CCS Environmental Analysis, April

IEA and IPCC: DACCS is increasingly important for climate goals

In April, the IEA (International Energy Agency) released their latest analysis of the conditions behind the increasing interest in DACCS (Direct Air Carbon Capture and Storage), as well as assessments of what is needed for the technology to be adopted. In the short term, DACCS will be able to offset emissions that are more difficult to cut (carbon credits), and in the longer term, it will help remove historic emissions (CDR – Carbon Dioxide Removal). Furthermore, CO2 from the atmosphere may be used in the future to produce materials or for synthetic fuels (DACCU).

DACCS should be scaled up

The IEA believes that to achieve the goal of net zero emissions before 2050, DACCS should be scaled up to 85 million tonnes of CO2 in 2030 and 980 million tonnes in 2050. The cost per tonne of captured carbon could fall to under $100 in 2030 – with sufficient R&D (Research and Development) and scale-up. In comparison, around 8,000 tonnes of CO2 are captured through DAC systems today, while global operational CCS projects have a combined capture and storage capacity of around 40 million tonnes of CO2 per year. For DACCS to be a viable solution, the IEA believes that internationally recognised certifications must be set up for the solution, and that niches willing to pay for DACCS must be exploited.

Significant amount of CDR is needed to achieve goals

The IPCC’s latest report dedicated a lot of space to CDR solutions (including DACCS). The IPCC works on multiple scenarios and as such presents a greater sample space for the use of DACCS than the IEA. This is also an expression of significant uncertainty about how climate goals should be achieved and the relevance of DACCS going forwards. However, overall, the IPCC assumes a significant amount of CDR from now up to 2100 in order for the world to stay within the 2°C goal, in the region of several hundred to over 1,000 gigatonnes removed in the next 80 years. In comparison, current total global greenhouse gas emissions are around 60 gigatonnes of CO2e. The IPCC emphasises the multiple important benefits of DACCS, including scalability, measurable additionality and flexibility around localisation. The challenges of DACCS are primarily linked to its costs and the large amounts of energy required.

USA investing in DACCS

Last year, the United States Congress added their name to the list of new major investors in DACCS by approving USD 3.5 billion for the development DACCS hubs over a five year period. The international collaborative venture “Mission Innovation” has set a goal of 100 million tonnes of stored carbon by 2030 through the use of various CDR technologies, including DACCS.

Large companies establish CDR funding scheme

Five major international companies in finance, tech and consulting have come together and set up a fund (“Frontier”) worth almost USD 1 billion to buy carbon credits from operators that can offer credits based on carbon negative solutions (CDR). The fund will buy credits from operators offering carbon removal from the atmosphere with solutions at a cost that may fall over time to less than USD 100 per tonne of CO2.  The purpose of this is to support scale-up of CDR technologies and to develop a market for these carbon credits. Frontier hopes to evolve into a marketplace for other operators wanting to support these sorts of initiatives. The concept itself is based on what is known as an “Advance Market Commitment” – where private and public operators come together to incentivise the development of markets for mutual benefit. The concept was also used for the development of vaccines.

EU: 100 cities to be climate-neutral by 2030

Last autumn, the EU announced five “missions” related to key social issues. One of these was “Climate-Neutral and Smart Cities”. After a competition, the European Commission announced in April which cities were selected. In Norway, Trondheim, Oslo and Stavanger are among the 100 chosen cities. The aim of this focus, beyond the cities being climate-neutral by 2030, is to create experimental and creative networks of cities that can share knowledge and experience with other cities with the same ambition.

Defining city emissions

Emissions that occur within a city’s boundaries as well as emissions related to a city’s own energy and heat consumption, regardless of the city’s boundaries, are what are currently regarded as a city’s emissions and which cities must focus on in order to call themselves “climate-neutral”. This includes industry, transport and waste management, and corresponds to “scopes” 1 and 2 according to the commonly used international methodology to categorise emissions. Scope 3 – which in this context is defined as indirect emissions that occur outside a city’s boundaries which are caused by the residents’ consumption – is not included here.

Individual consumption patterns affect emissions

A study published in 2018 by C40 (a network of climate-leading international cities), which assessed emissions from 79 international cities, concludes that 2/3 of emissions associated with residents’ consumption occur outside of the city itself. Various other studies have also shown that changes in individual consumption patterns and levels have a significant impact on total emissions and are among the more affordable climate initiatives in a socioeconomic perspective.

Bloomberg: Europe’s net zero emissions goal requires significant investment

 In its latest analysis of the consequences for Europe on its journey to the climate goal of net-zero emissions by 2050, Bloomberg points out the need for significant additional investments and the rapid phasing out of fossil fuel-based energy. The analysis was made by comparing a “net zero” scenario with a scenario with less political interference and a stronger focus on the economy, technology and pure market forces. Bloomberg concludes that the climate goal requires a rapid decrease in oil and gas consumption in Europe by 2030.

Demand for fossil fuel-based energy falls

In the NetZero Scenario, European demand for oil falls by more than 50% to 9.5 million barrels per day, and demand for natural gas falls by almost 25% by 2030. This is primarily due to rapid electrification or a transition to green hydrogen. This requires more than double current energy investments to achieve climate goals, and additional investments will primarily be seen in wind and green hydrogen.

HeidelbergCement: LEILAC technology will be extended and scaled up

 Since 2016, HeidelbergCement has worked to develop and test a new process for cement production (LEILAC), which will contribute to reducing the costs of carbon capture. A pilot facility was built in 2019 in Lixhe, Belgium, with a capacity of around 80,000 tonnes per year. The results were published last autumn and show that the process works as intended and that carbon capture can be achieved without having to use additional energy.

Amine process more expensive than LEILAC

The study estimated that the cost of carbon capture to be €12.5 per tonne of CO2 before compression compared to €20 for a traditional amine-based process, like the one used at Brevik. The analysis concludes that if carbon produced from the energy required for the amine process is also to be captured, the total cost of carbon capture using amine technology will be around €50 per tonne of CO2 – significantly more expensive than the LEILAC process. This also means that the investment cost of the LEILAC process, both for retrofitting and new installations, is significantly lower compared to an amine-based process. Heidelberg recently decided to continue LEILAC in a slightly larger pilot in Hannover, Germany. The purpose of the pilot is to validate the costs of building and using the technology, as well as the conditions associated with the integration and operation of the facility. The pilot is slated to be in operation in 2023.

Canada: tax credits for CCUS and DACCS up to 2030

Last year, Canada joined the “club” of the more than 70 countries with a goal of net-zero emissions. In the 2022 federal budget presented in April, the Trudeau government proposed a fiscal plan to support investment in CCUS and DACCS projects. CAD 2.6 billion (around NOK 20 billion) has been earmarked in the budget for 2022-2026, but the support is expected to total CAD 8.6 billion by 2030. The goal is cut national emissions by 15 million tonnes of CO2 per year by 2030. 

Surveying carbon storage opportunities

In March, the Government of Alberta designated six locations and operators to survey carbon storage opportunities. The goal is to establish an open network for this sort of storage in the province. The initiatives announced have received a mixed response. The CEO of Cenovus, one of Canada’s major oil companies that focuses on oil sands and is based in Alberta, recently said that the authorities have not done nearly enough to help companies achieve their climate goals. Alberta is unquestionably the province of Canada with the largest production of oil and gas and the largest carbon emissions. According to an article in Nature published in 2020, Canada is one of the countries with the largest greenhouse gas emissions per barrel of oil produced.

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The Environmental Analysis is prepared by Gassnova’s analysis team.