Emerging Tech Focus: Carbon Capture, Utilization, and Storage (CCUS) Technology
SAMEEN RAHMAN, CHENGXI GANG, NICKHIL ANANTHA
Overview
As political and societal trends increasingly shift towards renewable forms of energy, fossil fuel companies face heightened pressure to reduce their carbon emissions. As a result, carbon sequestration has gained prominence as an innovative method to reduce emissions. But is this new practice merely an industry buzzword, or does it actually live up to its expectations? Carbon sequestration, also known as carbon capture, utilization, and storage (CCUS), describes a wide range of technologies that isolate, extract, and store carbon dioxide (CO2) emissions from energy or industrial sources in order to prevent their long-term presence in the atmosphere. Captured CO2 in solid or dissolved forms is directed into long-term geological storage, such as saline aquifers or depleted oil fields, to reduce the amount of CO2 in the Earth’s atmosphere.
Although CCUS technology is relatively new, in principle it employs existing, proven technologies in innovative new ways. In fact, many parts of the CCUS process have been used extensively for decades within the oil and gas industry. The premise of capturing CO2and preventing its release into the atmosphere was first considered in 1977. And CO2 capture technology has been used even longer than that - its origins are tied to the 1920s, where CO2was separated from saleable methane gas in natural gas reservoirs. In 1972, CO2 captured in this method from a gas processing facility in Texas was piped towards a nearby oil field and injected in order to boost oil recovery. This practice is known as enhanced oil Recovery and has proven to be incredibly successful. Every year, millions of tons of CO2 are now piped into and injected into oilfields.
Carbon sequestration also describes natural means through which CO2 is removed and stored. Far before human CO2 emissions and sequestration efforts began, the natural processes of the global carbon cycle maintained a balance between CO2 uptake and release. Biological carbon sequestration involves CO2 being taken up primarily by oceans and soil. These existing CO2 uptake mechanisms are called carbon sinks and are vital to chemical balance in various ecosystems. However, increasing levels of atmospheric CO2 have diminished the benefits of carbon sinks. For example, ocean carbon sinks can cause acidification, making it difficult for marine mammals to build shells and thus disrupting the ecosystem. In addition, deforestation and increasing wildfires due to climate change have reduced the accessibility of forests as carbon sinks. As a result, existing CO2 uptake mechanisms are insufficient to offset accelerating human related emissions. Annual uptake amounts are only about 500 million tons compared to annual CO2 emissions of 1.6 billion tons from fossil fuels in the U.S., resulting in a net release of 1.1 billion tons annually. As a result, CCUS technology is becoming increasingly important to reducing the amount of CO2 in the atmosphere and combating climate change.
Deep Dive into Science Behind Technology
The primary method through which technological carbon sequestration occurs is Direct Air Capture (DAC). Generally, in DAC, CO2 is directly captured into the atmosphere and compressed into a form that can be injected into geological storage or used to make long-lasting products. Geological storage describes the permanent storage of CO2 in subsurface structures such as natural gas deposits, unmineable coal seams, deep saline formations, basalt formations, and shale rich in oil or gas. Currently, while capacity for geological sequestration is constrained by the distribution and volume of storage sites, DAC plants are utilizing geological storage for effective implementation of CCUS technology.
The first main step in Direct Air Capture involves chemical reactions in which chemicals, either liquid solvents or solid sorbents, selectively react with the air and remove the CO2 . The second step involves the application of heat to the captured CO2 which induces it to be released from the solvent or sorbent. The solvent/sorbent is then regenerated for another cycle of carbon capture. The specific processes of these two steps differ depending on whether or not the chemicals are liquid solvents or solid sorbents.
In a liquid solvent system, air enters an air contactor. Aqueous potassium hydroxide solution reacts with the CO2 from the air to form water and potassium carbonate: 2KOH + CO2 → H2O + K2CO3. Meanwhile, slaking occurs where calcium oxide and water combine to create calcium hydroxide: CaO + H2O → Ca(OH)2. The potassium carbonate solution from the air contact then enters a causticizer where it reacts with the calcium hydroxide to form calcium carbonate precipitate: H2O + K2CO3 + Ca(OH)2 → 2KOH + CaCO3. Then, the regeneration step begins. The calcium carbonate enters the regeneration facility where it undergoes clarification and filtration processes to remove water. It is then fed to a calciner where it is with natural gas in a kiln to 900C, producing solid calcium oxide and high-purity CO2 gas. This gas is then able to be compressed and transported for future use and/or storage.
