Released January 20, 2025 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Europe's oil and gas majors have called on the European Union (EU) to create a "bank" this year to help fund expensive carbon capture and sequestration (CCS) projects.
The proposed "European CCS Bank" would supply public financial support through its multibillion-euro Innovation Fund by creating a competitive Carbon Contracts for Difference (CCfD) auctioning mechanism. The call has been made by the International Association of Oil & Gas Producers Europe (IOGP Europe). It stated that while CCS is now "widely recognized as a key technology for industrial decarbonization, project deployment is still too slow." The EU has set a target of capturing 280 million tonnes of CO2 (MtCO2) per year by 2040 and 450 MtCO2 by 2050. The Net Zero Industry Act (NZIA) mandated an annual CO2 storage capacity of at least 50 million tonnes by 2030, but IOGP Europe claimed these targets are not feasible as the sector stands today. "The disparity between the cost of CO2 capture and carbon allowance prices under the EU emissions trading system (ETS) makes capture investments economically unviable for emitters, therefore preventing the conclusion of commercial agreements along the CCUS value chain," it stated in its call. "Without a sustainable business case, delayed investments and project deployment prevent the EU from decarbonizing its industry while preserving competitiveness."
"If we do not incentivize CO2 capture for strategic industries, we won't decarbonize, we will deindustrialize the EU," said François-Régis Mouton, Managing Director, IOGP Europe. "Contracts for Difference have helped scale up renewables and are now used for hydrogen projects. The European CCS Bank can create the value chain reaction needed to accelerate CCS deployment as of 2025."
The scheme being presented would be similar to the European Hydrogen Bank, launched in 2023. Its first auction set out to make 800 million euro (US$867 million) available to support companies producing renewable hydrogen. Renewable hydrogen producers, which includes those with planned projects, can bid for support in the form of a fixed premium per kilogram (kg) of hydrogen produced. The premium is intended to bridge the gap between the price of production and the price consumers are currently willing to pay, in a market where non-renewable hydrogen is still cheaper to produce. The results of the first auction concluded last June and saw 720 million euro (US$781 million) awarded to seven projects located in Spain, Portugal, Norway and Finland, in what was an oversubscribed auction that attracted 132 bids in total. For additional information, see June 4, 2024, article--Europe's First Clean Hydrogen Auction Awards $781 Million.
IOGP Europe's analysis, based on Rystad data, estimates the cost of the full CCS value chain in the EU at a level between 130-230 euro (US$132-234) per tonne of CO2. The capture part typically accounts for more than half of the total (depending on the type of capture technology) and is estimated, for the vast majority of industries, at approximately 90-130 (US$92-133) euro per tonne of CO2. It wants the EU to use an auction system to cover the cost gap between a stable 'strike price' and the fluctuating ETS allowance prices.
In October, Industrial Info reported on what energy think-tank the Institute for Energy Economics and Financial Analysis (IEEFA) referred to as Europe's 140 billion-euro (US$152 billion) "gamble" on carbon capture. Its Carbon Capture and Storage: Europe's Climate Gamble report claimed that the technology remains largely unproven and prohibitively costly for it to be relied on to reach Europe's net zero targets by 2050. It stated that Europe's current project pipeline could cost as much as 520 billion euro (US$566 billion) and require 140 billion euro (US$152 billion) of government support to capture and store a proportion of longer-term targets. Europe has slightly less than 200 planned CCS projects for multiple emissions-intensive sectors, according to the report, and 90 of those will need to be operational in the next six years 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." For additional information, see October 23, 2024, article - Europe's $152 Billion 'Gamble' with Carbon Capture .
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).
The proposed "European CCS Bank" would supply public financial support through its multibillion-euro Innovation Fund by creating a competitive Carbon Contracts for Difference (CCfD) auctioning mechanism. The call has been made by the International Association of Oil & Gas Producers Europe (IOGP Europe). It stated that while CCS is now "widely recognized as a key technology for industrial decarbonization, project deployment is still too slow." The EU has set a target of capturing 280 million tonnes of CO2 (MtCO2) per year by 2040 and 450 MtCO2 by 2050. The Net Zero Industry Act (NZIA) mandated an annual CO2 storage capacity of at least 50 million tonnes by 2030, but IOGP Europe claimed these targets are not feasible as the sector stands today. "The disparity between the cost of CO2 capture and carbon allowance prices under the EU emissions trading system (ETS) makes capture investments economically unviable for emitters, therefore preventing the conclusion of commercial agreements along the CCUS value chain," it stated in its call. "Without a sustainable business case, delayed investments and project deployment prevent the EU from decarbonizing its industry while preserving competitiveness."
"If we do not incentivize CO2 capture for strategic industries, we won't decarbonize, we will deindustrialize the EU," said François-Régis Mouton, Managing Director, IOGP Europe. "Contracts for Difference have helped scale up renewables and are now used for hydrogen projects. The European CCS Bank can create the value chain reaction needed to accelerate CCS deployment as of 2025."
The scheme being presented would be similar to the European Hydrogen Bank, launched in 2023. Its first auction set out to make 800 million euro (US$867 million) available to support companies producing renewable hydrogen. Renewable hydrogen producers, which includes those with planned projects, can bid for support in the form of a fixed premium per kilogram (kg) of hydrogen produced. The premium is intended to bridge the gap between the price of production and the price consumers are currently willing to pay, in a market where non-renewable hydrogen is still cheaper to produce. The results of the first auction concluded last June and saw 720 million euro (US$781 million) awarded to seven projects located in Spain, Portugal, Norway and Finland, in what was an oversubscribed auction that attracted 132 bids in total. For additional information, see June 4, 2024, article--Europe's First Clean Hydrogen Auction Awards $781 Million.
IOGP Europe's analysis, based on Rystad data, estimates the cost of the full CCS value chain in the EU at a level between 130-230 euro (US$132-234) per tonne of CO2. The capture part typically accounts for more than half of the total (depending on the type of capture technology) and is estimated, for the vast majority of industries, at approximately 90-130 (US$92-133) euro per tonne of CO2. It wants the EU to use an auction system to cover the cost gap between a stable 'strike price' and the fluctuating ETS allowance prices.
In October, Industrial Info reported on what energy think-tank the Institute for Energy Economics and Financial Analysis (IEEFA) referred to as Europe's 140 billion-euro (US$152 billion) "gamble" on carbon capture. Its Carbon Capture and Storage: Europe's Climate Gamble report claimed that the technology remains largely unproven and prohibitively costly for it to be relied on to reach Europe's net zero targets by 2050. It stated that Europe's current project pipeline could cost as much as 520 billion euro (US$566 billion) and require 140 billion euro (US$152 billion) of government support to capture and store a proportion of longer-term targets. Europe has slightly less than 200 planned CCS projects for multiple emissions-intensive sectors, according to the report, and 90 of those will need to be operational in the next six years 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." For additional information, see October 23, 2024, article - Europe's $152 Billion 'Gamble' with Carbon Capture .
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).
