Carbon capture ‘simply won’t work’ to meet net-zero goals, report says

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Shell PLC’s Quest carbon capture project at a hydrogen production plant in Alberta, Canada, has been a technological success but is not carbon neutral, according to a new report.
Source: Shell Canada

A report by the Institute for Energy Economics and Financial Analysis concluded that the majority of carbon capture projects have either failed or underperformed, while the few successful projects have primarily contributed to fossil fuel supply.

The findings, released on September 1, cast doubt on a widely cited United Nations climate change report that said carbon capture will be necessary for net-zero emissions by 2050.

“Many international bodies and national governments rely on carbon capture in the fossil fuel sector to get to net zero, and it just won’t work,” study author Bruce Robertson said in a statement.

But carbon capture advocates said the report was based on an outdated view of the technology. And the outlook for carbon capture has changed dramatically since the Biden administration’s bipartisan Infrastructure Act and the most recent Cut Inflation Act.

“Polarizing Views”

Carbon capture is an emerging technology that intercepts carbon dioxide from emissions streams, such as gas processing facilities or power plants. Once captured, the CO2 byproduct is vented and either permanently stored underground or used for other industrial purposes.

The study authors analyzed 13 carbon capture projects in various applications, representing about half of the world’s carbon capture capacity. Of the projects analyzed, seven operated below their stated capabilities, two failed due to technical issues and one was suspended, according to the study.

But even some of the projects that have been technological successes aren’t zero, according to the report, citing Shell PLC’s Quest carbon capture project in Alberta, Canada. Despite a high nominal CO2 capture rate, this rate does not take into account the CO2 emitted to power the carbon capture technology, which offsets 21% of “saved” emissions, according to the institute. Shell did not immediately respond to a request for comment.

Successful projects tend to contribute to the production of more fossil fuels, leading to new emissions, according to the study. An example is natural gas processing, which requires separating CO2 from raw gas to produce a marketable product. The CO2 by-product can be sold for enhanced oil recovery, in which CO2 is injected into oil fields to extract more crude.

“This explains why the industry has been using carbon capture technology for decades, not necessarily as a climate-friendly solution but as a necessity to produce fossil natural gas,” the authors wrote.

SNL picture

Carbon capture advocates, however, said recent policies favor investments for more climate-friendly purposes.

The US government’s 45Q tax credit program, expanded in 2018 and again in July by the Inflation Reduction Act $369 billion in climate and energy provisions, provides credit for every ton of CO2 captured and stored. The program also gives a smaller credit for each ton of CO2 captured and used.

“While enhanced oil recovery was the initial driver of carbon capture, secure geological storage is the future of the industry,” said Matt Bright, carbon capture policy manager at the Clean Air Task. Force, citing the nonprofit’s overview of US carbon capture projects.

Bright said that so far it has been “market conditions, not technology readiness,” that have stalled the rollout of carbon capture. “The [Inflation Reduction Act’s] 45Q improvements finally value CO2 reduction or removal to a sufficient degree to drive entire decarbonization systems based on carbon capture rather than isolated projects,” Bright said.

Jessie Stolark, Manager of Public Policy and Member Relations Carbon Capture Coalition, also said the report “paints an inaccurate picture picture of the current state of carbon capture.”

More than 120 carbon capture projects have been announced since the 45Q tax credit program was expanded in 2018, Stolark said, and most plan to permanently storing CO2 rather than using it.

The report does not dispel the idea that carbon capture could be the only climate mitigation tool for “hard to reduce” sectors, such as steel or cement production. However, these requests should be considered as interim measures and with “careful consideration”, the authors wrote.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.

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