Carbon Capture, Utilization and Storage

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As the main greenhouse gas emitted due to human activities, carbon dioxide (CO2) is one of the primary contributors to climate change. Capturing some of this gas and keeping it out of the atmosphere is one approach that can help achieve lower global emissions.

The natural world is responsible for most of this carbon capture, absorbing and storing CO2 in forests and wetlands, in the soil and in the ocean. In many cases, humans can help manage these natural processes. However, increasingly, societies are seeking to capture carbon using a new set of tools, collectively known as CCUS.

What is CCUS?

Carbon capture, utilization and storage, or CCUS, refers to human technologies that absorb CO2 so that the gas can be used or permanently stored. Figure 1 illustrates this process.

Figure 1 – Carbon Capture, Utilization and Storage

In the capture stage, CO2 is captured from fossil or biomass-fuelled power stations, industrial facilities, or directly from the air. Compressed CO2 is then transported by ship or pipeline from the point of capture to the point of use or storage. CO2 can be permanently stored in underground geological formations, onshore or offshore. Alternatively, captured CO2 can be used as an input or feedstock to create products or services.Source: International Energy Agency, “What is CCUS?,” About CCUS, Technology report, April 2021.

 

There are two categories of CCUS. First, CO2 can be captured at point sources where fossil fuels are burned for energy, like power plants, steel mills or natural gas processing facilities. Second, the gas can be pulled straight from the atmosphere using direct air capture (DAC) technology.

The captured CO2 is pressurized, then shipped to facilities to be used or stored.

CO2 has many uses. For example, it can be transformed into chemicals or synthetic fuels, made into plastics and polymers, or used to strengthen concrete. However, most of the world’s CCUS projects use captured CO2 for enhanced oil recovery (EOR). By injecting CO2 into old or declining oil wells, producers can recover additional oil while storing much of that CO2 underground.

However, the use of CO2 for EOR represents one of the challenges of “utilizing” carbon: many of the uses for captured CO2 create their own emissions or do not keep the gas permanently out of the atmosphere.

To avoid creating additional emissions, CO2 can be stored instead of used. In most cases, carbon storage means pressurizing CO2 until it becomes a liquid and injecting it deep underground.

Opportunities and Challenges

As a tool for fighting climate change, CCUS has two key advantages.

First, carbon capture can reduce emissions where eliminating them would be difficult or prohibitively expensive. These hard-to-abate emissions include those produced by industrial processes that rely on heat generated by fossil fuels, like steelmaking, and from chemical processes that release CO2, like cement production.

Second, although they are still under development, some carbon capture technologies could produce “negative emissions” by removing CO2 from the atmosphere. Theoretically, DAC is one such technology, and bioenergy with carbon capture and storage, or BECCS, could be another. BECCS involves burning biomass – organic matter that absorbs CO2 – for energy, then capturing and storing the resulting gas.

Yet, CCUS also faces several challenges.

The most important challenge is scale: the world is not capturing enough CO2. In 2021, CCUS projects captured a combined 40 million tonnes of CO2, or 0.1% of global emissions. According to the International Energy Agency, if the world is going to achieve net-zero emissions by 2050, it must capture 1.7 billion tonnes of CO2 a year by 2030 and 7.6 billion tonnes a year by mid-century.

Achieving that scale will require significant investments. Carbon capture is expensive, mostly because it is resource- and energy-intensive. Its costs range widely, but one recent estimate put the minimum cost of industrial CO2 capture at US$90 per tonne. Some applications, like hydrogen production, cost less, while others, like carbon capture from steel, cement or DAC, can cost two to three times more.

To date, most industries have been unwilling to bear these costs without government support or without carbon pricing to make CO2 more valuable.

There are other challenges. For instance, CCUS projects occupy large amounts of land, and some countries do not have the right geology to store CO2. Furthermore, because CCUS is energy-intensive and sometimes used to create products that release emissions, certain projects could indirectly produce more emissions than they capture.

For example, a barrel of oil extracted with CCUS will still release emissions when it is burned. According to some analyses, that barrel of oil can help reduce global emissions if it “displaces” – or replaces – a more emissions-intense fuel. However, other analyses emphasize that one barrel of oil does not necessarily displace another; instead, it may simply add to global production and global emissions.

CCUS in Canada

Canada’s CCUS projects help illustrate this mix of opportunities and challenges.

On the one hand, Canada has several industries with hard-to-abate emissions that could use CCUS. Carbon capture can reduce emissions in segments of the oil and gas sector, in established industries like steel and cement, and in emerging industries, like the capture of emissions that come from transforming natural gas into hydrogen.

