Non-governmental organizations release new studies and reports on new developments in carbon capture, usage, and storage technology.
At the 25th annual Conference of Parties (COP 25) United Nations Climate Summit, held in December 2019 in Madrid, non-governmental organizations (NGOs) and other groups submitted reports and studies on the latest developments in environmental technology. Several organizations, including the Innovation for Cool Earth Forum, the Global CCS Institute, and the National Petroleum Council of the United States, submitted reports on the use and future development of carbon capture, use, and storage (CCUS) technologies.
Innovation for Cool Earth Forum
The Innovation for Cool Earth Forum (ICEF), an organization that organizes an annual conference hosted by Japan’s Prime Minister that brings international leaders together to tackle climate change, published a roadmap for Industrial Heat Decarbonization in December 2019 (the Roadmap).[i] The Roadmap outlines how the use of industrial heat must be changed to reduce global greenhouse gas (GHG) emissions, specifically discussing the issue of carbon dioxide (CO2) emissions. The Roadmap further notes that industrial heat is particularly important due to the fact that roughly 10% of all GHG emissions come from industrial heat production. The Roadmap discusses the use of heat in a variety of industries, including cement, iron, and steel, as well as chemical production. Generally, the Roadmap discusses solutions that include the use of low-carbon energy sources such as hydrogen combustion and biomass burning, and electrical sources such as resistance heating, microwaves, induction, and electric arc furnaces. Moreover, the Roadmap discusses the role of CCUS in reducing the carbon produced in the creation of industrial heat.
While the Roadmap notes that there are low-carbon options available, it cites the need for innovation and policy change to decrease the cost of using these options, and the need to incentivize the use of such options. The Roadmap notes that systemic changes are necessary to produce industrial heat without also producing more CO2 For example, creating infrastructure for the transportation of hydrogen and capturing (and then storing) carbon will be important in reducing CO2 emissions. In addition, policy tools are required to support lowering CO2 emissions, which may include government research and development to create more clean energy technologies. Moreover, higher procurement standards for contracts with cement, iron, and steel companies may encourage those in these industries to lower their CO2 emissions. Financial incentives such as subsidies, carbon taxes, carbon tariffs, and carbon trading programs may also help to incentivize innovation in the use of these lower CO2 emission producing options. The Roadmap also generally recommends that governments prioritize industrial heat production with lower CO2 emissions in climate mitigation strategies, create more industry-specific analysis of innovation needed to lower CO2 emissions, and identify and implement policy actions that support lowering carbon emissions.[ii]
Global CCS Institute
The Global CCS Institute (the Institute) is an international think tank based in Australia that focuses on the development of CCUS and produced a new report on current CCUS technology and potential developments.[iii] In 2019, there were 19 operating CCUS facilities — four times as many operating CCUS facilities as there were in 2010 — with 32 others either under construction or in development. Thirteen large-scale CCS facilities currently operate in the United States. More than 25 million tonnes of CO2 from industrial and power sectors was captured and stored in 2019. However, according to the Institute, current CCUS technology is not moving fast enough to properly mitigate climate change.
The Institute notes that there has been more development in hubs and clusters of CCUS facilities, which can reduce the unit cost of CO2 storage through economies of scale. Moreover, countries have begun to create financial incentive frameworks, such as putting a price on carbon, which has increased the incentives for creating more CCUS facilities. As one example of a successful regulatory framework, the Institute points to California’s CCS Protocol and Low Carbon Fuel Standard. The Institute suggests that other jurisdictions should use this model to create similar regulatory regimes.
Meanwhile, new developments in CCUS technology seem promising for a future of widespread and viable CCUS usage, including Bioenergy With Carbon Capture and Storage (BECCS), which combines the use of biofuels and CCUS technology to create one of the more scalable options for net negative carbon emissions in fuel. Generally, companies and universities are generating new developments in CCUS technology using new processes and equipment and better materials has begun, and scaling these innovations will help reduce the costs of CCUS technology in the future.
National Petroleum Council
On December 12, 2019, the National Petroleum Council (NPC), a federally chartered and privately funded oil and natural gas advisory committee to the US Secretary of Energy that was established in 1946, published a report on CCUS technology and what is required to bring it to scale.[iv] The report details the state of CCUS technology today, forecasts the ability for the US to expand its CCUS technology and usage in the near future, and provides recommendations as to how best the US government can support further innovation and development of CCUS technologies. The NPC noted that the US currently deploys 80% of the world’s CO2 capture capacity, yet the capacity represents less than 1% of the CO2 emissions from stationary sources. The NPC did find that the US has approximately 85% of the total CO2 pipeline mileage in the world — which is required to move CO2 for storage and use for Enhanced Oil Recovery (EOR). The US also has a regulatory system that includes tax credits for CCUS, which is why the nation is primed to be a leader in the area of CCUS development, as such regulatory schemes create incentives for using CCUS technology.
Given the land resources in addition to the physical and regulatory infrastructure available in the US, the NPC created many recommendations as to how the US government could scale the development of CCUS technologies. One recommendation is to clarify the application of the 45Q tax credit to CCUS technologies and the adoption of further regulations to authorize access of pore space for geologic storage of CO2. Another recommendation is an expansion of the 45Q tax credit and the amendment of current statutes to allow CO2 storage in federal waters. Moreover, the NPC recommends that the US government create a working group to study how to best harmonize regulations at the federal, state, and local levels surrounding CO2. Finally, the NPC recommends that industry invest in CCUS research and development and that the government “bring cumulative value of economic policies to about $110 per tonne.”
This post was prepared with the assistance of Brittany Davis in the New York office of Latham & Watkins.