In a solid sorbent system, the process begins with the same basic step: air enters an air contactor. The air contactor here, however, contains a CO2-adsorbing solid which captures the CO2 material and allows the CO2-depleted air to be emitted. Here, adsorption is the adhesion of CO2 molecules from the air to a surface. As the regeneration step begins, the solid is saturated with CO2 and moves to a desorber where heat or vacuum systems heat the solid to 80-120 C which desorbs the CO2 and produces a concentrated CO2 stream. Desorbing the CO2 allows the solid sorbent to be regenerated while the nearly pure CO2 stream is ready for future use and/or storage.
Both approaches to DAC require land and water. DAC is relatively flexible with its siting and requires less land than bioenergy carbon capture as well as forestation. DAC does not require arable land, although it would be most beneficial if it was placed near a geological storage site to reduce transportation costs and extensive pipelines or near unused sources of waste heat if it uses a solid sorbent system. Depending on the approach and energy source, capturing a billion tons of CO2 will require 250-15,500 square miles. Liquid solvent systems require larger plants due to their multiple process units while solid sorbent systems engage in repetitive use with a single air contactor. Both methods also require large amounts of water, differing based on the system, temperature, and humidity level. With the liquid solvent system, capturing 1 ton of CO2 requires 1-7 tons of water, which is comparable to the production process for 1 ton of cement or steel. The solid sorbent system is more prone to water loss of about 1.6 tons of water per ton of CO2 captured due to the steam condensation needed to regenerate the sorbent. Nonetheless, this system also tends to create net water products of about 0.8-2 tons of water per ton of CO2 captured. Water losses for both systems primarily result from evaporation that is much higher in hot and dry environments.
Direct Air Capture is the main approach through which CCUS technology allows for carbon storage. Using the CO2 to create long-lasting products such as low-carbon cement contributes to the “carbon-to-value” chain and prevents the release of this CO2 back into the atmosphere for an extended period of time. However, it does raise some potential concerns. First, creating short-lived products rather than long-lasting products results in carbon recycling as opposed to carbon renewal, therefore not reducing the amount of CO2 in the atmosphere. The high levels of heat required for liquid solvent systems and the electric energy needed for heat and vacuums in solid sorbent systems make both DAC approaches very energy-intensive. In order to maximize the carbon sequestration efforts, these processes would need to be powered by primarily renewable energy sources. Using an oxygen-powered kiln with the liquid solvent system could also reduce emissions as opposed to natural gas or coal kilns while partially powering the solid sorbent system with geothermal or nuclear power could maximize carbon storage benefit while providing enough power for large-scale CO2 removal. Transporting and injecting CO2 into geological sites also creates concerns about pipeline creation, water pollution, seismic activity, and CO2 leakage back into the atmosphere. Finally, the largest market for captured CO2 is enhanced oil recovery where the CO2 is pumped into declining oil wells to increase oil output. This process prolongs the activity of the fossil fuel industry, conflicting with the overarching goals of carbon sequestration. However, enhanced oil recovery remains a main driver for demand in the carbon sequestration market.
Relevance to Environment, Social, Governance (ESG)
The main question revolving around CCUS technology is whether or not it can offset CO2 emissions. Computer models of future CO2 emissions and controls have been developed by the U.S. Climate Change Science Program (CCSP), and summarized for convenience. These CCSP models have been utilized to evaluate scenarios of aggressive geologic carbon sequestration implementation. The estimated amount of geologic sequestration in the U.S. over the next century is projected to be far smaller than cumulative emission reductions from all other methods. The model also indicates that the required amount of geologic sequestration would exceed U.S. capacity in depleted oil and gas reservoirs, necessitating development of alternative storage methods (e.g. deep formations with saline water). Other models are less critical, predicting geological sequestration needs to be smaller based upon different assumptions of technological and economic trends.
