The carbon capture, utilization, and storage (CCUS) industry has experienced significant growth this year, driven by global policy support and the increasing capacity for carbon capture projects. Research company BloombergNEF (BNEF) predicts that the industry will see a 50% increase by 2025, reaching 420 million metric tons per year by 2035. In 2022, investments in CCUS infrastructure amounted to $6.4 billion, and funding for this year is expected to reach $5 billion.
Initially, the CCUS market focused on natural gas processing. However, as efforts to decarbonize intensify, the industry is expanding into carbon-intensive sectors such as power, cement, iron, and steel. BNEF reported that the industry captured over 140 million metric tons per annum (mtpa) in 2022 and is forecasted to grow at an 18% compound annual growth rate, capturing 420 mtpa by 2035. This represents 1.1% of current global annual emissions.
The sectors that will drive CCUS expansion include ammonia or hydrogen production and power generation. These sectors will account for 33% of announced carbon capture capacity. Notably, the cement sector has experienced a massive increase in proposed carbon capture capacity, with a growth rate of 175%. Startups are also developing innovative technologies to capture CO2 from the atmosphere and inject it into cement, effectively locking it away for good.
The BNEF market outlook highlights that the United States will remain the leader in deploying carbon capture, holding a 40% market share in 2035. The United Kingdom follows with a 16% share, and Canada ranks third at 12%. Other large country emitters, including Australia, the Netherlands, and China, will each have a 3-4% share.
Despite the promising future of CCUS, there are challenges that need to be addressed. One major hurdle is the lack of transport and storage capacity for deploying carbon capture projects. Some national governments and companies are promoting commercialization as a solution to this challenge. However, the high costs associated with constructing storage facilities are not adequately addressed by policies such as the EU’s Net Zero Industry Act. In the United States, permits for transport and storage have been denied, leading the Environmental Protection Agency (EPA) to call on states to establish their own regulatory frameworks for CCUS.
In the private sector, oil majors aiming to be pioneers in advancing carbon capture and storage have turned to mergers and acquisitions. For example, ExxonMobil acquired Denbury, a small-scale oil business with an extensive CO2 pipeline transport network across the Gulf Coast. Similarly, Occidental Petroleum purchased Carbon Engineering, a Canadian Direct Air Capture (DAC) supplier, for over $1 billion.
Interestingly, BNEF highlights that DAC is more costly than previously thought, with a current cost of up to $1,100 per ton of CO2. However, this cost could potentially drop to $400 per ton by 2030 if the industry can develop enough supply chains to scale the technology.
The cost of capturing carbon varies across industries. In facilities with high CO2 concentration, the cost ranges from $20 to $28 per ton, while for industrial sources, it can reach up to $80 per ton of CO2. The total costs for CCUS can increase to $92 to $130 per ton of CO2, and transporting liquid CO2 can further inflate these costs by 2-4 times.
Industries such as cement, iron, and steel, and power, which emit significant amounts of CO2, are increasingly adopting carbon capture methods. This is driven by the incentives provided by the governments in the United States and the European Union, making CCUS more economically viable. For example, in Germany, building new gas power plants with carbon capture may be less expensive than generating power without capturing carbon by 2024, especially when factoring in the cost of carbon.
The CCUS industry is experiencing rapid growth and diversification across sectors, thanks to strong global policy support. However, challenges such as transport and storage capacity constraints, high construction costs, and regulatory hurdles pose significant barriers. Addressing these challenges will be crucial for CCUS to play a substantial role in global emissions reduction.