Canada also has geography on its side. Many of its industries are clustered together, and – in the case of oil and gas – they are linked by pipelines that can transport CO2. Some regions are investing in CCUS hubs that could collect and store CO2 from various sources. Canada could even explore the concept of cross-border hubs. The country also has the right geology, with rock formations in western Canada, southern Ontario, the St. Lawrence and elsewhere that could be used to store CO2.

So far, Canada has played a leading role in developing CCUS technology and putting it to use. Today, the country has three of the world’s 27 large-scale CCUS projects. These projects capture a total of approximately four million tonnes of CO2 a year, making Canada the second-largest site of carbon capture after the United States.

Table 1 – Large-scale CCUS Projects in Canada

Project Location CO2 Capacity CO2 Source CO2 Use Cost
Alberta Carbon Trunk Line Alberta 1.6 Mt captured per year, with capacity to transport up to 14.6 Mt by pipeline Bitumen upgrading and fertilizer production Enhanced oil recovery (EOR) $1.2 billion, 47% paid by governments
Boundary Dam Saskatchewan Up to 1 Mt captured per year Coal-fired electricity generation Mostly EOR, some underground storage $1.5 billion, 100% paid by governments
Quest Alberta 1 Mt captured per year Bitumen upgrading Underground storage $1.3 billion, 67% paid by governments

Notes: “Mt” stands for megatonne, equal to one million tonnes.
The costs paid by governments represent provincial and federal funding.

The International Energy Agency considers the Weyburn-Midale project to be a fourth “commercial” CCUS project in Canada. However, that project is not listed here because it does not capture carbon in Canada, is no longer actively receiving captured carbon, and is of a different scale from the other projects shown in this table. The Government of Canada considers Weyburn-Midale to be a research project rather than a large-scale project. For more information, see Government of Canada, International Energy Agency Greenhouse Gas Weyburn-Midale CO2 Monitoring and Storage Project.

Sources: Table prepared by the Library of Parliament using data obtained from Government of Canada, Alberta Carbon Trunk Line (ACTL); Government of Canada, Boundary Dam Integrated Carbon Capture and Storage Demonstration Project; and Government of Canada, Shell Canada Energy Quest Project.

On the other hand, the technology is not yet reducing a meaningful share of Canada’s emissions, though more projects are being planned. Nor are there major projects in some sectors where CCUS could be useful, like heavy industry.

In theory, CCUS can capture about 90% of emissions at industrial point sources, and it could reduce the emissions intensity of upstream oil and gas by up to 50%. In practice, CCUS fulfills a fraction of this potential. For example, the Boundary Dam project captures only about 65% of the emissions that it processes.

The emissions that have been captured have come at a steep cost. Canada’s rising carbon price should incentivize more investment in CCUS, but carbon capture remains an expensive venture and governments have paid more than 70% of the combined cost of the country’s major projects.

Indeed, there is a consensus that governments will continue to play a key role in driving the deployment of CCUS. The federal government appears to agree. It has committed to spending $319 million on CCUS research and development, creating a federal CCUS strategy and designing an investment tax credit for CCUS. Its goal is for Canada to capture 15 million tonnes of CO2 a year by 2030.

When thinking about how CCUS could achieve this target, it might be useful to consider the following questions:

  • What are the project’s lifecycle emissions? Lifecycle analysis assesses whether a CCUS project is reducing emissions overall, including emissions from the energy it uses, any products it creates and any gas that escapes from storage.
  • How much does it cost to capture a tonne of carbon? Measuring the costs of CCUS against the emissions it reduces could make it easier to decide which technologies and pathways offer the best value for money.
  • Can cost be balanced against other objectives? Support for CCUS may achieve other goals, like creating capture technologies that can reduce emissions abroad, or protecting jobs and communities.
  • What are the possible incentives? In addition to grants and tax relief, governments could explore regulatory measures that incentivize CCUS development, such as closing gaps in Canada’s carbon pricing system or establishing border carbon adjustments.
  • What are the long-term effects? Decision-makers can consider indirect implications of investing in CCUS. For example, it is possible that CCUS could prolong the operation of high-emitting industries in a way that makes it harder to achieve long-term climate goals.

Additional Resources

Dion, Jason. Canadian Institute for Climate Choices. Policy Implementation Will Be Tricky on Carbon Capture and Storage. 15 July 2021.

Author: Ross Linden-Fraser, Library of Parliament



Categories: Environment and Natural Resources, Industry and Trade

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