CCS Environmental Analysis, September
On a monthly basis, Gassnova prepares an analysis of important CCS international market trends, and what drives innovation in our focus areas. Here is the analysis for September.
CCS on the west coast of the EU: TotalEnergies steps up, TATA Steel pulls out
The Netherlands has been a pioneer for more than 15 years in the field of CCS within the EU. Work on three regional hubs for the transportation and storage of CO2 has been under way (Porthos, Athos and Aramis). Today, Porthos is the hub that is closest to receiving the investment green light to realise the EU’s first fullscale CCS project, which will have a primary focus on the capture of CO2 from existing hydrogen production. An investment decision may arrive as early as next year. However, Athos announced in September that its long-term partnership with TATA Steel developing a potential carbon capture project in Ijmuiden was to be discontinued following changes to TATA’s technology strategy, as they embark on a direct reduced iron process using green hydrogen rather than coal and CCS. According to TATA, they are now placing an emphasis on a faster transition to a more sustainable approach to steel production, and the hydrogen option is therefore of greater interest to them. The steelworks in Ijmuiden has total carbon emissions of approximately 12 million tonnes per annum.
In September, TotalEnergies signed a deal with Air Liquide for the latter to assume control of operations at Total’s hydrogen production plant in the northern French city of Le Havre. This will include the use of Air Liquide’s CCS technology with the aim of cutting carbon emissions from the plant. Air Liquide also has its own hydrogen production facilities in the area, with natural gas being used as a factor input, but they are also planning to establish new capacity based on electrolysis. Overall, it is stated that the companies’ aim is to cut annual carbon emissions in the region by 650,000 tonnes. It is planned that captured CO2 will be shipped by sea to the Dutch Aramis hub or potentially to Northern Lights. TotalEnergies thus entered into a partnership in September with stakeholders including Shell and the Dutch state-owned energy firm EBN pertaining to the development of Aramis and associated infrastructure to allow for the transportation and storage of CO2 in the southern North Sea. TotalEnergies is also involved in other collaborative ventures relating to CCS in the same region. Carbon emissions from the French industrial sector amount to around 80 million tonnes of CO2 per annum, of which around 10 million are emitted in Normandy alone. Last winter, the French government was ordered to do more to protect the climate, and according to analysts the country is still not on track to meet its 2030 targets.
DNV Energy Transition Outlook 2021: Paris target to be missed in 2029
DNV’s annual Energy Transition Outlook (ETO) was published in September, providing an updated projection of trends around global energy consumption in the run up to 2050 and the associated climate impact. The report sets out what DNV believes will happen (forecasting) rather than what they believe it will take to achieve specific goals (backcasting). Compared with two years ago (pre-pandemic), DnV’s latest prognosis shows that it will take one additional year before the 1.5°C goal is missed (2029 vs 2028) and four additional years before the 2°C goal is missed (2053 vs 2049). Globally, DnV estimates that the consumption of fossil fuel-based energy in 2050 will be on a par with levels in 1990, with a somewhat altered composition. 6% of emissions from the use of fossil fuel-based energy are expected to be removed through the use of CCS, which is a far lower figure than was set out in last year’s ETO where the estimate was 11%. The reduction in the proportion of CCS is, according to DNV, due to improved data and increased accuracy in associated models in use.
The analysis for Europe concludes that Net Zero in 2050 will not be achieved, but that there will be a 74% reduction in CO2 emissions vs 1990. Hydrogen production will quadruple, but new volumes will be used directly (and eventually also converted into synthetic fuels) in new industries and sectors of society. Hydrogen use will be slowed by associated costs. Almost all new hydrogen volumes will come from electrolysis. According to DnV, green hydrogen costs will become competitive against those related to blue hydrogen by around 2030. This development will be driven by falling costs for renewable power and economies of scale achieved by electrolysers. Hydrogen produced from natural gas will be more than halved, and it will be primarily produced in combination with CCS. Sharper falls in gas prices may make blue hydrogen even more competitive and thus slow interest in green hydrogen. In the run up to 2030, DnV anticipates that CCS in Europe will develop rapidly in the chemical and petrochemical industries, as well as in relation to various process-related emissions, rising to as much as 65 million tonnes in 2030.
