CCUS at Risk: Key Pathway to Net Zero Faces Growing Threats

CCUS (Carbon Capture Utilization Storage) has been touted for years as an answer to the problem of our ghg emissions to the atmosphere in the form of CO2.

It is certainly no surprise to oilfield people that CCUS looks like a dead end, at least at any meaningful scale in the US. 

The Journal of Petroleum Technology (JPT) reports that two major CCUS projects have been recently scrapped:

"...developer Navigator CO₂ announced that its large CCUS project the Heartland Greenway had been canceled. The project planned to build a 1,300-mile network of pipelines in the Midwest to transport up to 15 million tonnes of carbon dioxide from ethanol plants and permanently bury the gas in Illinois. The company cited the unpredictable nature of the regulatory and government processes involved in developing the pipelines."

Also:

"Summit Carbon Solutions has a similar project to capture carbon from more than 30 ethanol plants across the Midwest, transport it in pipelines, and store it underground in North Dakota. The company also has faced regulatory headwinds and recently announced that it was delaying the project by 2 years to 2026."

As has long been known, it is just too expensive.  My own opinion is that it was always a rather desperate wish and hope by the Oil & Gas Industry to extend the production and sale of fossil fuels for burning, hoping to convince taxpayers that they can continue to buy and burn fossil fuels, i.e.  that they can have their cake and eat it too.

The costs for carbon capture look something like this:

So, the cost per tonne of CO2 captured from gas and coal fired power plants is somewhere in the neighborhood of US$150-250. To give that some perspective:

Electricity generation is responsible for 42.5% of global CO₂ emissions. Of this, 73% can be attributed to coal-fired power plants, which emit 950 grams of CO₂ for every kilowatt-hour of electricity they generate, compared with 350 grams for gas-fired power plants^3.

So, very best case scenario: Gas fired plants produce about 350 grams CO2 per 1 kwh of electricity generated.  So, burning natural gas and capturing a tonne of CO2 from gas fired power is the result of generating about 2857 kwh of power.  The average cost of electricity in the US is:

As of February 2023, the average residential electricity rate in the U.S. is about 23 cents per kilowatt-hour (kWh).

So, 2857 kwh would cost about $US 657.  Add the cost of Carbon capture at $200 per tonne and you have $US857, increasing the price of electricity to $0.30 per kwh, about a 30% increase. That doesn´t seem like such an outlandish increase. At least it can be considered if we really want to reduce CO2 emissions.  However:

"These estimates do not include the added costs of transportation and storage."

"In our analysis, CO₂ transportation is likely to be one of the more challenging links in the CCUS value chain. While the US has a robust network of pipelines for natural gas, repurposing those for transporting CO₂ to locations with suitable geologic storage could, in many cases, be both technically and economically challenging. And building new pipelines for CO₂ transportation will face a gantlet of permitting challenges and regulatory uncertainty.

With CO₂ transportation well understood and having been in operation for years for industrial uses and EOR, an important driver will be regulatory permitting and public acceptance of CO₂ transportation and storage. Public opposition to natural gas pipelines has successfully derailed several projects. CO₂ pipelines are facing similar if not more extensive opposition, whether for new or retrofit pipelines.

This article gives an idea of the complexity of calculating costs for CCUS, including transport and storage. Note that the calculations, such as they are,  are from before 2020.  As we have seen from other studies, a lot has changed since then and, as far as costs are concerned, not for the better.

So, after all the $billions (of tax and subsidies) spent, no one can really give us the price for CCUS on a large scale.  Suffice it to say that it is much, much more than the approxinately $200 per tonne CO2 captured while burning gas for electricity generation, or,  the additional $0.07 per kwh for gas fired electricity, as discussed above.

Considering the complexity, it is an understatement that:

In contrast to technologies such as solar PV and wind that require subsidies only initially as the technologies scale up, CCS in oil and gas production requires substantial, ongoing government support and regulations. 

I´m sure we´d all be skeptical of the regulatory structure that might be required, both for the time it takes to establish a regulatory  and enforcement structure, the loopholes and abuse that will creep in and, not least, the cost.  Whether it will ever have a meaningful impact on the pace of climate change has to be very much in doubt.

This isn´t to say that CCUS cannot work in some cases.  Several projects in Norway and Denmark have been capturing CO2 from their sources for years, either gas wells or biogas combustion exhaust.  In the case of the gas wells, the CO2 has to be removed from the gas flow anyway, in order for the gas to go to market.  So, the only additional cost is for pumping the captured CO2 into the well.  But, in those cases the CO2 is very close to the location where it is to be stored.  The incentive is the carbon credit system, currently running at about Euro 82 per tonne.  But, that wasn´t always the case. The carbon market nearly collapsed several times over the years.  The simple fix was for the EU to rein in the quantity of carbon credits available, thus supporting the price of carbon.  Alas, that sort of semi-market based system has never managed to take hold in the US.  At this point it appears to be a political impossibility.  But, I dare say, that even that most straightforward simple system could result in millions of tonnes of CO2 sequestered forever.  Without such a system, it seems likely, with the complexity of the problem, that  most of our CO2 will go into and stay in the atmosphere.

Personally, short of a market based system of CO2 credits,  I think large scale CCUS in the United States is as dead as a door nail for the foreseeable future.  Even direct air capture (DAC) of CO2 at sites adjacent to deep well storage would probably be more palatable. At this stage, cost estimates for DAC are really all over the map. But, we are starting to hear more about efforts at DAC, some even solar powered.  Maybe there is some small measure of hope.

But, for the most part, the hype you hear about CCUS is largely a result of your tax dollars at work (or not).