Plans to capture CO2 from coal plants wasted federal dollars, watchdog says

The DOE funded projects that never came to fruition

By Justine Calma@justcalma Dec 30, 2021, 

Water vapor rises from the NRG Energy Inc. WA Parish generating station in Thompsons, Texas, U.S., on Thursday, Feb. 16, 2017. The plant was home to the Petra Nova Carbon Capture Project, until it shut down in 2021 because of high costs. 

 Luke Sharrett/Bloomberg via Getty Images

The Biden administration wants to shove more money into projects that are supposed to capture CO2 emissions from power plants and industrial facilities before they can escape and heat up the planet. But carbon capture technologies that the Department of Energy has already supported in the name of tackling climate change have mostly fallen flat, according to a recent report by the watchdog Government Accountability Office.

About $1.1 billion has flowed from the Department of Energy to carbon capture and storage (CCS) demonstration projects since 2009. Had they panned out, nine coal plants and industrial facilities would have been outfitted with devices that scrub most of the CO2 out of their emissions. Once captured, the CO2 can be sent via pipelines to underground storage in geologic formations.

That’s not what happened. The DOE doled out $684 million to coal six coal plants, but only one of them actually got built and started operating before shuttering in 2020. Of the three separate industrial facilities that received $438 million, just two got off the ground. Without more accountability, “DOE may risk expending significant taxpayer funds on CCS demonstrations that have little likelihood of success,” the GAO says.

THERE OUGHT TO BE MORE CONGRESSIONAL OVERSIGHT

To stop that from happening, the GAO says there ought to be more congressional oversight of DOE-funded demonstration projects. The GAO report also recommends that the DOE do a better job of choosing which projects to fund and that the DOE should establish more consistent “scopes, schedules, and budgets” for projects.

It’s a critical time to figure all these things out, because CCS projects in the US are about to get a big boost. In November, Congress passed a bipartisan infrastructure bill that included $2.5 billion for CCS demonstration projects. It also includes another $6 billion for large-scale CCS projects and pipelines to transport CO2 to storage sites. Altogether, the new infrastructure law marks the largest investment in carbon capture and storage in the history of the technology, according to the think tank Global CCS Institute.

More money could be on the way if Democrats successfully push through their budget reconciliation bill, a $1.75 trillion environmental and social spending package. The bill could increase tax incentives for carbon capture technology, giving power plants outfitted with it a maximum of $85 per ton of CO2 captured compared to the current $50 maximum under the current 45Q tax credit. Power plants would need to capture at least 75 percent of their emissions in order to qualify for the tax credit, under the new parameters in the bill. It’s a requirement that some CCS advocates want to eliminate, because they think the high standard could chill investment in the technology.

Investors’ cold feet doomed CCS demo projects at coal plants that the GAO studied, says the Clean Air Task Force. The nonprofit, which supports CCS technology, is one of the groups pushing to get rid of the 75 percent requirement.

“Coal power projects were not great candidates for demo dollars not primarily because of technical issues with the plants but because they couldn’t secure outside investor support,” Lee Beck, international director of carbon capture at the Clean Air Task Force, said in an email to The Verge.

Falling natural gas prices and uncertainty around markets for carbon credits “negatively affected the economic viability” of coal plants with carbon capture technologies, the report says. Adding CCS to power plants also increases the cost of electricity production.

Compared to power plants, capturing carbon from industrial facilities — for example, those that make ammonia used in fertilizer — can be more cost effective because they often produce more concentrated streams of CO2. Because the CO2 in coal plant emissions is relatively diffuse, carbon capture devices hooked up to coal plants require more energy to run. Beck called the DOE’s spending at industrial sites a “big success” since two of the three projects got up and running.

In comments sent back to the GAO, the DOE said that developing CCS technologies for new coal plants is important because “current trends indicate that globally many new coal power plants will continue to be built in coming decades.” The GAO also says that the US “will need to rely on CCS as an essential mitigation option” for climate change.

“THEY ARE SIMPLY FOSSIL FUEL SUBSIDIES BY ANOTHER NAME.”

Other environmental advocates are much more skeptical of the technology and say the GAO report only shows that CCS projects are a bad investment. “We should stop deploying hundreds of millions of dollars to prop up the industries responsible for the climate crisis through fantasy technologies like CCS,” Adrien Salazar, policy director at the nonprofit Grassroots Global Justice Alliance, wrote to The Verge in an email. “Federal investments for CCS are greenwashing – they are simply fossil fuel subsidies by another name.”

CCS paired with a polluting power plant has yet to be rolled out at a commercial scale, according to the GAO report. For the most part, Salazar points out, the technology has been used by the fossil fuel industry for a process called enhanced oil recovery. Fossil fuel companies shoot captured carbon dioxide deep into the ground to push out hard-to-reach oil reserves. So critics of CCS say the technology is just a tactic to keep the oil and gas industry afloat even as the world increasingly turns to renewable energy to stave off the climate crisis. Even if the captured CO2 isn’t used for enhanced oil recovery, they worry, the technology might extend the life span of gas and coal power plants.

