CO2 is permanent - as in CCS projects - it also helps governments and companies meet the growing number of Net Zero commitments being made around the world. A Net Zero target means that a company, government, or organization commits to doing its part to ensure no net increase of CO2 or other greenhouse gases (GHGs) above levels needed to stabilise global temperature increase to a maximum of 2-degrees Celsius. This means that once a company hits Net Zero it must continue to prevent new emissions from entering the atmosphere, as well as permanently remove any residual emissions that it isn't able to avoid. The need to permanently remove CO2 is most important for those sectors and geographies where there are few alternatives to aligning with a Net Zero pathway, which is what makes CO2 removal technologies so important for hard-to-abate industries like steel or cement.
Most of the world's current CCU projects are located in North America, and while the EU has acknowledged the role of CCU in reaching its climate goals, an even wider portfolio of removal technologies and approaches can hold huge potential to address the block's decarbonisation challenge. CCU technologies could become a major area of growth under the European Green Deal with large potential for growth... but only if the right market conditions and enabling policies are put into place.
Despite the opportunity, there are several challenges hindering the scale-up of CCU technologies, such as the absence of favourable market incentives, sufficient regulatory frameworks, or the large-scale transport infrastructure needed to capture, store, and use CO2. The underlying issue, however, is that it is still cheaper to emit CO2 than it is to reuse it. CCU technologies and products are still more expensive and energy-intensive than existing fossil fuel-based products. Simply put, they are not commercially viable, especially in the absence of policies and market incentives that would encourage their development.
Strong regulatory support can help, as most CCU technologies are dependent on legislation in order to develop at scale. Climate policy, including carbon pricing regulation, is the most important driver for CCU, but more work still needs to be done. One way to promote CCU is to allow hard-to-abate industries that are subject to carbon pricing systems like the EU ETS to use certified carbon reduction outcomes from CCUS to meet their obligations.
To do this, schemes like the EU ETS must develop clearer rules on how to include CCU or CCS removals as a complementary way for industry actors to offset their emissions and decrease compliance costs. When investments in CCUS take place alongside investments in efficiency, alternative technology, and nature-based solutions, companies and governments are making the best use of every tool available to combat climate change.
Based on South Pole's insights from the Carbon4PUR project (financed by the EU Horizon 2020 program), policy support seems to be even weaker for non-permanent removal technologies, such as the one developed by the Carbon4PUR consortium. The project is developing a CCU technology that will turn CO2 into valuable carbon-based products such as chemicals, plastics, and building materials. It's a novel CCU technology that reuses CO2 and could help to reduce carbon emissions while supporting the shift towards a circular economy, while also demonstrating a way for CCU to be monetised. But in order to scale up and take full advantage of new technologies like these, the EU's regulatory framework needs to reflect the ambitions and the resource-efficiency objectives put forward in the European Green Deal.
In the absence of enabling policies, voluntary action is filling the gap when it comes to financing and developing CCU technologies. Recognised voluntary carbon standards such as Verra (VCS) are already approving methodologies to cover CCU projects. Other initiatives, such as Puro.earth, are focusing solely on the issuance of carbon removal credits to enable companies around the world to support a growing number of emerging technologies and work towards their Net Zero targets. Action like this proves that there is interest and potential in CCUS, but to make real progress governments need to be along for the ride.
For CCUS to reach its full potential, policymakers must do more to support the research and development for CCU. They must support the development of the physical infrastructure needed to scale up new climate technologies. More importantly, they must provide better financial incentives to ensure CCU becomes economically viable. Carbon removal credits, result-based payments, tax incentives, and grants are just some of the options that could be considered. Policymakers must also facilitate the development of robust emission reduction accounting rules for CCU technologies, a move which will greatly support the integrity of voluntary actions in this field.
In our fight against climate change we need to use every tool we have at our disposal. Carbon pricing, nature-based solutions, and technological developments all play a role. It is in policymakers' hands to unlock the potential of CCU technologies and allow this important part of the tool box to meaningfully contribute to climate action.
About the Carbon4PUR project
The Carbon4PUR project explores industrial symbiosis between steel and chemical industry to produce polymer foams and coatings from steel off-gases.Flue gases from steel manufacturing contain a mixture of carbon dioxide and carbon monoxide, valuable feedstock gases for chemical production. The ambition of Carbon4PUR, a 7.8 Mill. Euro Horizon2020 project with 14 partners from 7 countries, is to manufacture high value polyurethane materials from these flue gases. The unique Carbon4PUR technology will valorise steel off-gas without previous cleaning or separation of the gas components.