IEA: China can overfulfil its climate goals – but do they want to?
In response to the Chinese government’s invitation to the IEA to cooperate on a long-term decarbonisation roadmap for the Chinese economy, the IEA recently published a comprehensive analysis of China’s prospects for meetings its goal for carbon neutrality by 2060. The analysis takes its point of departure from the revised targets that China submitted to COP26 last autumn, as well as policies adopted in relation to energy and the climate and ongoing trends. This analysis then seeks to assess whether these targets can be realistically met. Generally, the analysis sets out a positive view of China’s ability to meet its goals, and indeed to overfulfil them. In its rationale, the IEA stresses that China largely has what it will take in terms of technology, finance and political experience, as well as the fact that such a transition will generate an array of positive socioeconomic ripples effects across the country. The IEA’s scenario for a possible accelerated transition concludes that early interventions to reduce the use of coal will give China a reasonable chance of peaking its greenhouse gas emissions by 2025 rather than by 2030 at the latest as the current goal stands.
The Carbon Action Tracker (CAT) is less positive in its most recent updated assessment from September when considering China’s efforts to meet its climate goals, which its classifies as “highly insufficient”. CAT gives weighting to necessary measures in order to meet the climate goals when carrying out its assessments – rather than whether China will meet its own climate targets when carrying out its assessments. Their analysis suggests that China may well overfulfil in terms of its submitted climate goals, but that the country ought to reduce its use of coal and set a date for the phasing out of coal altogether. By way of example, an overview published by the Centre for Research on Energy and Clean Air (CREA) in August shows that in the first half of 2021 alone, China announced new projects relating to coal power and coal-powered steelworks which, if they are built, will result in emissions of up to 150 million tonnes of CO2 per annum.
Iceland: The first DACCS project in the world has begun storing CO2
ORCA is the name of the world’s biggest (to date) facility for the capture of CO2 from the atmosphere. The site will permanently store 4,000 tonnes of CO2 per annum using a mineralisation process. The IEA believes that such plants are of great significance in efforts to reduce the costs associated with DACCS. CO2 from biogenic sources or the atmosphere will in the future provide raw material for the production of synthetic fuels, which in turn will contribute to reduced net emissions from sectors such as aviation. While the capture of bio-CO2 may lead to competition with the food production sector and in terms of land use, the primary challenges associated with DACCS are energy use. According to the IEA, the world must capture 1 gigatonne of CO2 from the atmosphere in 2050 in order to meet the 1.5°C goal stipulated in the Paris Agreement.
Refineries on the move: major stakeholders hatch plans targeting climate neutrality
The refinery industry has struggled during the pandemic, and its challenges are connected to the climate/environment, over-capacity, margins and structural changes. In September, Petroineos (a JV with Ineos and Petro China) announced plans to invest £1 billion to transition power generation and other operational aspects of the refinery and petrochemicals facility at Grangemouth from using natural gas to using hydrogen reformed from natural gas with CCS. Grangemouth is one of four clusters that the British government has identified as hubs for CCS development in the UK. The transition by Petroineos will see CO2 emissions reduced by 1 million tonnes – and will ensure that the facility reduces its overall CO2 emissions by 60% in 2030 when compared with 2005. They plan to store captured CO2 in partnership with the Scottish Acorn project. These changes will help to ensure that the Scottish goals for carbon neutrality are met by 2045, some five years ahead of the rest of the UK.
In the Netherlands, Shell announced in September its decision to build a biofuel refinery in Rotterdam to contribute to European climate goals while also helping to meet Shell’s own climate targets. Deliveries from the refinery will partly cover demand for sustainable aviation fuel and biodiesel. The plant will result in a reduction in emissions of 2.8 million tonnes of CO2 per annum. Shell plans to convert its 14 refineries into five “energy and chemical parks”. Its park in Rotterdam is the second such site to be announced, following the launch of an energy park in July in Rhineland, Germany for the production of green hydrogen.
The Environmental Analysis is prepared by Gassnova's analysis team.