Carbon Capture, Utilization, and Storage

Even as renewable energy and complementary energy storage and management technologies become more cost-competitive and gain market share, large amounts of fossil fueled power generation are likely to remain in service for some time to provide economic, reliable, and dispatchable energy. Also, hard to decarbonize industrial processes such as for iron and steel, cement, ethanol, ammonia, and petrochemical manufacture will remain vital to the economy. CCUS can provide a foundation for net-zero and even net-negative emissions biofuel production and biomass-based power generation. In complement to renewable and nuclear energy, CCUS can help enable hydrogen as a clean energy storage and transport medium.

The Carbon Capture Coalition reports that there are 21 large CCS or CCUS facilities capturing about 42 million metric tons of CO2 annually around the world. Thirteen such facilities operate in the United States, capturing about 25 million metric tons of CO2 annually. The Clean Air Task Force (CATF) lists a total of 32 U.S. projects at some stage of development.

Carbon capture can be performed before or after CO2 is generated in an energy or industrial operation. Pre-combustion processes remove carbon from fossil or biomass fuels to create a hydrogen-rich synthesis gas that can be used for energy or chemical process input. Various current carbon capture facilities employ post-combustion processes that capture CO2 after it is created through combustion or other chemical process. Depending on CO2 concentration, technologies used for pre- or post-combustion removal can also be used to separate naturally occurring CO2 in natural gas and from petroleum extraction and processing. While this document focuses on carbon capture from industrial and power generation emissions, direct air capture (DAC) of CO2 from the air also garners growing attention as part of the climate solution.

CO2 can be geologically sequestered in saline formations, old oil and gas fields, and deep unmineable coal seams, but utilization of captured CO2 can provide value to mitigate costs. Since the 1930s, CO2 has been recovered from industrial processes, such as petroleum refining, ammonia manufacture, and ethanol production, for use in food, beverage, and other industries and to make dry ice and liquid CO2 for other applications. Since 1972, enhanced oil recovery (EOR) using CO2 has increased oil field production. The diagram below illustrates storage, including EOR. 

Utilization as feedstock to produce fuels, chemicals, and new materials, and to enhance agriculture, offer growing opportunity. Lux Research projects that the global market for CO2 utilization will grow to $70 billion in 2030 and $550 billion in 2050, led by building material applications (86 percent in 2040) with other uses for fuels, chemicals, carbon additives, polymers, and proteins (for feed). However, volumes of emissions are far greater than potential utilization markets. Also, while some utilization (e.g., EOR and some material production) may sequester CO2 long-term or permanently, other uses (e.g., food and beverage, dry ice applications) only delay emissions. If utilization or suitable geology for sequestration is not close to the site of capture, then piping/transport can present financial, planning, and implementation challenges. However, CO2 piping infrastructure development also offers investment and employment opportunities.

As with renewable energy and energy storage, costs of CCUS have been declining as technologies advance, are demonstrated, and grow in scale. Application, context, and scale affect costs. It is easier to remove CO2 from highly concentrated streams, such as from some industrial and natural gas processing operations, than less concentrated streams from power plants flue gas. Cost of capture, compression, deep injection, and monitoring can range from about $25 per ton for an ethanol or hydrogen plant to roughly $100 and $120 per ton for coal- and natural gas-fueled power plants, respectively. DAC may be in the $600 to $1,000 a ton range. EOR or other utilization can defray costs. As noted previously, pipeline or other transport imposes cost too.

State Energy Offices should be cognizant that policies and regulations are critical to the current viability of CCUS. Government provided or incentivized research, development, and demonstration (RD&D) can advance CCUS technical and economic performance. Pricing CO2 emissions explicitly or implicitly through emission limits can incite demand for CCUS. For example, the California Low Carbon Fuel Standard (LCFS), which regulates the carbon-intensity of transportation fuels used in California, provides credits that certain in- and out-of-state CCUS projects, including DAC facilities, can earn. Federal and state fiscal incentives can also propel CCUS development. The federal 45Q tax credit for eligible CCUS projects commencing construction by 2024 provides a valuable incentive. U.S. Environmental Protection Agency (EPA) and state regulation and permitting of CO2 underground injection must be complied with to assure long term sequestration and environmental protection. States also play critical roles in underground ownership rights, liability, and pipeline siting and permitting important for CCUS implementation. State Energy Offices and other agencies can consider policy, program, and regulatory options that can encourage CCUS development and implementation that supports state economic and environmental objectives.

State Energy Offices should consider whether and how CCUS can fit into the state’s energy, environmental, and economic development plans and strategies. Consistent with questions below, planners should consider current and projected CO. emitting sources, geology, regional options for achieving economies-of-scale, and opportunities to marry CCUS technology with new biomass energy, biofuels, hydrogen, and other industrial applications to support innovation and competitive advantage. State Energy Offices should also take stock of current and prospective federal and state policies and regulations that will affect CCUS viability and opportunity.

These high-level questions and considerations will likely generate more detailed questions for deliberation by State Energy Offices and other pertinent planners and policymakers.