Development in any new oil, coal, and gas infrastructure needs to completely stop in order to avoid catastrophic climate change, the International Energy Agency warned in a landmark report this year. That’s coming from an agency that formed in the 1970s to safeguard the world’s oil supply but has more recently heeded urgent calls from the scientific community to eliminate greenhouse gas emissions within a few decades.

U.S. Government Accountability Organisation Weighs In On Carbon Capture While Exxon Soldiers On

Dec. 30, 2021 

Summary

• Exxon Mobil makes CCS a major plank for new business; the Government Accountability Office questions CCS programs funded by DOE.
• DOE funding of $1.1 billion (matched by industry) produced 3 operational CCS facilities (out of 11) and one of these ceased operations soon after being established.
• The IEA is bullish about CCS but the story is more hope than reality.
• CURE (Coalition United for a Responsible Exxon) makes 7 strong recommendations, including an independent Chair, new CEO, net zero target, cease lobbying against climate action.
• Strong cash flow, high dividends work today for XOM, but what about the future? Is Exxon a stock for future investment outperformance?

IGphotography/iStock via Getty Images

Seeking Alpha authors continue to be amazed at the lacklustre performance of Exxon Mobil (NYSE:XOM) share price and urge investors to acquire XOM shares at a time when there are a number of major issues swirling around the company. In a recent article mostly about Chevron (NYSE:CVX), but with commentary that applies to Exxon Mobil too, Michael Fitzsimmons accurately places the future for oil & gas majors as “…a Race Against Time (EVs)”. Here I address a new report on CCS (Carbon Capture and Storage) by the Government Accountability Office, which throws doubt on the status of CCS technology which is a major plank of XOM’s decarbonization business prospects. Secondly I summarize new information from dissatisfied shareholders concerning Governance and performance issues. When these issues are considered, one can understand why long term investment in XOM is not without risk.

CCS (Carbon Capture and Storage)

I’ve laid out my scepticism concerning CCS in earlier articles. The facts are self-evident that most money invested in CCS projects comes from Governments after lobbying from the fossil fuel industry. Exxon management has continued to ignore lack of evidence that CCS is a technology that can contribute to emissions reductions, and continues to insist that CCS is going to become a significant part of XOM earnings in the future.

Earlier this month a report was released from the US Government Accountability Office “Carbon Capture and Storage: Actions Needed to Improve DOE Management of Demonstration Projects”. The title of the report itself makes clear where the CCS technology sits. We are not at full commercialisation yet.

Although the Department of Energy (DOE) invested $1.1 billion in 11 CCS projects conducted between fiscal years 2010 and 2017; all were demonstration projects. The performance audit was conducted from April 2021 through December 2021. Note the projects were designed to be co-funded with industry, with the coal projects being matching dollar for dollar funding , while the industrial projects involved 20% contribution by the industry group. This means that the funding for the coal projects was actually double what the DOE funding provided. This is important in considering the construction cost of these CCS projects.

Government Accountability Organisation report

The 33 page December 2021 report from the Government Accountability Office (GAO) makes confronting reading for a XOM investor who thinks that CCS is going to be a path to future success for XOM. Simply put the CCS report makes clear that most of the DOE funding for CCS projects produced no outcomes and that the administration of CCS funding was a shambles. A significant problem beyond the overall cost structure of the projects was that getting permits to sequester the CO2 was a non-trivial problem. It seems that a number of normal project planning checkpoints were either absent or truncated because the DOE wanted to get the funds committed.

Considering coal CCS projects, the DOE selected 8 projects for funding. Two of these projects were withdrawn before any funding was received because the companies involved couldn’t make the budgets work (despite the fact that one project had a ~$700 million budget). Three projects reached the definition phase, receiving $16.9, $117.9 and $153.4 million before they were withdrawn/terminated. Two projects (receiving $116.7 and $83.9 million) reached project design before being terminated. The final project (Petra Nova) became operational (after $195.1 million matching? DOE funding) but its operation was terminated because it was not cost competitive due to low oil prices making enhanced oil recovery not economic. So the Petra Nova project cost $390.2 million if the matching funds were actually provided by industry.

In summary the DOE spent $683.8 million on 8 coal CCS projects, none of which became viable.

Three further DOE funded projects involving industrial CCS received $438.2 million. One of the projects was withdrawn at the design stage having received $12.8 million, while the remaining two projects became operational after receiving $284.0 and 141.4 million funding. The “successful” Air Products (NYSE:APD) Blue Hydrogen project in Port Arthur Texas cost $284 million of DOE funding and it captures 1 million tons of CO2 annually in producing hydrogen from methane. No details are given for the operational cost of this facility, but the CCS involves separation of CO2, purification and delivery by a 12 mile pipeline to an existing interstate CO2 pipeline for use in enhanced oil recovery (a process in which the CO2 is not specifically stored, but there is some release of the captured CO2) elsewhere in Texas (distance not specified). It does not seem like this process is cheap.