Even then, all of these models may be too optimistic, as the CCSP model results contain a significant amount of uncertainty. The model does not account for many uncertainties in costs and environmental risks, nor does it consider comparisons of advancements in new sequestration efforts such as terrestrial sequestration. Terrestrial sequestration involves the removal and storage of CO2 by vegetation and soils through tree-planting, no-till farming, wetland restoration, and forestation. These practices either enhance carbon storage by restoring and establishing new wetlands, grasslands, or forests or reduce emissions by reducing agricultural tillage and suppressing wildfires. However, existing storage is highly susceptible to disturbance from fires, disease, and changes in land use and climate. Thus, the capacity for terrestrial sequestration of additional carbon is difficult to discern. Upper estimates of sequestration are also likely unattainable due to potential mass displacement of agriculture, meaning that careful considerations of tradeoffs must be conducted by scientists and resource-planners. Even with geological sequestration, technology might simply not be as effective as promised - Chevron Corp.’s massive $54 billion Australian liquefied natural gas plant, has fallen short of its target to capture 80% of emissions, capturing just 30% over five years. Ultimately, the CCSP models reflect the generally accepted view that sequestration is an integral step, but alone insufficient towards controlling atmospheric carbon dioxide.
Industry Overview and Competitive Landscape
The main application segments for technological carbon sequestration are enhanced oil recovery, agriculture, food and beverage, and industrial production. These sectors are carbon-intensive and will have greater difficulty in making a transition in the short-term to renewable forms of energy. Specifically for DAC, the market size was about 14,3700 tons in 2021 and is estimated to reach 940 million tons in 2050, increasing at a compound annual growth rate (CAGR) of 46.57%. Recently, governments are beginning to supply financial and verbal support for carbon sequestration and companies within this industry. The U.S. government allocated $24 million to CCUS support in 2021 and $9 billion to CCUS support within the $1 trillion Infrastructure Investment and Jobs Act of 2021. In addition, governments are partnering with or supporting companies in the industry, most notably Carbon Engineering, Climeworks, and Global Thermostat.
Carbon Engineering is a Canadian company that has been devoted to DAC since 2015. It is currently working to deploy DAC facilities that can capture 1 million tons of CO2 per year each., equivalent to the carbon removal done by approximately 40 million trees. It has two types of large-scale industrial plants: DAC Storage Plants and Air to Fuels Plants. The DAC Storage Plants use a liquid solvent system to capture the CO2 then bury it deep underground through secure geological storage in saline formations in rocks, depleted oil and gas fields, and in current oil reservoirs through enhanced oil recovery. These plants can be built in most climates, sized to customer needs, and can be built to capture millions of tons of CO2 per year. Air to Fuels Plants, which began use in 2017, combine DAC with hydrogen generation to create nearly carbon-neutral synthetic fuel. Renewable energy sources, such as solar power, are used to electrolyze water to allow isolated hydrogen to react with the captured CO2 to produce hydrocarbons that can be converted into gasoline, diesel, and jet fuel for existing vehicles and transportation. Carbon Engineering’s clients can choose which plant to partner with based on their specific goals. Most clients for permanent carbon removal are governments and public institutions devoted to fast-paced carbon emissions reductions. Most clients for low carbon-intensity fuels are fuel distributors, wholesalers, and purchasers, such as airline or shipping companies, that require fuel but are transitioning away from fossil fuels. Finally, most clients for low carbon-intensity products involve companies in industries that are very difficult to carbonize due to their industrial processes such as cement and steel companies.
