What is missing for large scale deployment of CCS in Europe?

Abstract

Carbon Capture and Storage (CCS) has been highlighted as an essential tool to maintain and decrease emissions, and therefore global warming, within a reasonable range. In recent years, numerous large scale carbon capture and storage projects have been announced throughout Europe, however, many have also been dropped before starting and few have started operating, with the exception of the two Norwegian projects, Sleipner and Snøhvit. What is missing for large scale deployment of CCS in Europe which can help meeting climate targets for the industry and power generation? Carbon Limits, with the support of CATF, ran two different analyses to identify where some of these gaps could lie. The first looked into the potential gap between funding requirements for CCS and announced available public funding in the coming years, until CCS projects can be self-financed. The second analysis assessed the potential gap between developed storage space and the storage needs of capture projects. Both of these analyses relied on the CATF CCS project database†, which include around 60 capture and/or storage projects and is valid as of January 2022.

Reducing CO2 emissions is a key element in mitigating climate change and other types of measures have received long standing support from governments. This is the case for renewable electricity generation. Therefore, a third analysis compared the funding distributed to renewable energy projects and CCS projects, in terms of funds spent per ton of emissions reduction.
The funding gap analysis, quantifying the difference between available funding and funds that could be required by announced projects, was performed using publicly available data on current and upcoming public funding opportunities for CCS, compared to an estimated cost of CCS projects depending on the sector over time. By 2030, the funding needs for non-profitable CCS projects are twice as large as the available public funding, which amounts to 10.4 bn EUR over the coming decade, if project losses were to be fully covered by public support.
The majority of these project are capture projects, with no carbon storage sites directly associated with the project. Therefore, if all the announced capture projects were to start operation, developed storage projects would be necessary to inject the CO2 durably in geological formations. The analysis of the different projects with announced capacity and timelines shows that currently announced developed storage capacity would not be sufficient to cover the demand. Currently, of the 187 Mtpa of CO2 capture that has been announced for 2030, over 100 Mtpa have dedicated storage space, but the remaining 82 Mtpa of announced capture without dedicated storage can only rely on 41.5 Mtpa developed storage capacity with availability for third-party storage. Additional and timely development of storage projects, making use of the ample theoretical geological CO2 storage potential in Europe, would be necessary to ensure capture ambitions can be met and to limit competition on third-party storage capacity.

Large scale emissions reduction options have previously been deployed in Europe, particularly in the form of renewable electricity production. The final analysis compared the public funding received by renewables in the past few years per ton of CO2 avoided and the funding that has, up to now, been distributed to upcoming CCS projects, using the same metric.
Data was collected on the funding mechanisms supporting the deployment of renewable electricity generation in Europe and compared to the grid lifecycle emission factor, to determine greenhouse gas emissions reduction. Data was also collected on the two European projects, Longship and Porthos, which have currently been allocated specific public funding. For the different funding mechanisms, this allowed the calculation of the cost per ton of CO2e avoided, both for renewable electricity generation and CCS. So far, the two CCS projects have received significantly less funding compared to the emissions reduction they are expected to provide. Overall, Porthos and Longship funding is 35-50% lower than that of wind and solar technologies and more than twice as low compared to bioenergy. The total budget allocated to CCS is also often much more limited than the public funding allocated to renewables. From a greenhouse gas perspective however, it would be more beneficial to fund emissions reduction options with lowest abatement costs and provide sufficient funding for large-scale CCS projects to develop.

Overall, ambitions for CCS in Europe are high, considering all the projects which have been announced in the past few years, but the hurdles to overcome are still significant and will require adequate support from public authorities. This support will need to focus both on making funding available for CCS projects and creating an environment where storage projects can thrive to meet capture ambitions, and ultimately, the European climate targets.

Keywords: Carbon capture and storage, public funding, developed storage, third-party storage, renewable electricity