Carbon capture, utilization, and storage under the Paris Agreement

Almost every international climate change scenario under the 2015 Paris Agreement shows the need for an enormous ramp-up of carbon capture, utilization and storage (CCUS) technologies to meet global goals. Timing matters, not just scale. 

CCUS technology must be deployed at scale sooner rather than later if the agreement’s objective of holding the increase in the global average temperature to well below 2 degrees centigrade above pre-industrial levels is to be achieved. Additionally, CCUS uniquely holds promise as a “negative” emissions technology — removing carbon dioxide from the air. 

Prior to the recent COVID-19 pandemic, the implementation rules for the Paris Agreement were anticipated to be finalized later this year at the 26th Conference of the Parties in Glasgow, which has now been rightly postponed. Hopefully, when the public health crisis is contained, society will re-focus on addressing climate change. 

Analyses of countries’ initial commitments confirm they are not on track to meet the Paris Agreement’s objective. Equally troubling, analyses of countries’ nationally determined contributions (NDCs) suggest that only a handful of countries considers deployment of CCUS a priority. Only three countries — Canada, Norway and Saudi Arabia — deem the technology to be a “focus area.” Even the United States’ initial NDC plan, submitted under the Obama Administration, did not explicitly identify CCUS. 

It should come as no surprise that CCUS deployments are well behind where they need to be if the technology is to play a meaningful role in future climate mitigation approaches. Late last year, the Global CCS Institute (GCCSI) reported the existence of 51 large-scale CCUS facilities globally: 19 in operation, four under construction and 28 in various stages of development. Together, the 51 facilities have an estimated capture capacity of around 96 million tonnes of carbon dioxide per year. Aspects of the technology are commercially demonstrated. Carbon dioxide pipelines and natural gas separation plants have been in operation for decades. In other contexts — certain large-scale integrated projects, for example — more work needs to be done to reduce costs and demonstrate the technology at scale without government support. 

Nineteen operating facilities is quite an accomplishment and nothing to be scoffed at. Yet the GCCSI separately estimates that more than 2,500 such facilities must be put into operation if the gap between modeled need and commercial reality is to be closed. When and how are the remaining 2,481 CCUS facilities going to be built?

CCUS remains a costly and complicated technology, yet many countries and companies are devoting significant resources to reducing costs and making the technology more commercially palatable. As example is the U.S. Department of Energy’s Carbon Storage Assurance Facility Enterprise program, which has the goal of supporting the commercial development of one or more large-scale integrated CCUS projects throughout the United States in the current decade. Such complex technologies typically take decades to move to full commercialization and diffusion. 

The ultimate commercial scale of CCUS remains uncertain, but efforts must continue to be taken today to ensure the technology has a legitimate chance to flourish commercially in the decades ahead. Policy must be designed and implemented with the same fervor as technology research and development. In the United States, at the both federal and state levels, many CCUS policies are already in place. In 2009, the U.S. EPA finalized rules governing the injection of carbon dioxide into the subsurface. About a year ago, the state of California finalized a CCUS methodology.

Still, there is more to be done on the policy front. In its 2019 status report, the GCCSI identified how specific projects have been supported by policy levers, including grants, tax incentives and carbon dioxide enhanced oil recovery. The GCCSI also identified “emission credits” as a valuable policy tool; indeed, emission credits were playing a role in seven projects worldwide.

Because the Paris Agreement is expected to provide the international community with the overarching framework for tackling carbon emissions this century, it is imperative that the agreement’s mechanisms incentivize CCUS. The mere existence of the Paris Agreement does not necessarily guarantee success, with the Kyoto Protocol providing a cautionary tale. One of the Kyoto Protocol’s “market mechanisms” or emission crediting programs — the Clean Development Mechanism — had approved CCUS methodologies, yet no projects were ever developed. Merely because many climate modelers agree that a technology such as CCUS is needed, one cannot assume that governing climate agreement will function in a manner that encourages its deployment. 

Fortunately, because the rules governing implementation of the Paris Agreement are still in flux and not expected to be finalized until later this year in Glasgow, the international community has time to ensure the agreement encourages robust CCUS projects in the decades ahead. 

We offer the following four suggestions.

First, the Article 6 carbon trading rules, which remain in flux should be finalized this year in a manner that incentivizes CCUS projects. Because CCUS projects continue to face financing challenges, the Paris Agreement should facilitate monetization of these prodigious amounts of reductions and removals and seek to leverage private capital. Article 6 negotiators should recognize: CCUS, almost by definition, results in net climate benefits, and, the significant amount of progress the international community has made on CCUS over the decades. 

Second, like-minded countries could form a “CCUS Club,” the purpose of which would be to collaborate on various finance-related approaches under Article 6, as well as wider policy design. Researchers with the King Abdullah Petroleum Studies and Research Center put forward an interesting concept in this regard last year. CCUS projects are distributed amongst many countries, creating natural partners to form such a club.  

Third, because NDCs will be submitted every five years and are supposed to get more stringent over time, CCUS interests should undertake educational programs to try to convince a broader swath of counties to include the technology as a “focus area” in their future climate plans. Doing so would help send the right signals to investors and lenders that the technology is here to stay.

Fourth, governments around the world should continue to invest in the technology (inside or outside of the Paris Agreement), similar to what the United States is doing under the CarbonSAFE and related programs. In the United States specifically, it is also vitally important that the Internal Revenue Service issue the remaining guidance under the section 45Q tax incentive for carbon dioxide sequestration. A queue of intriguing projects is looking closely at section 45Q, but they need complete guidance before they can advance.

Morgan Bazilian is a professor of public policy at the Colorado School of Mines, and a former Lead Energy Specialist at the World Bank. Kipp Coddington is the director of Energy Policy & Economics at the School of Energy Resources at the University of Wyoming.