Carbon Engineering has many ongoing partnerships and projects with companies around the world. It is working to create the first large-scale commercial facility to utilize DAC technology in the U.S. under its partnership with Occidental Petroleum. This plant will be located in the Texas Permian Basin with the goal of being operational by 2024 and capturing 500,000 tons of CO2 for enhanced oil recovery. Carbon Engineering is also a part of Project Dreamcatcher where it is creating the first large-scale DAC facility of its kind in Europe alongside Storegga, a UK carbon removal company. Project Dreamcatcher’s plant will ideally capture 500,000 to 1 million tons of CO2 annually and has been awarded over $330,000 by the UK Department for Business, Energy, and Industrial Strategy. The plant is expected to be operational by 2025 in Scotland and powered primarily by renewable energy sources, created with existing infrastructure, and run by a skilled workforce from the North Sea oil and gas industry. A third project of Carbon Engineering involving Carbon Removal, a Norwegian company, and Oxy Low Carbon Ventures (OLCV), a DAC and CO2 storage company, is the deployment of a DAC facility in Norway to also capture 500,000 to 1 million tons of CO2 annually. Carbon Engineering plans to license its technology with these development partners so that facilities can be built and operated even in regions that Carbon Engineering is not in. Finally, 1PointFive which is a subsidiary of OLCV announced the sale of 400,00 tons of carbon removal credits to Airbus from its first planned DAC facility that incorporates Carbon Engineering technology and geological storage.
Another main competitor in the CCUS technology industry is Climeworks, a Swiss company founded in 2009. Climeworks launched its first DAC facility in Iceland in September 2021 which is the largest DAC plant powered by geothermal energy using a solid sorbent system. It has the ability to remove 4000 tons of CO2 from the atmosphere every year. This plant primarily utilizes geological storage where the captured CO2 mixes with water and is pumped underground to be trapped by impermeable rock formations. When the CO2 dissolves in saline formations that are naturally present in underground reservoirs, CO2 chemically reacts with basalt rock and mineralizes, turning into stable carbonates (stone) after a few years. This mineralization process of CO2 storage minimizes leakage and is the first of its kind. This process has accelerated as a result of Climeworks’ partnership with Carbfix that was created in 2017. Carbfix technology, developed by Reykjavik Energy, pioneered the dissolution of CO2 in water that is injected into reactive rocks, accelerating the mineralization process. This approach reduces the risk of CO2 migration back to the surface, ensuring more permanent geological storage. Furthermore, while not a major part of its carbon storage process, Climeworks also upcycles CO2 into sustainable aviation fuel due to the difficulties of decarbonization in the aviation industry. It has partnered with the Hague Airport to jointly conduct a research study on the production of renewable jet fuel from air in order to further minimize CO2 emissions. Finally, Climeworks has created 10-year agreements for carbon removal with LGT Group, Boston Consulting Group, and Swiss Re to help them reach their net zero emissions goals.
A third major player in the carbon sequestration industry is Global Thermostat, a U.S. company founded in 2010. It currently has two small pilot plants with solid sorbent systems. Its major ongoing partnership is with ExxonMobil for research and development to scale Global Thermostat DAC technology to be used for enhanced oil recovery. It has also partnered with FIA Formula E to counteract the CO2 emissions created from the racecar series. Finally, the largest project using Global Thermostat DAC technology is the HIG Haru Oni eFuels Pilot Plant. With funding from the German government, this plant aims to remove 2400 tons of CO2 annually in Chile by producing synthetic fuels.
Economic Implications of Carbon Sequestration Technology Adoption
Despite its longevity, carbon sequestration remains an expensive process. For quite some time, there was little incentive for companies to adopt CCUS technology due to its higher comparative cost of $200-800 per ton of CO2 removed, whereas a pollution permit sells for as low as $61 a ton. In the past, even when governments have established carbon prices, which capture the external costs of greenhouse gas emissions, these prices have typically been set too low to incentivize investment.
However, the dynamic may be shifting. Governments have begun to implement policies that provide significant economic incentives for businesses to consider CCUS, allowing them to recognize that the technology could play a key role in high-emissions industries. Skyrocketing carbon prices and increasingly alarming warnings about the threat of climate change are providing new momentum to carbon sequestration technology. As carbon prices have more than doubled in the past two years with prices set to reach $118 by the middle of the decade, it is likely that carbon capture technology will finally begin to see widespread adoption. In short, with the cost of releasing carbon increasing, we may soon reach a tipping point where preventing emissions becomes the economic alternative, driving industries to adopt CCUS technology.