The GAO report outlines a litany of mismanagement and poor oversight of huge amounts ($1.1 billion) of funding. For example the report states that “DOE bypassed cost controls and spent almost $300 million more than planned on four unsuccessful coal CCS projects”. The planned DOE funding for these 4 coal CCS projects was $175.8 million, but actual DOE funding amounted to $471.8 million. None of these projects were successful! There was effectively no cost control on these projects or indeed oversight of project progress.

The programs studied in the GAO report are a forerunner to a further $2.5 billion to be spent in the US on CCS in the period between 2022 and 2025.

The IEA is bullish about CCS

A recent update from the IEA “Carbon capture in 2021: off and running or another false start?” announces 100 new planned CCS facilities. The IEA’s position is that the only way to achieve net zero emissions by 2050 is for there to be a huge CCS industry established. This view is predicated on the view that fossil fuel exploitation and the resultant emissions must continue as there are no substitutes for a significant amount of fossil fuel products. Others argue that the evidence is clear that fossil fuels are not an essential part of a future society and that emissions can be eliminated without a CCS industry.

For all of the hype and exaggeration the GAO report described above documents reality, which is essentially no genuine capacity to store carbon despite $billions being invested in trying to make it work.

In the November report the IEA claims that this time it is different for three reasons

i) new business models based on hubs : It is claimed that by aggregating CCS activities economies of scale and reduced commercial risk is possible. The economics of CCS is so unrealistic that I’m yet to see a full financial proposal (including capture, shipment, and storage) for CCS. Most costings focus just on capture and don’t address the need to store and transport huge amounts of CO2 and to take it often 100’s of kilometers for storage. The Exxon proposal for a Houston hub is going to cost more than $100 billion to store a tiny amount of CO2 in comparison with current emissions.

ii) The investment environment has improved : Hope that Governments will fund impossibly expensive facilities is the basis for a better investment environment. I see no evidence yet that XOM or any of the other parties putting their name to the Houston hub actually committing significant cash. All of the 11 companies signed up are keen to build the facility if Government comes to the party.

iii) Net Zero plans make CCS a necessity and not an option : The IEA seems unable to understand that Net Zero plans do not need to involve continued fossil fuel exploitation. Indeed the massive cost structure for CCS (making fossil fuel exploitation more expensive) is a major positive for plans that involve renewable energy, storage, interconnectivity and demand management. Note that already solar PV and wind produce cheaper electricity than coal and gas, even before there is any investment in CCS to capture the emissions.

Lack of understanding about CCS

Apart from companies like XOM, the chief proponents of CCS are Governments, and the Australian Government is a major CCS promoter and funder. The Australian Government website is an example of hype over substance, with CCS talked about as if it is established, when it clearly is not. Two technologies are showcased, CCS by injection into subterranean cavities of CO2 produced in the formation of hydrogen from coal or gas, and carbon capture by mineral carbonation. These technologies are not commercially established on either a technical or cost basis.

Anyone who wishes to get an understanding as to where the Technical and Regulatory situation for CCS in the US lies might consider reading the 2020 report, “Injection and Geologic Sequestration of Carbon Dioxide: Federal Role and Issues for Congress” from the Congressional Research Service. This report makes clear that in just about every area of CCS research the data is inadequate and real issues remain for consideration. For example, regarding Geologic CO2 sequestration 8 risks are identified, including drinking water impacts, accidental CO2 release, effects on subsurface minerals and potential for earthquakes from injections. As far as I can make out, none of these potential health and environmental considerations have been explored in any detail. It is noted that the full train from initial CO2 capture, to storage, transport and injection is poorly developed and costly. The point is made that there is a likelihood that the additional costs incurred as a result of CCS are likely to outweigh the cost of alternative energy sources (eg solar PV and wind).

The area of CCS most developed is that involved with cleaning up the CO2 from “gassy” wells. LNG needs CO2 to be removed before the gas is liquefied, because CO2 freezes at LNG temperatures. Some gas fields have natural gas that has a high proportion (above 10%) of CO2 . This has to be removed. The Australian Gorgon project (managed by Chevron, with XOM and Shell (NYSE:RDS.A) (NYSE:RDS.B) as major partners) is the world’s largest CCS project of this type. The story of the project documents how the project has failed to successfully capture the CO2 as contracted. The West Australian Government has issued a notice of non-compliance after Chevron captured less than 20% of its contracted CO2 from the project since 2016.

Note that this CO2 removal in no way mitigates the CO2 released on burning the gas. This “cleanup” CCS is about making the gas viable for conversion into LNG. Oil and gas majors rarely make clear this distinction.

South Korea’s largest private gas provider SK E&S Co is being challenged by an activist group “Solutions for our Climate” over claims by SK E&S that the gas from the Barossa project of NE Australia is “CO2-free”. SK E&S is referring to the CO2 captured from cleaning up the natural gas after harvesting. This overlooks the emissions from burning the LNG product (which many assume is where emissions reductions are needed).

