Europe's $152 Billion 'Gamble' with Carbon Capture

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Unproven carbon capture and storage (CCS) technologies and prohibitive costs could lead to the European Union (EU) having to spend up to 140 billion euro (US$152 billion) in government support to realize its ambitious carbon reduction targets.

The estimates are laid out by energy think tank the Institute for Energy Economics and Financial Analysis (IEEFA) in its report Carbon Capture and Storage: Europe's Climate Gamble at the same time that the European Commission (EC) is heading up its annual two-day CCS event for industry in Pau, France. CCS is at the heart of Europe's climate change policies but according to IEEFA, the technology remains largely unproven and prohibitively costly for it to be relied on to reach the EC's net zero targets by 2050. Europe's current project pipeline could cost as much as 520 billion euro (US$566 billion) and require 140 billion euro of government support to capture and store a proportion of longer-term targets. In February, the Commission introduced the EU's Industrial Carbon Management Strategy, which sets an annual carbon capture target of 450 million tonnes of CO2 (MtCO2) by 2050, or 13% of the bloc's 2022 emissions. To get there, it wants to store 50 MtCO2 by 2030 and 280 MtCO2 a decade later.

Despite the large reliance on CCS within Europe, CCS is "very much in its infancy" IEEFA stated, pointing out that of the 50 MtCO2 captured globally per annum, there are only five operational projects in Europe, which capture a total of just 2.7 MtCO2 per annum. Of this, 63% is captured as part of natural gas processing in Norway, which is not part of the EU. "Relying on CCS as a climate solution will force European governments to introduce eye-wateringly high subsidies to prop up a technology that has a history of failure," said Andrew Reid, an IEEFA energy finance analyst and author of the report. "As the small number of operational projects show, CCS is not likely to work as hoped and will take longer to implement than expected."

Europe has just under 200 planned CCS projects for multiple emissions-intensive sectors and, according to the report, "more than 90% of the emissions from these facilities are expected from sectors where the technology is at the prototype or demonstration phase". It stated that the proposed timelines of European CCS projects are "overoptimistic" and that about 90 will need to be operational by 2030 across the EU and the U.K. for both to meet their carbon capture targets. "Currently, there are three operational CCS projects in the European Union and none in the U.K.", the report noted.

"Doubling down on unrealistic targets risks leaving it too late to reduce emissions through alternative measures when it is realized that CCS's contribution to net zero will likely fail," Reid said. "Policymakers should begin working urgently to put more practical solutions in place."

Speaking at the opening of the 4th Industrial Carbon Management Forum in Pau, France, EU Energy Commissioner Kadri Simson reaffirmed Europe's commitment to CCS. "Carbon capture, utilization and storage will play a major role in our journey to 2050. The 2040 Climate Target Plan underlines that industrial carbon management is not just an alternative...it is a vital complement to renewables and energy efficiency. Alongside all this, we are seeing tangible, on-the-ground progress. In Europe we are charting new territories, with storage capacities across Bulgaria, Croatia, Greece and Italy, building on what has already been done in the front-running area of the North Sea. Denmark made history this June, awarding its first onshore CO2 storage exploration licenses. And there is more--the Longship facility in Norway is now operational; Porthos in the Netherlands is breaking ground; and in Ravenna, Italy, CO2 injections for storage are underway."

However, despite the growth in project announcements, Simson admitted that things are moving too slowly and costing too much. "Despite such important milestones, the pace of industrial carbon management roll-out must quicken. We need to do more. We need to go further. We still have some major challenges to tackle: high costs, regulatory disparities and insufficient coordination. Consider the issue of costs. Industrial carbon management technologies face high capital investment costs, which are typically seen in all emerging markets. To bridge this gap, we must implement targeted de-risking measures and provide the necessary financial support. This will help to reach final investment decisions on these projects. The second barrier is the patchwork of regulatory approaches across Member States which differ in scope and speed. The solution is a comprehensive European CO2 transport regulatory package."

She added: "Third, we grapple with inadequate coordination. We also do not have a clear picture of available CO2 storage facilities and CO2 captured by emitters. Good coordination across industrial carbon management pathways is critical for establishing a robust business case and giving investors greater certainty. The Strategy foresees the creation of an investment atlas mapping all potential CO2 storage sites and initiatives. In addition, the Commission is developing a knowledge-sharing platform to enhance collaboration between projects and stimulate investment in industrial carbon management projects across Member States."

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).