There are additional economic benefits to the adoption of CCS technology. A state-by-state analysis conducted by the Rhodium Group explored potential economic benefits within the U.S. and found three key takeaways and benefits. First, there could be significant state-level economic opportunities and emissions reduction potential for carbon capture deployment on existing industrial and electric power facilities. Second, carbon capture can help states finance existing solutions and offer unique solutions on their paths to decarbonization. Third, as an “off-the-shelf” technology, CCUS technology can be applied across key sectors to preserve and create high-wage jobs. On an even greater scale, Boston Consulting Group (BCG) has argued that should carbon sequestration overcome its existing hurdles, the technology has the potential to become a dominant global game-changing industry.
Policy Implications of Carbon Sequestration Technology Adoption
As carbon sequestration remains a practice largely conducted by private companies, legislative action by the federal government has remained relatively limited outside of economic encouragement. The following legislative proposals were introduced during the 116th Congress (2019-2021):
H.R. 1166, USE IT Act: a proposal to amend the Clean Air Act by directing the U.S. Environmental Protection Agency (EPA) to conduct carbon capture research activities, requiring the Department of Energy (DOE) to submit a report to Congress about the potential risks and benefits of CO2 storage in saline formations, and directing the Council on Environmental Quality (CEQ) to issue guidance on the development of CO2 storage projects.
H.R. 3607, Fossil Energy Research and Development Act of 2019: a proposal to amend the Energy Policy Act of 2005 and direct the DOE to research, develop, and conduct large-scale CCUS partnerships.
H.R. 5883: a proposal to increase the tax credit for direct air capture facilities, remove deadlines for beginning construction of qualified facilities, and reduce the amount of CO2 required to be captured by qualifying facilities.
S. 383, USE IT Act: see H.R. 1166
S. 1201, EFFECT Act: a proposal to amend the Energy Policy Act of 2005 to direct the DOE to research and develop CCUS programs. Would require the DOE to submit a report on CCUS activities, and establish an optional program to transition large-scale carbon sequestration projects into integrated storage complexes.
S. 2263, CO2 Regulatory Certainty Act: a proposal to revise the requirements for secure geological storage of CO2 for tax credit purposes in sequestration and enhanced oil recovery. Would also require the Department of Treasury to establish regulations about these requirements, including compliance with federal statutes.
S.986, Carbon Capture, Utilization, and Storage Tax Credit Amendments Act of 2021: a bill to extend sequestration tax credit through 2030 and permits taxpayers to receive payments in lieu.
H.R.4408, Carbon Capture Improvement Act of 2021: a bill to authorize issuance of tax-exempt facility bonds for the financing of qualified CO2 capture facilities.
Additional legislation can be expected as Direct Air Capture plants are built and additional agreements for carbon credits are made.
In addition, notable policy developments have taken place over the past few years in multiple countries. Currently, the United States contains most of the world’s current CCUS capacity due to government support, as well as significant numbers of natural gas processing plants and demand for CO2 for use in enhanced oil recovery. The adoption of a more generous federal tax credit (45Q) in 2018 for carbon sequestration projects could substantially increase the number of industries where the CCUS is commercially viable. State governments are also adopting policies to incentivize CCUS adoption and are reducing regulatory barriers. In Europe, the European Union’s Emissions Trading System (ETS), which allows companies to buy and sell emissions allowances, has reduced auction volume, increasing costs by 400% over the past 2 years, greatly incentivizing companies to adopt CCUS technology. Furthermore, Norway and the UK recently introduced government subsidies for carbon sequestration projects, and the Netherlands and Denmark are committed to use CCUS for emission reduction targets. Finally, in China, the Chinese Communist Party commenced trading allowances through its ETS,which should encourage energy-intensive industries to adopt CCUS technology to offset emissions. China also included CCUS technology in the country's new five-year economic plan.
Future Development of Carbon Sequestration Uses
Because carbon sequestration is a relatively undeveloped technology, there are many potential technological advancements in the technology that can be developed in order to effectively remove and consequently store carbon dioxide from the atmosphere in places where it does not affect the climate. Currently, meeting the goals set by the Paris Agreement requires continual action that prioritizes not only a transition to renewable energy but decarbonization as well, a goal that carbon sequestration can play an essential role in achieving.
