Insights

Could Michigan be the Next Leader in Renewable Energy?

Barbara Weber
November 8, 2023
Illustration design by Mary Duncan-Sain

There’s a visceral pride associated with people from Michigan. I should know, as I’m one of them. Regardless of where I am in the world, chances are you’ll hear me wax poetic about my home state. For instance, did you know it’s surrounded by one of the largest surface freshwater resources in the world (and 90% of the US freshwater supply)? Or that it has over 3,000 miles of breathtaking coastline? How about the fact that it’s an agricultural powerhouse that grows the most diversity of crops than any other state (aside from California) in the country. It also produces the nicest and most down-to-earth people, with unmatched worth ethics, you’ll ever meet, but maybe I’m biased.

While I haven’t been a resident of Michigan for nearly two decades, I still visit my family there often and care deeply about the well-being and vitality of the state. As a result, I closely follow what’s happening there, particularly in politics and business. So if my vocal enthusiasm for the Mitten (as we affectionately call it), wasn’t already borderline annoying, it certainly will be now. I recently learned that thanks to a combination of political will, industrial innovation, and utility cooperation, it’s on track to become one of the most ambitious states for grid decarbonization. *SWOON.*

The Power of Policy

It’s no secret that policy has played a huge role in the advancement and adoption of clean energy throughout the US, especially since the Inflation Reduction Act (IRA) was signed into law last summer. But long before the IRA was passed, Michigan was making its own progressive moves towards climate action.

Before she became the Secretary of Energy in 2021 (where she’s currently leading the DOE's work to advance cutting-edge clean energy technologies), Jennifer Granholm served two terms as Governor of Michigan from 2003 to 2011. During this time, amidst an economic downturn, she successfully led efforts to diversify the state’s economy, strengthen its auto industry, preserve the manufacturing sector, and add emerging sectors like clean energy to Michigan’s economic portfolio. As a result, today, one-third of all North American electric vehicle battery production takes place in Michigan, the state is one of the top five states for clean energy patents, and 126,000 Michiganders were employed in the clean energy sector prior to COVID-19. But more on all of that later.

Following in Secretary Granholm’s shoes, current Michigan Governor Gretchen Whitmer introduced the MI Healthy Climate Plan in 2022. Designed to reduce greenhouse gas emissions and transition toward economy-wide carbon neutrality – while also creating thousands more clean energy jobs – the action plan also has a key focus on solutions that support communities disproportionately impacted by the changing climate. This is the type of policy that happens when you actually have the right leadership in place. (Which is why I always tell my friends and family the number one thing you can do to help the planet is to vote. Wisely.)

During the 2022 midterm elections, which saw the highest voter turnout for midterms in the state’s history, Democrats won a trifecta, gaining control of both legislative chambers and the Governor’s mansion. This election essentially paved the way for the policy that is now in place today.

Last spring, Michigan Senate Democrats introduced a sprawling legislative package aimed at achieving many of the energy and climate goals outlined in Governor Whitmer’s climate plan. The law is currently being debated in the state legislature but if passed, it would make Michigan the third Midwestern state with a requirement of 100% carbon-free energy. It would also make Michigan the first state to pass a law that aligns with the Biden Administration’s goal of phasing out fossil-fueled power plants by 2035. *Double swoon.*

It’s very much worth noting, before this legislation was even introduced, Michigan’s utilities had similar goals in mind.

An Energy Evolution

In 2019, Consumers Energy, Michigan’s largest energy provider that provides natural gas and/or electricity to 6.8 million Michigan residents, introduced their Clean Energy Plan. As noted by the company, the plan came as a response to customers who care deeply about how the utility handles issues such as air quality, water management, and greenhouse gas emissions. Among other things, the plan highlights initially included the reduction in carbon emissions from power plants by 90% by 2040. However, in June 2022, a key regulatory decision paved the way for Consumers Energy to stop burning coal to generate electricity by 2025 — 15 years faster than previously planned — making it one of the first utilities in the nation to go coal-free. 

Other 2022 updates to the initial Clean Energy Plan included the addition of nearly 8,000 megawatts (MW) of solar power by 2040 ensuring 90% of their capacity comes from clean sources and increased energy storage with a total of 75 MW of energy storage by 2027, achieving 550 MW by 2040. And I’m just scratching the surface here. But most importantly, in my opinion, is that all of Consumer Energy’s efforts are making clean energy more affordable for Michigan residents, helping customers save an estimated $600 million dollars through 2040 compared to the current plan. This is how you get constituent buy-in.

Clearly I’m a huge fan of what Consumers Energy has done on the clean energy front. However, what prompted me to write this article in the first place was when I saw that its direct competitor, DTE Energy (now the largest investor in renewable energy in Michigan), joined the party this summer. In July, DTE announced a historic settlement agreement with nearly two dozen organizations from across Michigan. Developed with the input of DTE’s customers and stakeholders, this 20-year plan includes an $11 billion investment in clean energy construction and the closure of their last remaining coal plants – including a 3,400-megawatt coal plant that’s considered the third-largest climate polluter in the US. 

