The energy world is changing, and quicker than most experts predicted only a year ago. The adaptation of renewable energy technologies is accelerating, even during the pandemic, and three contenders – carbon capture and storage (CCS), battery storage and hydrogen – have begun a competitive race to reduce emissions and assist the increasing number of countries, industries and companies that are setting net zero targets.

To address the energy transition and identify the latest trends, Rystad Energy has proudly initiated a monthly Energy Transition Report, which showcases and analyzes the latest developments across key transition variables, societies and technologies.

CCS could address 62% of global CO2 emissions

Our assessment shows that CCS as a technology has the theoretical potential to address 62% (25 gigatons, GT) of global CO2 emissions, but net-negative technologies such as Direct Air Capture (DAC) and Bio Energy CCS (BECCS) will be needed given that traditional CCS has a capture rate of up to approximately 90%. However, it is unlikely that CCS will ever reach this level.

The current portfolio of operational CCS projects captures roughly 40 megatons (Mt) per year; if we include the upcoming project pipeline, this number increases to 110 Mt per year for projects that are to come online by the end of 2026.

These numbers compare to the IEA’s Sustainable Development Scenario, with 5.6 Gt captured in 2050, representing a 50x increase from the current pipeline. To capture the total addressable market would require an additional 4x increase above the IEA SDS scenario.

“Where we end up will rely heavily on the development in carbon prices, which today are far below the levels needed to support most applications of CCS. The exceptions are perhaps in some European countries and some states in the US, which utilize a combination of emissions trading systems (ETS), carbon tax, carbon credits, or more direct subsidy schemes,” says Marius Foss, senior vice president and head of global energy systems at Rystad Energy.

*When it comes to total greenhouse gas emissions (GHG), CCS could theoretically address up to 48% of the world’s total, an upwards revision of our last general energy transition report that adds some more industrial GHG emissions.

Global geological storage at 11,500 Gt of CO2

What results from our analysis is a consistent global dataset depicting a tier 1 midpoint estimate of 11,500 GtCO2 of potential geological storage across the globe. In the graph below, the darker brown swaths illustrate the largest basins, as seen sweeping across Russia and parts of the US and Canada. The lighter orange areas show smaller formations, as can be seen dappling the Middle East and up through the UK into the North Sea.

Combining our understanding of country-level emissions that are addressable with CCS, together with our assessment of geological CO2 storage capacity at a regional level, we are able to construct a carbon storage timeline for each country, displayed as a range to reflect potential underlying geological uncertainty. This indicates the lower and upper estimate, in years from the present, that countries will reach maximum carbon storage given their geological storage potential, and assuming CCS is applied to all applicable segments. 

In EMEA, our report shows that there is excellent CO2 storage capacity in Russia and Saudi Arabia, which grants them long CO2 storage timelines, the lower end of which exceeds 100 years. The majority of remaining EMEA regions have some combination of good storage potential or relatively low emissions.

In APAC, significant global emitters China and India do have excellent or good storage potential, but the significant volume of emissions that must be abated from these countries means that CO2 timelines are relatively short. This is especially true for APAC countries with somewhat less storage potential, such as Japan and South Korea.

The Americas offer some of the most attractive CO2 timelines of any region, given the robust opportunities for storage. Even top emitters such as the US and Canada see the lower limit of storage timelines at over one hundred years.

Only 49% of global emissions are priced

Regions that currently have carbon pricing mechanisms in place represent 18 GtCO2 of annual emissions from power generation, energy, industry processes and industry combustion – 49% of global CO2 emissions. Yet, most of these countries have relatively low carbon prices.

This is especially true for major emitters such as China, the US, and the EU, all of which have stated net-zero targets. These emissions must be delt with if major players are to become carbon neutral, pressure which presents tremendous opportunity for higher carbon prices at both the national and regional level.

“To make carbon capture and storage economically feasible, it must become more costly to emit CO2 than to capture it. This is often not the case as CCS remains costly when applied to most applications compared to local carbon pricing. But as technology improves, and carbon prices increase, CCS will make economic sense for an increasing number of projects,“ adds Foss.

What about CCS costs?

When it comes to costs, Rystad Energy estimates that there is large potential for reductions on the capture level, which represents 80% of the CCS cost. The cost of capture can vary significantly based on factors such as the concentration of CO2, capture rates, capture amounts, location, and energy source. However, several factors are driving costs down.

The CO2 capture industry has seen rapid technology development in recent years. Companies are beginning to develop modular designs and standardize, which reduces capture costs. Larger capture volumes will create economies of scale, while increased competition with new players entering the capture market continues to drive innovation and reduces pricing power.

The transportation segment of the value chain, which accounts for about 10% of CCS costs, offers medium cost reduction potential. For storage however, which takes up the last 10% of CCS costs, much of the technology needed is quite mature and has less cost reduction potential.