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The Energy Transition

(source: https://www.iea.org/)

There’s a new buzz-phrase being used when talking about decarbonisation: ”Net-Zero emission”. Net-Zero means the amount of greenhouse gases emitted into the atmosphere by different sectors and industries is not more than the amount being taken out. Then it comes the £1tn question: what is needed to deliver this massive commitment?  

According to the 15th IPCC special report titled “Global warming of 1.5 °C”, beside full utilisation of renewable energy resources and switching to CO2 neutral fuels such Hydrogen and biofuels, Carbon Capture Utilisation and/or Storage (CCUS) could play a role and it is necessary in decarbonising the industrial sector as well as decarbonisation of biofuel power plants (i.e. Biofuel with Carbon Capture and Utilisation/Storage BECCS). This has caused a new wave of interest to seriously revisit CCUS technologies and ultimately bring them back to the climate change agenda. 

At the same time, the commitment from the UK government onto the Net-Zero emission path added more emphasis on urgent development and commercialisation of CCUS technologies particularly for their use to decarbonise energy intensive sectors such as steel, cement and district heating. There were some notions that CCUS could be useful for forming the hydrogen economy by producing hydrogen from coal or natural gas. 

Despite such obvious needs for CCUS and strong support from IPCC, IEA, and UK Committee on Climate Change, and that the price of carbon emission permits under the EU Emission Trading system (EU ETS) has quadrupled since May 2017, there are still roadblocks to utilise CCUS.

Some are skeptical in the CCS operational viability, though these technologies are proven and have been in commercial operation specifically in chemical and oil production industries for over 40 years. Some rightly argue the operational cost and the efficiency penalty associated with the CCUS incorporation makes it less attractive. In addition, operational inflexibility imposed by coupling CCS to a process creates further resistance. This means still more research and development is needed to make CCUS technologies attractive both operationally and economically. 

Beside its relatively high operational cost, another limiting factor for CCUS deployment is the requirement of storage infrastructure. To have a viable CO2 storage capacity at the lowest possible cost, shared-border CO2 transport and storage infrastructures are needed resulting in creation of various industrial CCS clusters. Which requires massive international and intercontinental collaboration. Then problems would arise if a country lacks natural reservoirs for storage, such as Germany.

However, apart from the CCUS inherent characteristics, there are also external factors that forcefully push CCUS out of the picture. For instance, the steel industry that accounts for around 6% of global greenhouse gas emissions and is one of the main potentials for CCUS application is already looking into other alternatives to reduce their emissions. In search for ways to reduce emissions of steel production, there is a global interest in raising the proportion of recycled steel made from steel scrap via electric arc furnace process. In addition, for prime steel production, hydrogen-based reduction and potentially in longer term, electricity-based reduction generated by renewable energy resources could eliminate the need for CCUS utilisation.

For Hydrogen, production from electrolysis using renewable energy resources, under Power-to-X approach, is already cost competitive compared to the Steam Methane Reformer (SMR) approach, which is the case for CCUS, as the electricity price generated by renewables has substantially fallen in the past few years to the point that renewables are reaching grid parity in some countries.  

Moreover, some countries such as Russia and USA are evaluating the Methane Pyrolysis approach, the non-oxidative thermal decomposition of methane to solid-phase carbon and hydrogen, as an alternative to SMR to produce CO2-free hydrogen from fossil fuels. This process has been suggested as an environmentally friendly alternative to conventional method of producing hydrogen (e.g. SMR and electrolysis) and it also doesn’t require large amount of water as needed to generate hydrogen via electrolysis.

The other potential big market for CCUS is the cement industry which accounts for about 8% of the global CO2 emissions. This means if the cement industry were a country, it would have been the world third largest CO2 emitter after China and USA, and indeed CCUS could play a role to help reducing emissions. However, other approaches are progressing rapidly which might limit the CCUS application in this industry as well. For instance, energy efficiency improvements in new built plants and burning waste fuel as alternative to fossil fuels have already contributed to near 20% reduction in the average CO2 emission per tonne of cement produced in recent years. One would wonder how much further reduction could be attained if hydrogen is entirely used as a substitute for fossil fuels?

When it comes to power generation and with the coal phase out plans in most countries, the need for CCUS could be eliminated once the gas turbines combustion technologies are enabled to burn 100% hydrogen as a fuel which is a technology that already exists, it is only needed to be applied to different type of gas turbines. Moreover, gas turbines currently being under operations could be retrofitted to burn hydrogen instead of natural gas.

All above statements are testaments that there are growing number of other commercially viable approaches, independent of CCUS, to reach Net-Zero emissions. CCUS could still be an attractive solution for applications where there is strong use case for the captured CO2, such as enhanced oil recovery in countries like Norway. Otherwise, why a country such as Norway where its electricity sector relies predominantly on renewables (more than 98%) and a significant share of the total electricity production is consumed by its industry is pioneer for CCS deployment in Europe? It seems that this application of CCUS is going to be short-lived as by the Net-Zero commitment, the global oil and gas production and the world dependency on fossil fuels would be substantially diminished, particularly as the transport and domestic heating sectors are moving toward electrification or using hydrogen as fuel.

So now the big question is whether there is enough of a market out there to justify the investment needed to make CCS a commercially viable option and how much (or how little) the Net-Zero Commitment relies on CCUS technologies if any?