What is Exxon Mobil doing about CCS?

Exxon continues to represent that CCS technology is a proven technology that is being implemented worldwide. The evidence they provide to support these assertions is questionable. There is lots of “potential for capture” and an absence of cost estimates or who will pay for the additional cost burden on CO2 emissions-related industries.

CURE (Coalition United for a Responsible Exxon)

Perhaps it is just a straw in the wind but recently there have been calls for Chairman & CEO Darren Woods to be removed and a new CEO and independent Chairman to be appointed. The XOM shareholders making this call, Coalition United for a Responsible Exxon (CURE), represent stakeholders with $2.5 trillion in assets under management. They have become dissatisfied with the lack of progress in transition to clean energy and overhaul of spending. CURE’s “Mid-Term Report Card for the Exxon Mobil Board” was released in December,

The report includes scores on four different criteria for grading XOM’s performance. One was based on CURE’s objectives for the company, another was based on Engine No 1’s expectations released before the 2021 AGM, while two others are climate-based indicators. CURE’s report concludes that notwithstanding 5 new board members and an expanded board size from 9 to 12 members, little progress has been made to address shareholder concerns. The company philosophy and strategy seems little altered and indeed CURE noted that Chairman and CEO Darren Woods made clear in July that huge shifts in strategy are not planned by XOM. The company’s goals fall far short of science-based emissions reductions needed to align with a 1.5C temperature increase by 2050. It was noted that XOM continues to refuse to include Scope 3 emissions in its targets.

CURE notes that XOM’s $15 billion budget ($3 million/yr for 5 years) for lower-emissions investment is 1.7% of XOM’s annual revenues. A shareholder resolution in May 2021 for XOM to develop a climate lobbying position aligned with the Paris Agreement shows no sign of being implemented.

CURE proposes 7 immediate actions:

1) Appoint an independent Board Chair

2) Replace current CEO

3) Set net-zero 2050 target with annual milestones & reporting

4) Provide new CEO & key executives with incentives for achieving emissions reductions

5) Align climate objectives with key climate benchmarks to remedy business risk

6) Halt lobbying & dark money being invested in climate denial and anti-clean energy legislation

7) Appoint 2 new directors in a transparent fashion before Feb 2022.

The above demands come from a powerful group of investors. Engine No 1 is not impressed by XOM’s focus on CCS for the reasons given in the report mentioned above. Basically there is no demonstration that CCS works at scale, nor is there evidence that the additional cost of CCS will find users of fossil fuels who are prepared to pay the extra cost, when renewables are already cheaper than fossil fuels without CCS.

Conclusion

In this article I’ve included two key issues confronting the XOM board and senior management. The first questions whether CCS has any reality to it and reviews a very recent report that makes clear CCS is not a technology capable of contributing to emission reduction needs in a cost effective fashion. This brings into question a major claim by XOM management that it is addressing climate-related issues and providing tangible new business opportunities for the company, based on its claimed position as leading CCS technology. For CCS to have a significant impact on XOM’s business, there needs to be some reality to the claims that this is going to become a major income earner. Secondly I point out that the issues that led to board changes earlier this year have not been adequately addressed. Given the significance of shareholder concern about ESG matters, I don’t think this unrest is going away. Together the issues considered here provide some explanation as to why XOM, notwithstanding apparent tailwinds currently, has a share price that is marooned.

MOTLEY FOOL

IT'S A MYTH

Opinion: Carbon capture and storage a good deal for Canada and the world
Opinion by James Millar • Friday

As we await further details on support for carbon capture and storage (CCS) projects in the upcoming federal budget, there are almost daily reports expressing concern that Canada is losing ground to the United States and other competitors when it comes to breaking ground on large-scale CCS facilities.


Pipes run through a carbon capture facility in Alberta.

© Provided by Calgary Herald

Canada and the European Union are indeed scrambling to craft policies promoting private-sector investment in CCS following the landmark incentives put in place in the U.S. late last year. The United Kingdom has also doubled down with last week’s announcement of a CAD $33-billion investment in CCS for the next 20 years. Getting the right framework built, and quickly, is critical as the clock is ticking on Canada’s commitment to reach net-zero greenhouse gas emissions by 2050. Meeting this goal will rely heavily on implementing CCS in heavy industries across the country, including power generation; cement, steel and fertilizer manufacturing, mining, petrochemical processing, and oil and gas production.

While much attention is on the hefty upfront price tag for building large-scale CCS infrastructure, what is often lost in the debates over how to create the right conditions for investment in CCS are the longer-term costs to our society if we do not proceed on pace with the massive build-out required if we hope to meet our Paris Agreement commitments.

At the highest level, the world can’t afford to ignore CCS as a key tool in fighting climate change. The International Energy Agency estimates that CCS will be required for as much as one-quarter of the GHG reductions necessary by 2050, while the UN’s Intergovernmental Panel on Climate Change forecasts that the cost of climate mitigation could more than double without the application of CCS technologies.

