BP's (BP.) new decarbonisation czar Giulia Chierchia said last month carbon capture and storage (CCS) technology was “critical” to the world getting closer to net zero carbon emissions. If it is that important, then net zero carbon emissions are further off than we thought.
There is currently a huge gap between CCS capacity and that needed under the International Energy Agency’s (IEA) sustainable development scenario, which would see global warming limited to 1.6-1.8 degrees centigrade. But oil and gas companies have pinned net zero carbon emission hopes on this technology, on top of cutting flaring and other practices that realise large amounts of CO2. This year, the majors have pledged to hit net zero carbon emissions between 2050, while midcaps have also joined in.
Plenty of uncertainties remain over how these goals will be met, with differing levels of emissions depending on whether a company has downstream as well as upstream operations and whether it counts scope 3 emissions, which include “all other indirect emissions from full upstream and downstream value chains”, according to Carbon Tracker.
Upstream producers will have an easier job of getting to net zero, given the massive emissions from refineries in the downstream sector.
An update from the IEA in June put global CCS capacity for power at 2.4m tonnes (t) of CO2 and for ‘industry and transition’ at 34.6mt. Under the sustainable development scenario (SDS), capacity should be a combined 760mt by 2030, meaning an increase of 1,900 per cent is needed within a decade. The SDS also needs a quick reduction in absolute emissions from the energy sector which looks unlikely.
Carbon Tracker analyst Mike Coffin told us CCS was not ready to be a major part of the world’s decarbonisation strategy. “Given carbon capture is still a very nascent technology, it would be very difficult to see it being deployed at scale ahead of the 2030s and frankly ahead of the 2040s,” he said. “For us to reach net zero and stay within the carbon budget on the way to net zero the key thing is we need to reduce our usage of fossil fuels.”
The carbon budget is how much more CO2 we can emit and stay within a certain temperature threshold. The sustainable development scenario (SDS), in which warming is limited to 1.8 degrees, has a carbon budget of almost 800 gigatonnes of cumulative CO2.
So progress – under IEA forecasts – doesn’t look great. But there is work being done to increase the number of CCS plants.
Help needed
CCS represents a major sales opportunity for services companies while oil and gas companies try to drive down emissions. One of the largest, Wood Group (WG.), works in engineering and procurement as well as services and has previously designed CCS plants.
Andy Hemingway, president of Wood’s technical consulting solutions division, told us it was a proven technology that just needed regulatory help to grow. “On a purely practical level it is cheaper to vent CO2 than it is to capture that CO2, compress it, transport it and sequester it,” he said. “Something has to be in place to make it economically viable to capture it.” Mr Hemingway said carbon pricing and other fiscal incentives were needed to “accelerate” the introduction of CCS plants.
Mr Hemingway used the Gorgon LNG plant in Australia as an example. Chevron (US:CVX) built the $1.7bn operation because permitting required it. The plant removes CO2 during the LNG liquefaction process, during which natural gas is cooled to become a liquid and then transported on. Usually the CO2 contained in the gas reservoir (14 per cent in the case of Gorgon) is vented, according to Chevron but the liquefaction plant pipes the CO2 2km underground. Chevron says this is the largest greenhouse gas abatement project undertaken by industry. It reduces Gorgon’s carbon emissions by 40 per cent, or 100mt over the life of the project, and took a decade to build.
In the UK, the Teesside Net Zero project is the industry’s great hope of a local proof of concept. It is backed by the Oil and Gas Climate Initiative (OGCI), an industry body with members like ExxonMobil (US:XOM) and Saudi Aramco (SA:2222). BP (BP.), Royal Dutch Shell (RDSB), Total (Fr:FP), Eni (Ita:EN) and Equinor (Nor:EQNR) have formed an operating consortium to build the project, which Wood is working on as well.
Mr Hemingway said its model of a hub where multiple industries make use of a CCS plant makes the technology more feasible. “The actual capture of the CO2 itself is only one aspect of it,” he said. Then you've got to transport that CO2 and put it into some form of network and then sequest it...as a company looking at CCS it makes sense to look to be part of one of these clusters looking to develop CCS at a larger scale.”
The current proposal includes a new gas-fired power plant, the emissions of which will be offset by the CCS plant. It would power fertiliser and chemicals facilities, and hydrogen and wind have been proposed as add-ons for the site.
Mr Coffin from Carbon Tracker said CCS technology should not be used to maintain “business-as-usual” fossil fuel development. “If we've only got limited options in CCS, then those should be used to offset emissions from those hard to abate sectors, as opposed to justifying business as usual fossil fuel use,” he said, using steel- and cement-making as examples.
On top of focusing on those industries where a low-carbon or carbon-free alternative is available, Mr Coffin said a sensible use of CCS would treat it as a “bonus” to help keep global warming even lower than the Paris Agreement global warming target of between 1.5 and 2 degrees. “It’s not like those are good outcomes, [but] they’re not as bad outcomes as even higher temperatures,” he said.
