Artificial carbon dioxide1 sinks such as devices for the carbon capture, utilization and storage(CCUS) are among the technologically innovative tools that aim to contribute to carbon neutrality. Industrial activities that are both greenhouse gas (GHG) emitters and do not have decarbonated substitutes can use carbon capture devices either to store carbon or to use it in industrial processes.
What is the origin and evolution of this market? Who are the players? What uncertainties do these actors need to resolve in order to move towards the CCUS?
1. Origin and evolution of the market
The CCUS market is currently a development project market. It results from the environmental policies of public authorities. In Europe, the EU Emissions Trading Scheme (EU ETS) integrates CCUS technologies and helps finance their development. The economic viability of CCUS schemes depends on the price of carbon (in euros per tonne), which corresponds to the value of GHG emission allowances on the market. The current level is around 40-50 euros. The level that would make CCUS technologies economically viable is in the order of 100 euros, in the opinion of the industry. As a reminder, GHG emitters whose emissions are not fully covered by allowances must pay a fine of 100 euros per tonne of GHG (and this level will increase).
CCUS technologies are therefore being developed on the basis of an anticipated increase in the price of carbon. Currently, 25 projects are under development around the world, out of a total of 40 projects in development or understudy.
1.2. Some applications made possible by carbon capture
Enhanced Oil Recovery (EOR)
Injecting carbon into an oil well increases the pressure in the well and makes it more exploitable: this is one of the variants of enhanced oil recovery (EOR). The carbon may eventually be taken from a capture device and ends up stored in the well (although it is more or less likely to leak). This situation, therefore, combines use and storage.
Example 1 of chemical application: green ammonia and low-carbon ethanol production
The principle is to capture the carbon emitted from ammonia production and then use it to produce low-carbon ethanol.
Example n°2 of chemical application: green hydrogen
The principle is to sequester the carbon emissions generated by the steam reforming of methane to produce green hydrogen. Air Liquide is developing a solution that meets this objective.
The sites considered for carbon sequestration tend to be on the seabed for pressure and temperature reasons. Safe storage in saline aquifers requires advanced means of control and monitoring, taking advantage of digital processing.
2. Who are the players in the CCUS market?
2.1. The demand for CCUS
The use component is not new, as we have seen that industrial or extractive uses of carbon exist independently of the carbon neutrality objective. On the other hand, capture is a new technology whose high development cost is only justified by the decarbonization objective.
From this perspective, CCUS can be relevant for any industrial process producing concentrated GHGs. Steelmakers, fertilizer producers, refiners, chemists, petrochemists, cement manufacturers… so many activities without decarbonated substitutes that could reduce their carbon footprint thanks to CCUS.
CCUS can also be deployed in the context of thermal power plants, particularly those that run on coal. This is the case for two coal-fired power plants in the world, one in Canada and one in Texas.
As Nicolas Moreau, Vice-President Industry and Energy Transition Opportunities product line at Vallourec, recently explained to me, “the players in these different sectors are forming consortiums in order to pool assets and create new balances.
2.2. The offer of CCUS
Several approaches are possible to achieve capture. The most common design works with fans and filters. It is currently inefficient and therefore very expensive. Many pilot projects in different parts of the world have revealed the difficulty of mastering this technology. Capture is currently a major subject of technological innovation.
In order to increase the efficiency of capture, one solution is to spatially group industrial activities in clusters marked out by CCUS devices.
Transportation can be by ship or by pipeline. Transport by ship involves developing an efficient solution for transporting liquid carbon.
Pipeline transport requires high-performance, seamless pipes capable of withstanding extreme conditions of temperature, pressure, and mechanical strength. In France, Vallourec is positioned in this market. On the other hand, the routing of the pipeline routes requires extensive mapping work, taking into account all geological risks.
2.3. National players
By far the most advanced country on carbon capture and sequestration is Norway. The Northern Lights project involves Total and Shell.
Several major developed countries have programs to support the development of CCUS technologies.
3. Points of uncertainty
3.1. Carbon price
Since the emission allowance market is nothing more than a means of driving down global emissions generated by a complex economic system, the rise in the price of carbon is a reasonable hypothesis in the European case. Indeed, the authorities are planning to gradually reduce the total volume of new allowances. It is therefore only a matter of time before the accumulated reserves of allowances are consumed. However, the exact timing of this increase is uncertain. Similarly, the price of carbon may differ from one region of the world to another, potentially leading to the relocation of GHG emitting activities… but also to interest for out-of-area players to integrate into the carbon market where the price is highest, to sell allowances at a high price.
The price of carbon needs to reach around $300 to give full impetus to technological exploration around the CCUS. It is on this condition that the massive investments needed to achieve carbon neutrality become possible. The effort required would be similar to that which enabled the construction of the oil infrastructure, but over a much tighter period of time.
There is no perfect political consensus on the relevance of CCUS within decarbonization tools. For example, a political current that has long been dominant in Germany is opposed to any application of CCUS technologies to coal-fired power plants, so as not to favor their extension. However, developing efficient CCUS technology for coal-fired power plants does not seem a bad idea given that many countries, including China, will continue to use this source of electricity for a long time to come.
Conclusion: Identifying synergies around the development of CCUS technologies
The carbon capture market is at the very beginning of its development. In this sense, it is comparable to the green hydrogen market. This is not surprising: we have seen that the current price of carbon only allows the power generation industry to be profitable.
Under these conditions, the question of the development of this market leads to two questions. On the one hand: what capture technologies are available in the depths of the industrial innovation ecosystem, what are their breakthrough potentials, and what are their levels of maturity? And this question must be asked without presuming the origin of the technologies. Today, the surprise is likely to come from anywhere. On the other hand, who are the players who should be asking this question?