To be honest, before this summer, my familiarity with DTE Energy was limited to its namesake music venue outside of Detroit (appropriately located on Bob Seger Drive), where I spent the late 90s and early 2000s fan-girling over the Dave Matthews Band and Ben Harper. Now here I am fan-girling over DTE and their pledge to develop 15 gigawatts of in-state renewable power by 2042 and expand energy storage to 780 megawatts by 2030 and 1,800 megawatts by 2042. It’s amazing how things change as you get older. And I’m not just talking about the climate (too soon?).

The deeper in the rabbit hole I got while researching this piece, the more it became abundantly clear just how much of that classic Michigan ingenuity I know and love has been employed to make the clean energy transition happen there. Every i has been dotted and every t crossed. One of the biggest hurdles in the energy transition has been resistance from communities who feel as though they’re being left behind. So the fact that DTE, for instance, will provide re-training for employees impacted by the coal plant retirements and will continue to partner with the local communities, who for years have hosted these coal-fired plants, on new economic development opportunities, is exactly what we need to see from more utilities. The solutions put forth by the state’s leadership and its utilities prove to not only be good for the planet, but also for the people of Michigan.

Keeping Jobs in Michigan

Ten years ago, before “climate change” or “renewable energy” were in most people’s vernacular, Secretary Granholm gave a notable TED Talk that posed the question: How do we make more jobs? Her big idea: invest in new alternative energy sources. And that’s exactly what Michigan has done. And as planned, the jobs have followed.

In August 2022, it was announced that Michigan ranked #1 in the nation for energy job growth according to the U.S. Energy and Employment Jobs Report (USEER).  From 2020 to 2021, the state added 35,463 energy sector jobs – more than any other state in the nation. And this was before the Inflation Reduction Act infused much-needed funding (and the enthusiasm to match) for renewable energy. A year later, it was reported that Michigan was leading the country in a clean energy jobs boom, creating more than 15,800 jobs in the previous year.The same report outlines how the state has the greatest number of clean energy projects in the country, having secured more than $21 billion in investments.

And things are just getting started. It’s estimated that as a result of the IRA, Michigan is projected to create 167,000 clean energy jobs over the next decade. 

From Motor City to Battery City

To many outsiders, Michigan is perhaps most well known as the birthplace of the automobile (thanks, Henry Ford). So it’s no surprise that the auto capital of the world is also leading the charge (pun absolutely intended) for electric vehicle and battery investment. Earlier this year, a report from the Environmental Defense Fund (EDF) found that, of the $120 billion of investments in American electric vehicle manufacturing that have been announced in the last eight years, Michigan has secured $16.6 billion of that, creating 16,300 new jobs in the process.

One of my favorite aspects of the IRA is that one of its stipulations ensures the jobs associated with electric vehicle (EV) manufacturing actually stay within the US. It’s not just a victory for EV battery manufacturers, but for my home state’s economy, too.

Before I conclude this long-winded love note to Michigan’s renewable energy revolution (and I promise, I’m getting there), I’d be remiss not to acknowledge something that keeps me up at night (and on Zillow). In addition to Michigan being a shining example of what’s possible to achieve on a state level to address climate change, it is also predicted to be one of the last habitable places in the country based on the predicted impacts of climate change. (Yes, I am that person that often talks to my Michigan relatives and friends about the realities of an eventual climate migration to the Mitten state.)

For now, a year typically passes in between my visits home, and every time I return I can see where progress has been made, from the number of EVs on the roads (yet the potholes somehow remain), to the increase in wind turbines decorating the horizon, and expanses of solar farms sparkling under that 45th-parallel sun. This summer, however, was the first time that wildfire smoke from Canada made it impossible to see across the bay in front of my childhood home. It was a sobering reminder of what’s to come. My only hope is that more states can learn from Michigan’s progress and act, before it’s truly too late.

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insight

Carbon Capture, Utilization, and Storage - Big Growth Is Promising, But More Is Needed

Gavin Chisholm & Walter James

Key Takeaways: 

  • Today, 65% of carbon capture, utilization, and storage (CCUS) capacity is used to capture emissions from natural gas processing. 
  • By 2030, hydrogen production, power generation, and heat will be the largest sectoral applications for CCUS.
  • CCUS is set to grow globally, with North America and Europe poised for particularly rapid growth over the next decade. 
  • The vast majority of the captured carbon will be stored in permanent storage infrastructure by 2030, outpacing carbon use in enhanced oil recovery.
  • Expected CCUS capacity growth is still not sufficient to meet the IEA’s Net-Zero Emissions Scenario for 2050. Policymakers must enact measures from a wide range of policy and regulatory options available to them to further accelerate CCUS growth.

Overview

Driven by ambitious government emissions-reduction targets, a wide range of decarbonization strategies are underway all around the world, from renewable energy production to transportation electrification. Recently, however, a very different decarbonization approach has started to gain traction: carbon capture, utilization, and storage (CCUS). Instead of replacing a polluting product or process with one that does not produce emissions, CCUS technologies remove carbon dioxide (CO2) emitted from power plants and industrial processes, as well as directly from the atmosphere. The captured carbon can be stored (usually injected deep underground) or used for a wide range of applications, including the manufacturing of construction material, fertilizers, and bioplastics.