It is also important to look beyond the direct cost of building a CCS facility, and consider how the cost of CCS impacts end users of the products we all rely on for daily life. A new study by Norwegian and Dutch experts concluded that implementing CCS on large-scale industrial projects yields significant CO2 reductions at minimal cost to the public over the long term. The researchers concluded that CCS is a relatively cheap emissions reduction solution for the end users of the commodities that heavy-emitting industries provide. After all, the average person does not tend to buy a lot of steel, cement, fertilizer or crude oil, but we do rely on these inputs for our homes, buildings, roads, clothing, food, pharmaceuticals and electronic devices. It turns out the overall cost for mitigating CO2 emissions from these products with CCS is marginal and well within the normal range of variation we see in market prices for such goods.

Focusing on the situation in Canada, our current federal emissions reduction plan calls for more than tripling Canada’s current CCS capacity by 2030. Adding the capture facilities, pipelines and underground storage systems needed for keeping at least another 15 million tonnes of CO2 per year from entering the atmosphere by the end of the decade is a massive undertaking that will require enormous political will, public confidence, and collaboration between industry, government, academia, Indigenous communities, and other partners.

Related video: Pressure grows on the shipping industry to accept carbon levy (WION)   View on Watch

The major players in Canada’s heavy-emitting industries – which provide major contributions to national GDP and government revenues, employ millions of people, and include firms that are at the core of most Canadians’ pension plans and investment portfolios – are committed to achieving net zero by 2050, and they are set to invest billions in Canada. Capital Power announced last December a limited notice to proceed for its Genesee CCS project. Heidelberg Materials continues to advance the world’s first CCS project on a cement plant in Edmonton. And the oilsands industry is already spending tens of millions of dollars on environmental assessments, early-stage engineering work and stakeholder engagement that is necessary to receive permits for construction.

All heavy emitters are awaiting key details to be released in the March 28 budget for how the Government of Canada will create a competitive regulatory environment with co-financing models allowing for multi-decade investments that will be tenable through the volatile cash flows that can define industry, especially the oil and gas sector.

Canada’s federal government has already lined up significant support for CCS projects through a proposed investment tax credit, new capital cost allowance classes for CCS projects, a federal price on carbon emissions, and several federal and provincial carbon credit systems that will allow companies to monetize the emissions they permanently send underground. When taken together, these incentives provide a promising basis for CCS investment in Canada.

The focus now needs to be on ensuring these programs move from proposals to reality, and for the government to provide long-term certainty on its carbon pricing regime so that industry can be confident its economic models won’t collapse due to the shifting winds of climate politics in the decades to come.

In the meantime, the risk that capital available for CCS development will move south of the border continues to grow. The U.S. Inflation Reduction Act contained straightforward incentives for CCS, including a production tax credit that provides $85 for every tonne of CO2 captured – a juicy carrot analysts believe will cover two-thirds of a project’s lifetime capital and operating costs.

As the world’s good intentions for addressing climate change become concrete plans with dollar figures attached, some argue that funding for the energy transition be directed towards renewable power and other emissions reduction technologies, but not CCS. This is an unrealistic approach considering the magnitude of the challenge ahead.

To be clear, global decarbonization requires using all the tools we have at our disposal. CCS is the only proven solution we have today that can dramatically cut CO2 emissions from heavy industries that are the pillars of our economy. It is worth pointing out that investment in this emission reduction pathway has been virtually non-existent compared to the trillions of dollars that have been spent on wind turbines, solar panels, electric vehicles and energy efficiency programs so far this century – during which time greenhouse gas emissions have continued to climb and the share of fossil fuels in the world’s energy mix has only budged marginally from 87 per cent in 2000 to 84 per cent by 2020.

It’s time to bring CCS to life, and Canada is uniquely suited to capture enormous value from the CCS boom on the horizon. With the right geology for safely storing CO2 deep underground, the technical experience from building and operating many of the world’s first CCS facilities, and the desire to fight climate change in a just and sustainable manner, Canada is poised to continue its global leadership in the CCS space.

Let’s make sure we don’t miss out on this once-in-a-generation opportunity. Our children are counting on us.

James Millar is president and CEO of the International CCS Knowledge Centre.

Carbon Capture Technology And Its Growing Role in Decarbonisation

Editor OilPrice.com
Sat, March 25, 2023

With a greater number of climate policies coming into place worldwide, from the Biden Administration’s IRA to the European Union’s New Green Deal, companies are feeling mounting pressure to decarbonise. And while some are doing it to enhance their ESG practices and futureproof their business, others are concerned about rising carbon taxes, which could slash their profits. So, as well as introducing green energy technology, many are turning to carbon capture and storage (CCS) technologies to support their decarbonisation efforts. Big Oil is pumping billions into CCS equipment at operations around the globe to keep production ‘low-carbon oil’, while other industries, such as manufacturing, are looking to the technology to help clean up operations.

