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Carbon Capture, Utilization & Storage (CCUS)

Carbon Capture, Utilization & Storage (CCUS)

Locking up carbon: A deep dive into the evolving landscape of CCS

The Paris Agreement calls for halving current emissions by 2030 and achieving net-zero emissions by 2050 to maintain global warming at a sub-catastrophic level. Carbon capture and storage (CCS) plays a vital role in the decarbonization race, not only catching fresh emissions from hard-to-decarbonize industries but removing atmospheric CO2 through the likes of direct air capture (DAC) as well. CCS is transitioning from its traditional roots that spanned over half a century to a more contemporary industry, driven by falling capture costs, technology innovations and shifting regional hotspots. In this Insight, we take a deep dive into this evolving landscape. 

Key takeaways

  • CCS is set to expand, rapidly driven by falling capture costs: A downward trend in costs is beginning to emerge as the technology matures, with prices projected to fall as low as ~USD 45 per metric ton (MT) between 2025 and 2027. As a result, the global carbon capture capacity is estimated to increase 6x to 320.9 million MT (MMT) of CO2 per year by 2030, while global CO2 storage is estimated to increase by 9x to 420 MMT by 2030, balancing storage supply and demand from planned carbon capture capacity. North America is, and is anticipated to remain, the dominant power, while Europe is picking up pace as a new hotspot spurred on by supportive government incentives and policies.
  • A new generation of CCS technologies led by DAC is also positively contributing to improving process efficiency: DAC startups Climeworks and Carbon Engineering have begun commercial operations. DAC has also been a hotspot for federal and VC funding. Modular DAC, electro-swing adsorption (ESA), direct ocean capture (DOC), and algae-based capture are creating some buzz. The transport and storage segments are testing new technologies to improve process efficiency.
  • However, the industry faces several hurdles: The current CCS pipeline is still less than half of what’s needed by 2030 (715 MMT) to be on track for net zero. The industry is also facing a significant funding gap, with McKinsey estimating USD 130 billion per year (2022–2050) to meet capacity requirements. There is also pressure for effective coordination along the CCS value chain, as the industry shifts to a “part-chain” model. Policy measures remain slow and inadequate, with even mature markets (the US and Europe) only just introducing CCS reforms.

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