Wood Mackenzie, a prominent global provider of data analytics and solutions in sustainability and renewable energy, has recently released a comprehensive media statement regarding the cost projections for expanding CCUS (Carbon Capture, Utilization, and Storage) initiatives on a global scale. According to their analysis, an estimated investment of approximately $196 billion is anticipated by 2034.
What Does Wood Mackenzie’s 10-Year CCUS Market Forecast Say?
In their latest assessment, Wood Mackenzie has projected that the global carbon capture capacity could potentially increase to 440 million metric tons per annum (Mtpa), with storage capacity rising to 664 Mtpa. This expansion is expected to necessitate a total investment of $196 billion by 2034, with an estimated $80 billion coming from governmental sources in North America and Europe.
The report indicates that nearly half of the global investment will be directed towards CO2 capture, while the remaining funds will be allocated to the transportation and storage sectors, with $53 billion and $43 billion respectively. Plans are underway to channel 70% of the total value chain investment into projects in North America and Europe. It is important to note that while production projections are on the rise, Wood Mackenzie cautions that the supply of carbon capture may not meet immediate demands. Long-term projects slated for 2034 are expected to require up to 640 Mtpa of CO2 storage, with a shortfall of 200 Mtpa in expected commissions.
Hetal Gandhi, the APAC CCUS lead at Wood Mackenzie, shared her insights in the press release, highlighting that 71% of the announced projects are concentrated in North America and Europe, supported by various government incentives. Key contributors to these initiatives include the US Inflation Reduction Act, UK business models, Canada’s Investment Tax Credit, and the Netherlands SDE++ scheme. The introduction of the new EU Industrial Carbon Management Strategy is anticipated to further bolster projects in Europe. Gandhi emphasized that while China and India are the largest emitters in the Asia-Pacific region, they lack adequate CCS (Carbon Capture and Storage) infrastructure. Her predictions underscore significant gaps between demand and supply in the power and chemical sectors until 2034, necessitating substantial upgrades in CCUS technology.
Notably, regions such as China, India, Latin America, the Middle East, and Africa face developmental challenges due to insufficient policy frameworks, regulatory support, and funding. Government funding for CCUS projects in key countries amounts to approximately $80 billion, with the US leading at 50% of the total, followed by the UK at 33% and Canada at 10%.
Source: Wood Mackenzie
Using the Investment Effectively, A Wood Mac Study
Building on the previous analysis, Wood Mackenzie has delved deeper into the role of CCUS in global decarbonization efforts. The research conducted by the organization highlights that some countries are investing in CCUS technology to decarbonize challenging sectors such as cement, chemicals, steel, refining, and power generation. Conversely, others view CCUS as a long-term tool for decarbonization.
Hetal Gandhi outlined key strategies for maximizing the effectiveness of CCUS investments, emphasizing the importance of affordable technology and sustainable infrastructure for carbon capture and storage. The focus should primarily target heavy emitters, as CCUS plays a crucial role in addressing climate change concerns. Presently, global CCUS capacity stands at around 63 Mtpa, with projections indicating a potential surge to 1,700 Mtpa by 2050. However, to limit global warming to within 1.5 degrees above pre-industrial levels, capacity would need to reach 7,750 Mtpa. While current projects predominantly target the power and gas sectors, future applications of CCUS will be essential for industries such as cement, steel, and blue hydrogen production.
Click here to know what 2024 looks like for CCUS, as per Wood Mac.
Source: Wood Mackenzie
CCUS Future: Challenges Amid Opportunities
Wood Mackenzie has also identified challenges facing the widespread adoption of CCUS technology. Despite advancements, the uptake of CCUS remains limited. Fauzi Said, a senior research analyst at Wood Mackenzie, proposed a solution focusing on hub-based storage ecosystems, stating that these systems, with more concentrated storage capacities compared to capture capacities, are likely to evolve, particularly in Europe and the Asia-Pacific region.
One of the primary challenges highlighted is the high cost of CO2 sequestering in comparison to current carbon prices, with minimal revenue generation. Successful projects have managed costs through incentives, but future viability hinges on effective policies and well-structured carbon pricing mechanisms. Additionally, the dominance of amine-based processes in CCUS technology may not be sufficient, necessitating more advanced methods for cost-effective CO2 capture with low carbon concentration. The corrosive nature of carbon dioxide poses transportation and storage challenges, further underscoring the significance of cost considerations in driving the CCUS process.
Source: Wood Mackenzie
In a recent report by Wood Mackenzie, it was revealed that ExxonMobil has established a robust presence in the US CCUS sector. The detailed study conducted by Wood Mackenzie highlighted, “The company’s US portfolio demonstrates a weighted average return of 20% in their base case, with some projects yielding even higher returns.” Anticipating further updates on the global status and developments in CCUS from Wood Mackenzie in the near future.