The International Energy Agency (IEA) sees CCS technology as key to the decarbonisation of fossil fuel operations and industrial processes, particularly useful as a bridge to greater renewable energy production. By 2021, the total annual carbon capture capacity stood at close to 45?Mt?of CO2, a figure that is expected to increase substantially with approximately 300 projects under construction. CCS equipment could capture more than 220 Mt CO2 a year by 2030. This will help companies achieve net-zero ambitions when paired with renewable energy technologies.

By 2022, 35 commercial facilities were using CCS for industrial processes, fuel transformation, and power generation. Deployment of the technology has been slow to date but investment in the sector is rising sharply, as companies look for ways to reduce their carbon output, improve their ESG practices, and avoid carbon taxes, to support a green transition. However, improved political policies and regulatory frameworks are required to ensure the effective rollout of the technology, in line with climate policies.

According to research by Wood Mackenzie, 2023 will be a milestone year for CCS. The global CCS pipeline rose by more than 50 percent in 2022, with projects planned across several industrial sectors. In recent years, government funding of up to 50 percent has helped CCS projects get off the ground, a trend that is expected to continue. The U.S. government has so far committed $3.7 billion to finance CCS projects and meet its net-zero goal by 2050. The introduction of new climate policies worldwide will also support the uptake of the technology.

In terms of how the CO2 is used, much of the sequestered carbon is currently going to enhanced oil recovery operations at present, responding to the ongoing need for fossil fuels to ensure energy security worldwide. However, as green energy capacity increases worldwide, much of the CO2 will go to designated storage sites, with 66 percent expected to be pumped deep underground by 2030. New legislation and supporting incentives for CO2 utilisation will encourage this change.

David Lluis Madrid, the CCUS analyst at BloombergNEF (BNEF), explained, “CCS is starting to overcome its bad reputation.” Madrid added, “It is now being deployed as a decarbonization tool, which means the CO2 needs to be stored. A lack of CO2 transport and storage sites near industrial or power generation point sources could be a major bottleneck to CCS development. But we are already seeing a big increase in these projects to serve that need.”

One of many projects underway globally is an innovative CCS offshore site, the Greensand project, in the Danish part of the North Sea, where construction began this month. CO2 captured in Belgium will be transported via ship for injection in a depleted oil field, located 120 miles from the North Sea coast. The project is being undertaken by a consortium of companies including Germany’s Wintershall Dea and Britain’s INEOS. It is considered to be the world’s first cross-border offshore carbon dioxide storage with the explicit purpose of tackling climate change.

Meanwhile, in Norway, a joint venture between Equinor, TotalEnergies, and Shell is also underway. The Northern Lights project will see 1.5 million tonnes of CO2 injected into saline aquifer near the Troll gas field annually, starting in 2024. In the U.K., the Accorn CCS project is being launched off the coast of Scotland, aimed at creating an annual capacity of 5-10 mtpa of CO2 by 2030. The project is being operated by Storegga, Shell, Harbour Energy and North Sea Midstream Partners. And in the Netherlands, the Porthos project by the Port of Rotterdam, Gasunie, and EBN is expected to provide a storage capacity of 2.5 mtpa of CO2. Porthos will be located in depleted Dutch gas fields in the North Sea, with operations expected to start in 2026.

Many companies worldwide are now looking to CCS technologies to help them achieve decarbonisation aims without giving up on their traditional operations. The rollout of CCS around the globe will be supported by new climate policies, decarbonisation incentives, and better regulation of the industry. In addition, greater public funding for CCS projects is expected to spur private investment in the sector and boost the world’s CO2storage capacity significantly in the coming decades.

By Felicity Bradstock for Oilprice.com

The Collapse of Confidence in Carbon Capture

By Felicity Bradstock - Oct 05, 2025

• Governments and fossil fuel firms have invested billions in CCS, but delays, glitches, and cost overruns have slowed progress.
• 
  
• Evidence shows many CCS and DAC facilities are capturing far less carbon than promised, shaking investor and public confidence.
• 
  
• Critics warn that overreliance on CCS could divert crucial funding away from long-term renewable energy development.

Just a few years ago, Carbon Capture and Storage (CCS) was expected to be the saviour of the oil and gas industry, as major fossil fuel firms invested heavily in CCS activities aimed at decarbonising operations. Governments worldwide have encouraged companies to invest in CCS in recent years, funding green energy projects to help reduce the carbon emitted from oil and gas operations, and to allow countries to continue using fossil fuels to bridge the energy gap over the coming decades. However, as we see delays in the rollout of CCS projects and more evidence that suggests most CCS installations do not work as well as anticipated, many are questioning whether investing in this type of decarbonisation is viable.

CCS involves capturing carbon dioxide at emission sources, to be transported and stored or buried in a suitable deep, underground location. There is now a range of CCS technologies being used in fossil fuel and industrial operations worldwide, including conventional CCS installations and direct air capture (DAC), which removes CO2 directly from the atmosphere.

