Wood Mackenzie research has found that in order to achieve global net-zero goals by 2050, the world must urgently accelerate the capture of 7 billion tonnes of carbon dioxide annually. The analysis shows that at the current pace, carbon removal is projected to reach only 2 billion tonnes of CO2 by 2050, which aligns with a 2.5°C global warming scenario. However, to meet the critical 1.5°C warming threshold, 7 billion tonnes of carbon capture and removal are required by midcentury.
Speaking at the Carbon Capture, Utilization and Storage (CCUS) Conference, Mhairidh Evans, the research head at Wood Mackenzie, emphasized the need for significant carbon capture from industries and the power sector to decarbonize areas that cannot be easily reached by green electrification or alternatives. Evans stated, “To come close [to 1.5°C], we need to get shovels in the ground quickly.”
Wood Mackenzie is currently monitoring planned global CCUS capacity at 1,400 million tonnes of CO2 per annum. This includes various projects encompassing carbon capture, transportation, and storage. The United States leads the way with 33% of the projects, followed by the UK with 14% and Canada with 12%.
Evans also highlighted the U.S. Inflation Reduction Act 45Q tax credit, which provides significant support for polluters to decarbonize. Additionally, the Infrastructure Investment and Jobs Act has facilitated the development of essential infrastructure for CO2 transport and storage. The U.S. is well-positioned for strong growth in the CCUS market due to its vast geological carbon storage resources.
However, the analysis warns that delaying actions or waiting for CCUS projects to become economically viable can make it more challenging to meet climate goals, leading to further economic implications resulting from the climate crisis.
CCUS has been identified by the United Nations’ IPCC and other renowned organizations as a crucial technology for avoiding carbon emissions that contribute to global warming. The panel argues that capturing and permanently storing carbon is essential for achieving the targets set in the Paris Agreement. In recent years, CCUS has received significant attention from private and public investors.
The U.S. Department of Energy has been investing billions of dollars in carbon capture projects, supporting both early-stage research and development and commercial initiatives. Furthermore, proposed rules by the Environmental Protection Agency to regulate emissions from coal and new gas-fired facilities have made CCUS technologies an attractive solution for hard-to-decarbonize sectors. Other governments, including Canada, the UK, and the EU, have also committed substantial funds to advance these climate technologies.
However, Wood Mackenzie highlights several challenges that hinder the expansion of the CCUS industry. These include nascent policy and regulations, unfit business models, and high costs. Despite the 45Q tax credit, companies still await lower prices to scale up their projects. Additionally, most carbon capture, transport, and storage technologies available today are still evolving and have yet to prove their efficacy. Many of these technologies are developed by startups that require significant capital investments.
Furthermore, convincing heavy polluters to embrace carbon capture as part of their net-zero strategies remains a challenge. Although there has been an increase in carbon storage hub initiatives, there is limited demand from potential customers.
Wood Mackenzie expects project development costs to decrease by up to 30% during this decade. However, waiting for a price drop would also mean delaying the impact of projects, resulting in delayed carbon emission reductions and moving further away from the goal of limiting global warming to 1.5°C.