Episode 1

Carbon Capture, Use and Storage - The opportunities, limitations and economics

The Energy Transition series is comprised of one hour panel sessions involving executives and industry experts dedicated to improving awareness on various elements of the energy transition, as well as identifying investment opportunities for corporate and institutional investors.

PlayStart Watching

Subscribe Today

By Biraj Borkhataria, John Musk and guest speakers
Published September 21, 2021 | 3 min watch
Share This Article Share to LinkedInShare to TwitterShare to Email

Key Points

  • Why carbon capture is seen as a “best of both worlds” technology
  • What is needed to accelerate development and reduce costs
  • Which regions are likely to see greater advancement of carbon capture
  • Storage or Utilization? What are the considerations for Usage of captured CO2 as a building block for industries
  • What makes a project viable at industrial scale

Carbon Capture, Use and Storage (CCUS) is expected to increasingly play a key role in reaching climate goals and reducing emissions in the coming decades.  In this session we look at what are the opportunities, limitations and economics of Carbon Capture, Use and Storage schemes and answer some of the most pressing questions on the subject.  RBC Capital Markets hosts the first in a series of session with guest speaker Jason Shipstone, Director of Innovation at Drax Group; Sue-Ern Tan, Group Carbon Relations Manager at Royal Dutch Shell; and Steve Oldham, Chief Executive Officer at Carbon Engineering.


Five Key Takeaways:

Achieving ‘Net Zero’ by 2050 requires a colossal effort

“To achieve ‘Net Zero’ you need to stop every single emitter of CO2 on the planet, and collect CO2 from that emitter, permanently store it and put it back underground again - every car, truck, every plane, every boat, every plant, agricultural facility etc. It’s a huge undertaking,” notes Steve Oldham from Carbon Engineering. “On a global scale, there is an array of costs and feasibilities. There will be a series of low hanging fruit, things that are relatively easy to decarbonise,” he adds, “but what about cars, trucks, planes, etc.?” The Direct Air Capture technology developed by Carbon Engineering captures CO2 directly from the atmosphere, offering two main advantages, according to him: it can eliminate any emission, from any place, of any type at any moment in time. Secondly, it can help address legacy emissions. “It’s an infinitely scalable solution,” he says.

The criticality of CCUS is well-known and agreed on by experts

“Under every scenario, from the IPCC to IEA, scientists believe CCUS has a critical role to play to achieve the Paris Agreement goals of a -2C world,” stresses Sue-Ern Tan of Royal Dutch Shell. CCUS is seen as very helpful in particular for the meaningful decarbonisation of critical industries like steel, cement, refiners, and chemical complexes. “We need to start storing CO2 at scale by 2030,” she remarks. Currently, globally, there are 51 large scale CCS facilities in operation, or in development, representing 30 mln per annum of CO2 but to meet obligations we need to multiply this capacity rapidly.

CCUS has the potential to be the powerhouse of a Green Economic Recovery in the UK

Jason Shipstone, Director of Innovation at Drax Group, explains that the Drax Power Station in North Yorkshire, is trialling Europe’s first bioenergy carbon capture and storage (BECCS) project. Combining sustainable biomass with carbon capture technology, it could remove and capture more than 16 million tonnes of CO2 a year as part of the wider decarbonisation efforts across the region (“Zero Carbon Humber”). “As part of helping the UK achieve a Net Zero carbon economy by 2050, CCUS projects offer lots of scope for post-COVID green recovery and capital project growth.” There is momentum currently in the UK for CCUS schemes and investments to grow. “The UK will allocate at least £800 million to facilitate the delivery of two CCUS clusters,” notes Sue-Ern Tan. The Net Zero Teeside project, for instance, aims to decarbonise the cluster of carbon generating businesses in the area, which could potentially support many jobs creations. “This will create a powerhouse here in the UK,” she argues.

CCUS is a pre-commercial technology; pricing is key

“CCUS is reliable, it’s proven, it’s ready for deployment at scale - but the reality is that, where we are on the technology development curve right now, is the stage where financial support is required to make economic sense,” Sue-Ern Tan believes. The rough estimate for total cost of CCUS could range between 40 to 200 dollars per ton, she noted. Governments need to step in with specific policies, such as the tax credits seen in the US, or the critical role of the Norwegian government played in supporting the Northern Lights project, with the European Commission acknowledgement etc. We need innovative policy instruments around carbon pricing, argues Steve Oldham. “The UK is in a favourable position to become a key player in carbon capture: it has access to the North Sea to store CO2 (sequestration), lots of opportunity for renewable power such as wind and solar power, and the skillset required in the industrial regions of the UK are similar to those necessary for carbon capture programmes.”

A multi-stakeholder approach is required

All the panellists agreed that working closely with government support is key to ensure the right level of regulatory support is in place. Keeping up extensive collaboration between all the stakeholders – including governments, industries, investors, NGOs, communities etc. is a prerequisite to achieve the CO2 emission targets and successfully deliver more CCUS projects. The role of the finance sector is also, therefore, critical.

View audio transcript

Stay Informed

Get the latest insights from RBC Capital Markets delivered to your inbox.