Following significant support from governments and fossil fuel companies worldwide, the CCS market could attract as much as $80 billion in investment by 2030, to support an anticipated 270 million tons of carbon dioxide capture a year. However, many scientists now suggest that financing CCS is a waste of money, as the technology does not work as effectively as previously expected, and it could detract from funding long-term green energy projects. A new report suggests that globally, the maximum reduction that CCS operations could achieve for the atmosphere would be 0.7 degrees Celsius, which is far short of the 5 °C to 6 °C industry and governments claim.

The U.K. has committed $40.5 billion to CCS technology in support of its net-zero emissions aims for 2050. The country hopes to find a way to reduce emissions in the mid-term as it gradually incorporates more renewable energy capacity into the energy mix, while it continues to rely heavily on oil and gas for power and heating. However, getting CCS projects off the ground has been no easy feat, with decades of delays under several governments.

The increased funding into CCS technology in recent years is supposed to have led to technological improvements and design innovation that will help suck more carbon from the sky. However, technology glitches and the high costs associated with installing CCS equipment have delayed projects and deterred companies from investing in CCS operations. Thilo Trabner, a business development manager for the Zurich-based CSS provider ABB, explained, “First-of-a-kind technology challenges continue to contribute to delays in some projects, and reliance on subsidies and offtake agreements continues to play a critical role in project viability.”

Some of the projects for the U.K. include a gas power plant on Teesside in the north of England, which is expected to be operational by 2028, with plans to capture 95 percent of its emissions – around 2 million tonnes a year, and capacity to transport and store up to 4 million tonnes of carbon a year. Another three projects in the first round of the project pipeline are under negotiation, with plans to capture carbon from a methane-based blue hydrogen plant and energy from waste.

Related: Supermajors Slim Down to Protect Shareholder PayoutsA government committee has questioned the cost-effectiveness of the planned CCS projects, warning against an over-reliance on CCS activities rather than investing in the country’s long-term green energy goals. The government has already acknowledged that its target to capture between 20 and 30 million tonnes of carbon dioxide a year by 2030 is no longer viable.Related: Greenpeace Blockade Forces LNG Tanker Diversions From Belgian Terminal

In Switzerland, one of the world’s most well-known CCS companies, Climeworks, announced in May that it would be cutting its workforce by more than 10 percent, citing economic uncertainty and “reduced momentum” for CCS technology. Climeworks is famous for constructing the world’s first DAC facilities. However, the company has come under fire as two of its flagship plants in Iceland were found to be capturing significantly less carbon than originally anticipated. Climeworks said that it was uncertain whether a third facility planned for the U.S. would go ahead due to the uncertain energy environment under President Trump.

DAC technology is much more expensive than conventional CCS equipment, but many companies have invested in DAC activities in recent years in response to government pressure to decarbonise. Now, recent reviews suggest that DAC technology is struggling to grow out of the pilot phase, as interest in the sector wanes. Climeworks said that at its flagship Mammoth plant in Iceland, which is thought to have a carbon capture capacity of 36,000 tonnes of carbon dioxide a year, the equipment captured just 750 tonnes in the first 10 months of operations.

The outlook for CCS technology is uncertain. In recent years, several governments, industries, and oil and gas companies have invested heavily in CCS technology in a bid to decarbonise. However, many of the planned projects have been delayed due to technological constraints and high costs. Now, reports on existing CCS activities suggest that the technology may not be working as successfully as anticipated, which has cooled investor interest in the sector and could cause progress in the CCS rollout to stall in the coming years.

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Onboard CCS is Paving the Way for Shipping’s Carbon-Neutral Future

iStock / SHansche

PUBLISHED APR 10, 2024 9:08 AM BY SIGURD JENSSEN

 

 

Reducing Greenhouse Gas (GHG) emissions from international shipping is a considerable challenge, but advancements are being made to address this global issue. Onboard carbon capture and storage (CCS) stands out as a revolutionary technology for the shipping industry, offering a tangible means to reduce carbon dioxide (CO2) emissions from ships. This becomes increasingly crucial as the industry navigates the development of power alternatives like hydrogen fuel cells and future fuels, such as renewable ammonia and methanol.

The regulatory landscape for onboard CCS is evolving rapidly, driven by the urgent need to reduce maritime emissions. Recent regulatory initiatives such as the 2022 Inflation Reduction Act (IRA), in the United States, and the European Union's Fit for 55 package – which includes shipping's integration into the EU ETS – have spurred increased investments in CCS projects.

However, the economic value of CCS compared to freely emitting CO2 requires further policy refinement. Effective regulation is essential to incentivize CCS adoption and foster technological advancements. The EU Commission's forthcoming integration of atmospheric CO2 removal and storage into emissions trading by July 2026, exemplifies proactive regulatory measures to create a predictable environment for CCS technologies' deployment, attracting investments and advancing adoption.

