The Paris Agreement and the growing pressure for countries and companies to take climate action means that no sector or industry can escape the need to dramatically reduce emissions and align their operations with a net zero pathway. But this transition will be incredibly challenging, especially for heavy industries. In our previous blog, we looked at how Carbon Capture Utilisation and Storage (CCUS) could provide a crucial tool for ensuring that certain sectors achieve net zero, and how policymakers can help with this. This blog explores other key barriers that are preventing the use of CCUS as one of the many tools needed to tackle climate change.
While some sectors, such as power generation and transport, have clear pathways for substituting fossil fuel use with low-emission or emission-free alternatives, other 'hard to abate' sectors like cement and steel production have fewer options for their decarbonisation pathways. For these sectors, CCUS can be critical. Yet the development of CCUS remains nascent in most countries.
A key barrier to the development of CCUS comes down to how we understand and define the sector. CCUS has been consistently - and incorrectly - framed as an 'add-on' to existing facilities (like scrubbers to improve air quality). Rather, CCUS relies on a complex network of infrastructure with interconnected sub-sectors across carbon capture, processing, transport, and storage/utilisation phases. Importantly, each step has specific technological and infrastructural requirements that need different regulatory, financing, and policy approaches. The networked nature of CCUS also makes the correct sequencing of its development crucial to scaling up. This technical complexity is matched by significant upfront and operational costs, meaning government incentives or carbon pricing at significantly higher levels than are seen today are required to make CCUS feasible.
The challenging nature of developing CCUS means that in the absence of a regulatory requirement or high costs of carbon, emitters have not made it a core business priority until relatively recently. This means that the knowledge base around CCUS has not developed as well as it could have. Some companies which are involved in transport and storage along the CCUS value chain, like oil and gas companies or pipeline operators, have technical experience with CO2 and related infrastructure. Other companies that are planning to deploy CCUS to reduce their emissions, such as cement and steel producers, are also starting to gain first hand experience. But a significant number of stakeholders - including policymakers - may not be fully aware of the complexities involved. This can act as a barrier to developing a full-chain CCUS system, where CO2 emitters, infrastructure operators, CO2 users/storers, and the related technology and service providers all need to work together.
The complexity and cross-sectoral nature of CCUS therefore means better coordination and cooperation is needed between all actors in the sector. Recognising this challenge, countries belonging to the Clean Energy Ministerial - which includes the leading CCUS developers - have called for better cooperation between the public and private sectors, and more collaboration between companies in the supply chain in order to accelerate CCUS deployment. There must also be stronger cooperation between developers and government with research institutions in order to work across technical, commercial, and regulatory areas to accelerate the development and deployment of CCUS. Collaboration and engagement with civil society groups and NGOs is also important for maintaining the social license for the CCUS industry.
Such cross-sectoral and institutional collaboration is particularly important for CCUS, as the barriers to its deployment are not specific to one end-use sector. This means that any issues with CCUS supply chain development could affect all industrial sectors that want to make use of the technology. To avoid a missed opportunity and make sure that CCUS reaches its full potential to contribute to net zero goals, complex and custom-designed technical, commercial, financial, and regulatory solutions need to be defined and implemented by public and private sectors in close collaboration. Everybody has a role to play here, and through close collaboration the right market conditions can be created to cut emissions while creating new value chains at the same time.
The Carbon4PUR CCU project is a good example of an enhanced cooperation model that can help CCU development. Funded through the EU's Horizon 2020 research and innovation program, the project consortium is made up of fourteen organisations from seven countries, spanning sectors including industrial companies, infrastructure operators, and universities. The Carbon4PUR partners are collaborating on the development of CCU technology that will turn waste CO2 into carbon-based products such as chemicals, plastics, and building materials. As a novel CCU technology that reuses CO2, the project works to reduce carbon emissions and support the circular economy. Importantly, it also demonstrates a potential pathway for monetising CCU. Carbon4PUR not only enables the application of a unique technology, but it also brings together partners from across the value chain and fosters collaboration on policy, regulation, and technical processes and specifications.
South Pole views CCUS expansion as one of many important tools in the climate action tool box and encourages collaboration between government, industrial, and research sectors. We urge stakeholders in these sectors to further develop robust policy frameworks and continue working to catalyse private sector investments in order to support CCUS development that does not compromise environmental and climate integrity. To ensure CCUS contributes to Net Zero in the most effective way, key partners in its value chain and public sector entities must work together to develop clear plans and pathways.
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.
For further information about the Carbon4PUR project, please visit the project website. To find out more about how policymakers can help scale carbon removal activities within and beyond Europe, please read the first blog of this series.