Thought Leadership

IEA Publishes Report on CCUS in the Clean Energy Transition

Client Updates

Carbon capture, usage and storage (CCUS) has received increased attention in recent months, as organisations and governments begin to recognise its importance in reaching ‘net zero’ emissions from various activities. Although relatively capital intensive, CCUS is the only group of technologies that contributes both to reducing emissions and to directly removing CO2 from the atmosphere to reduce CO2 emissions that cannot be avoided. CCUS is also critical to large-scale production of low-carbon, affordable, hydrogen that will allow hydrogen’s widespread use in decarbonisation in the near future. Therefore, CCUS is likely to form a key pillar in efforts to put the world on the path to net zero. 

On 24 September 2020 the International Energy Agency (the “IEA”) published its flagship report outlining the role of CCUS in the clean energy transition (the “Report”). A copy of the Report is available here

The Report suggests that to meet the IEA’s ‘sustainable development scenario’ (being the IEA recommendations to meet the Paris Agreement and UN Sustainable Development Goals, available here) USD 160 billion of investment will be required in CCUS prior to 2030, representing a ten-fold increase on the investment for the period 2010 to 2020. 

The Report suggests that CCUS is likely to contribute to the energy transition in the following key ways:

a) tackling emissions from existing energy infrastructure – for example, retrofitting to existing power and industrial plants;

b) a solution for hard to abate emissions – for example, CCUS is currently one of the only technology solutions for reducing emissions in cement production;

c) a cost-effective pathway for low carbon (blue) hydrogen production – for example, in July 2020, Equinor announced it would lead a project, H2H Saltend, to produce hydrogen from natural gas with CCUS in the Humber region of the UK, the world’s first fully decarbonised industrial cluster; and

d) removing carbon from the atmosphere – for emissions that cannot be avoided or reduced directly.

Notwithstanding the potential opportunities, CCUS investment has fallen behind other clean energy technologies in the last decade and the Report concludes that a major ramp up of deployment is required in the 2020s to put the global energy system on track for net zero. This will require extensive government engagement to develop policies that establish a sustainable and viable market to encourage industry to embrace the opportunity provide by CCUS to achieve net zero goals.

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