With the world’s first full-scale installation set for the summer of 2024, Wärtsilä is accelerating the deployment of CCS for shipping, a vital technology to mitigate climate change and deliver climate neutrality. The upcoming pilot onboard Solvang’s ethylene carrier, Clipper Eris, serves as a precursor to the commercial roll out in 2025, showcasing the technical viability of retrofitting CCS technology and refining its capabilities.

This testing phase is crucial to understanding training requirements, the value chain, and service and maintenance organisation. Once vessels equipped with CCS technology hit the water over the next few years, the highest performing systems will be able to capture up to 70% of their carbon emissions before they enter the atmosphere. Combined with alternative fuels, clean tech, and voyage optimization, achieving net-zero shipping becomes a realistic possibility.

But we didn’t get here overnight. The evolution of scrubber technology within the maritime industry has been instrumental in paving the way for onboard CCS systems. Initially developed to comply with sulphur emission regulations, scrubbers have matured into versatile systems capable of addressing a range of pollutants. By efficiently removing non-CO2 pollutants from ship exhausts, scrubbers ensure efficient pre-treatment for CO2 capture, enabling the safe storage and subsequent disposal of carbon at port facilities.

Continuous upgrades and advancements in scrubber capabilities have positioned them as critical components in tackling shipping's holistic environmental challenges. Technologies such as selective catalytic reduction systems (SCR) and exhaust gas recirculation systems (EGR) have been integrated to tackle NOx emissions, meeting stringent MARPOL Tier III requirements. Beyond regulatory compliance, scrubbers now boast the ability to filter particulate matter, black carbon, and even microplastics from scrubber washwater through advanced filtering systems.

As scrubbers continue to evolve, they not only contribute to cleaner air and oceans but also play a pivotal role in enabling the implementation of onboard CCS systems, marking a significant milestone in the maritime industry's journey towards sustainability. This progression demonstrates the industry's commitment to environmental stewardship and highlights how regulatory compliance has spurred innovation towards tackling broader environmental challenges.

Furthermore, extensive testing of Wärtsilä’s CCS system in Moss, Norway, operating at a 1 MW scale, has provided valuable insights and enabled the identification of unique challenges in designing a CCS system for ships. For example, testing the merits of different CO2 capture solvents has shown that a solvent optimised for marine engine exhaust gas can potentially achieve capture rates of up to 80%.

Whilst technological development progresses, most significant obstacles arise in the physical integration of CCS onboard ships. Challenges such as space limitations, energy requirements, storage infrastructure, and exhaust pre-treatment must be addressed for both new and existing vessels to achieve decarbonisation goals.

To tackle these issues, Wärtsilä Exhaust Treatment has expanded its services to offer CCS feasibility studies and provide shipowners and operators with comprehensive commercial proposals for CCS integration. These studies, spanning four to six months, involve early ship design engagement and engineering work to determine how to accommodate the power, space, and exhaust requirements of CCS onboard, ensuring minimal disruption during potential retrofitting. By closely analysing ship architecture, these studies accelerate the initial phases of CCS integration and educate customers on its benefits and complexities.

Equally important is the role being played by CCS-ready scrubbers, designed to accommodate future CCS retrofits while ensuring near-term compliance with sulphur cap regulations. These scrubbers are engineered to facilitate easy adaptation to CCS installation in the future, thus future-proofing vessels. If all ships with a Wärtsilä scrubber adopt CCS, a potential reduction in 30 million tonnes in CO2 emissions, at a 70% capture rate, could be achieved.

2024 is poised to be a hugely significant year for shipping’s decarbonisation journey, as new regulations and net-zero commitments propel industry players to increase their uptake of operational and energy efficiency technologies. However, the widespread availability of low-carbon products, which are cheaper than their high-carbon alternatives, remain a distant prospect, underscoring the urgency to accelerate the adoption of CCS technologies. In order to achieve these targets, it is imperative to share expertise, build capacity, and provide support for CCS implementation, ensuring its pivotal role in curbing GHG emissions.

As investment decisions also loom large in 2024, the CCS industry has a unique opportunity to showcase its potential in combating climate change, while fostering innovation and cost reduction. Policies such as carbon pricing and emission mandates serve as crucial enablers, not only incentivizing decarbonization but also mitigating risks associated with CCS deployment.

Against a backdrop of increasing sustainability commitments, financing CCS equipment emerges as a strategic avenue, aligning with both environmental objectives and the evolving priorities of financial institutions. Additionally, ship owners embracing carbon reduction initiatives not only gain a competitive edge in markets that are increasingly prioritizing sustainability, but also stand to attract enhanced investment capital from institutions that are factoring in environmental, social, and governance (ESG) considerations.

Now is the time to leverage CCS deployment as a catalyst for transformative change, in both industry practices and policy frameworks, ensuring a sustainable path forward for our planet and economy alike.

Sigurd Jenssen is the Director of Wärtsilä Exhaust Treatment.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.