The largest potential market for CCUS technology in the future is its potential for daily utilization. If CO2 pulled directly from the atmosphere becomes cheaper and more readily available, it could begin to compete with terrestrial CO2 . In theory, nearly any industry that uses carbon from underground sources could shift to the use of captured CO2 . Captured carbon would have the greatest impact on the climate when utilized industries such as the fuel, food and beverage, and industrial production industries. This would reduce emissions through the storage of carbon in geological areas and in durable products as well as through the reduction of additional CO2 emitted into the atmosphere from carbon-intensive processes that are critical to certain industries.
One potential process with significant room for carbon sequestration utilization is the creation of concrete building materials.Concrete is one of the most destructive materials on earth, emitting over 3 billion metric tons of CO2 every year However, CO2 can be used in a multitude of ways as a substitute for materials in concrete products in order to reduce emissions. CO2 can act as a substitute for water in the curing process, creating a stronger concrete product and reducing water usage that is another key element of combating climate change. Cement could also be eventually phased out in the future for products that can absorb and mineralize CO2 at a higher rate. There are European projects currently underway, such as LEILAC 1 and 2 (Low Emissions Intensity Lime & Cement), attempting to streamline the cement production process so that all CO2 emitted is captured and reused.
Furthermore, CO2 is also used in the production of specialized products such as graphene, carbon fiber, and carbon composites. These products have the potential to be stronger than steel which is very significant considering that the steel industry is responsible for 7-9 % of all carbon emissions. Therefore, increased production of these carbon products in substitute of steel would result in a reduction of CO2 emissions in billions of tons with upcycled carbon as the primary material that would be stored in these long-lived products. In addition, carbon-based wiring could potentially replace all copper wiring within electrical circuits, improving electrical efficiency in nearly every industry around the world.
Carbon dioxide can also be utilized for a variety of other chemicals and plastics products. CO2 could potentially be transformed by various catalysts into polymers, which are the precursors for products including plastics, adhesives, and pharmaceuticals. It can also be used to make chemicals including methanol and formic acid. While these aspects of CO2 utilization and emissions reductions are not well researched or developed to scale, further advancements can be made, and these processes create strong potential for future additional use of carbon capture, utilization, and storage technology.
Carbon capture and utilization will develop, advance, and become more efficient as continued investment and research continues. Utilization of captured carbon appears to be the most effective way to reduce carbon in the atmosphere by offsetting emissions from industrial activities and limiting future emissions by using carbon substitutes for historically carbon-intensive industries. While products with carbon materials and carbon-based chemicals are still in the early stages of research and usage, we can expect commercial-scale applications to develop in the next five to ten years. It is also important to note that while the largest market for CCUS technology is currently enhanced oil recovery, this will change as oil becomes a much less important energy source and renewable energy sources are more widely available and adopted.
Analysis on the Future of Carbon Sequestration Technology
The future of the use of CCUS technologies lies primarily in its economic incentives. Currently, it is significantly cheaper to release carbon dioxide into the atmosphere rather than capture and remove it. As mentioned, the most effective way to capture carbon with recent technology is direct air capture. However, because the concentration of CO2 in the atmosphere is only at 0.04%, DAC is energy-intensive and expensive with costs ranging from $200 to $800 per ton of CO2 removed. The technical process of removing carbon dioxide from the atmosphere becomes more expensive with lower concentrations of CO2 in the air.
As CCUS technology continues to advance, the costs associated with carbon capture will reduce over time. Over the past ten years, there have been a number of innovations and improvements that will enable us to save more energy and reduce costs by up to 70% for new carbon capture processes. We can expect this trend to continue for the foreseeable future as investment in carbon sequestration increases to reach climate change goals.
However, even the most effective and efficient carbon capture technology will be fruitless if regulations on CO2 emissions and carbon pricing are not created and standardized for public and private institutions. There must be significant monetary costs associated with emitting CO2 in order to incentivize reduced CO2 emissions and the worldwide expansion of carbon capture. Carbon utilization technology can only be implemented effectively if society is incentivized to use the existing and developing products. While CCUS technologies can serve as a buffer as we continue our transition from fossil fuels to renewable energy sources, effective utilization can only be achieved with strict regulatory policies on CO2 emissions that encourage this transition alongside the expansion of CCUS technologies. Thus, while the future potential of carbon sequestration technology is virtually unlimited, there remain concerns if that potential can ever be reached.