Why Has CCUS Failed to Attract Investors?

Proponents of carbon capture, utilisation and storage (CCUS) argue that the technology is needed to reach net-zero emissions targets. Some, like the UK Carbon Capture and Storage Research Centre, go even further. They state that “CCUS is proven; CCUS projects are already in operation in several countries, including the UK”.1 Why then does CCUS fail to attract investors?

What is CCUS?

CCUS encompasses technologies that capture CO2 from emission sources. They also make the greenhouse gas ready for transportation. Then, it is either used for other purposes or stored deep underground in geological formations.2 

If the captured CO2 is kept underground, this prevents it from entering the Earth’s atmosphere. As a result, it cannot trap heat from escaping into space. This is the main cause of global warming.3  

However, reusing the gas, for instance, for enhanced oil recovery contributes to global warming.4 80 per cent of CO2 captured by CCUS projects is used for enhanced oil recovery.5 This leads to more emissions since oil is a fossil fuel that releases large quantities of carbon through combustion. 

Is CCUS a ‘proven’ technology?

The first CCUS technology was applied to a natural gas facility in the early 1970s.6 There has subsequently been interest in the technology for decades. Yet today, there are just 19 large-scale industrial and two large-scale CCS power plants in operation worldwide. A mere 20 additional projects are currently under construction.7

This is because there are concerns around the economic viability, technical feasibility and long-term sustainability of CCUS. Therefore, many public and private investors are sceptical about funding future projects.8 A look at both the current capacity and the bungled history of the technology explains their reluctance to invest. 

The history of CCUS projects

In the UK, a GBP £1 billion grant for developing new CCUS technology was cancelled in 2015.9 The decision led to energy companies involved in two CCUS facilities pulling their funding.10 By 2017, the UK government had spent GBP £168 million on carbon capture.11 Yet the UK still does not have any operating large-scale CCUS facilities.12

The cost of failed CCUS projects is far greater on the other side of the Atlantic. For example, the US Department of Energy (DOE) pulled funding on one project, not once but twice. FutureGen was intended to be the first commercial-scale power plant with CCUS facilities in the US.13 However, after missing construction deadlines, the DOE withdrew funding for FutureGen. Total costs for the project were about USD $1.65 billion.14

Investment problems for CCUS projects

CCUS projects are extremely expensive. They require large amounts of investment from the public and private sector. However, they have a history of failing to complete on time. This has led to government funding being withdrawn for CCUS projects. Therefore, private investors are wary of losing money on similar costly failures.

Sources

  1. UKCCSRC. (n.d.). CCS Explained. [online] Available at: https://ukccsrc.ac.uk/ccs-explained/.
  2. UKCCSRC. (n.d.). CCS Explained. [online] Available at: https://ukccsrc.ac.uk/ccs-explained/.
  3. NASA (2018). The Causes of Climate Change. [online] Climate Change: Vital Signs of the Planet. Available at: https://climate.nasa.gov/causes/.
  4. Roberts, D. (2019). Could squeezing more oil out of the ground help fight climate change? [online] Vox. Available at: https://www.vox.com/energy-and-environment/2019/10/2/20838646/climate-change-carbon-capture-enhanced-oil-recovery-eor.
  5. IEA. (2020). CCUS in Clean Energy Transitions – Analysis. [online] Available at: https://www.iea.org/reports/ccus-in-clean-energy-transitions.
  6. A Brief History of CCS and Current Status. (n.d.). [online] . Available at: https://ieaghg.org/docs/General_Docs/Publications/Information_Sheets_for_CCS_2.pdf.
  7. www.energypolicy.columbia.edu. (n.d.). Columbia | SIPA Center on Global Energy Policy | Net-Zero and Geospheric Return: Actions Today for 2030 and Beyond. [online] Available at: https://www.energypolicy.columbia.edu/research/report/net-zero-and-geospheric-return-actions-today-2030-and-beyond.
  8. BCG Global. (2021). The Business Case for Carbon Capture. [online] Available at: https://www.bcg.com/publications/2019/business-case-carbon-capture [Accessed 28 Apr. 2021].
  9. Will carbon capture ever happen in the UK? (2015). BBC News. [online] 29 Nov. Available at: https://www.bbc.co.uk/news/uk-scotland-34943034 [Accessed 28 Apr. 2021].
  10. Drax pulls out of £1bn carbon capture project. (2015). BBC News. [online] 25 Sep. Available at: https://www.bbc.co.uk/news/business-34356117 [Accessed 28 Apr. 2021].
  11. Rathi, A. (n.d.). The UK could’ve changed the way the world fights global warming. Instead it blew $200 million. [online] Quartz. Available at: https://qz.com/972939/the-uk-could-have-changed-the-way-the-world-fights-global-warming-instead-it-blew-200-million/.
  12. Department for Business, Energy & Industrial Strategy (2019). UK carbon capture, usage and storage. [online] GOV.UK. Available at: https://www.gov.uk/guidance/uk-carbon-capture-and-storage-government-funding-and-support.
  13. Tollefson, J. (2015). US government abandons carbon-capture demonstration. Nature.
  14. Mit.edu. (2016). Carbon Capture and Sequestration Technologies @ MIT. [online] Available at: https://sequestration.mit.edu/tools/projects/futuregen.html [Accessed 28 Apr. 2021].