Despite its growing popularity, CCUS can be a controversial approach to climate change mitigation. Some opponents argue that developing CCUS technologies gives big emitters like fossil fuel companies a convenient excuse to keep extracting fossil fuels. Some observers also argue that relying too heavily on CCUS, rather than accelerating the use of emissions mitigation technologies, will not help the world meet crucial climate targets. 

Despite such skepticism about CCUS, a growing number of governments and firms are deploying CCUS as part of their decarbonization strategies. This is because while the rapid deployment of renewable energy remains the primary strategy for global carbon emission mitigation, even in the most generous of projections, renewables alone will not be enough to meet key climate targets. This is why authoritative projections like those by the Intergovernmental Panel on Climate Change and the International Energy Agency (IEA) also include the use of CCUS technologies.

In this article, we investigate the current state and future projections of the global CCUS landscape: What sectors are employing it, and how is the captured carbon used? How do we expect CCUS deployment to grow in the future? What policies and incentives are necessary for CCUS to reach its potential as a key pillar of a decarbonized society? 

To answer these questions, we analyzed the International Energy Agency’s (IEA) CCUS Projects Database. This database covers all CO2 capture, transport, storage, and utilization projects worldwide that have been commissioned since the 1970s and have an announced capacity of more than 100,000 tons per year (or 1,000 tons per year for direct air capture facilities).

Today’s Global CCUS Market

Natural Gas Processing Dominates Global CCUS Applications Today

For the sake of this analysis,  “sectoral application” refers to the industry in which CCUS is deployed to capture the emitted carbon before it is stored or transported for use. Broadly speaking, there are eight sectoral applications for CCUS technologies today: 

  1. Natural gas processing: CCUS is used to capture carbon emissions from purifying raw natural gas to produce pipeline quality natural gas.
  2. Hydrogen and ammonia production: Hydrogen is a molecule that does not emit carbon when combusted, and has the potential as a clean fuel for the industrial, transport, and power sectors. Ammonia can also be used as a zero-carbon fuel for power generation and a carrier for hydrogen. Yet most hydrogen and ammonia production today uses fossil fuels. CCUS offers a potential solution, as capturing the carbon emitted from hydrogen and ammonia production is a cheaper strategy than using renewable energy to produce these fuels in most regions.
  3. Biofuels: Facilities that produce biofuels like bioethanol, biodiesel, and biogas are also responsible for CO2 emissions, and carbon capture technologies can be used to remove these emissions. 
  4. Other fuel transformation: Carbon capture technology is used to sequester emissions from facilities that produce and refine fuels other than natural gas, hydrogen, ammonia and biofuels.
  5. Iron and steel plants: Some industrial processes, notably iron and steel manufacturing, are highly energy intensive and cannot easily be decarbonized. CCUS is one of the most promising emissions reduction methods for these facilities.
  6. Other industry: CCUS is applied to industrial facilities other than iron and steel, such as aluminum smelters, pulp and paper mills, etc.
  7. Power and heat generation: Power and heat generation account for about 30% of primary greenhouse gas emissions globally. Owners of fossil fuel power plants use CCUS to cut those emissions when power and heat are generated.
  8. Directly from the air: Through direct air capture (DAC), CO2 can be removed directly from the atmosphere.

Hover over graph to interact

As the chart above shows, natural gas processing is the dominant of these eight CCUS applications; today, 65% of all CCUS capacity is in the natural gas processing sector. Natural gas processing plants in North America were the earliest adopters of CCUS in the 1970s and 1980s because of the relatively low cost of capturing carbon from these processes and the ability to supply it to local oil producers for oil recovery operations. 

Over the last two decades, carbon capture capacity in natural gas processing has increased by 265%, from 8.5 megatons (Mt) of CO2 per year in 2000 to over 31 Mt CO2 per year in 2022. This growth follows the steady increase in natural gas production globally. 

Other applications pale in comparison. 7.3 Mt CO2 per year is captured from other fuel transformation processes, 3.5 Mt CO2 from industrial plants other than iron and steel, and 1.6 Mt CO2 from the production of biofuels. The sectors where carbon capture technology will be essential in decarbonization efforts – power generation and heat, as well as iron and steel manufacturing – are still lagging behind at 1.3 and 0.9 Mt CO2 per year, respectively. At 0.004 Mt CO2 per year, DAC capacity is also still in its infancy.

CCUS deployment in sectors other than natural gas processing face a common barrier: the lack of commercial value in capturing CO2. This, combined with the extremely high cost of developing a CCUS project in the absence of substantial and consistent policy support, has made CCUS deployment in industrial applications commercially unattractive. DAC projects are especially costly because the technology is still in its infancy, so there are relatively few companies that develop them. 

Policy Support is Scaling CCUS

To address these common barriers, governments have been proactive in passing and implementing measures to encourage the growth of CCUS projects over the past few years. Here, we highlight several of these policy initiatives in North America and Europe.

In the US, the Inflation Reduction Act (IRA) of 2022 offers a considerable boost for CCUS through a tax credit. This tax credit nearly doubles for carbon that is captured from power and industrial plants, and more than triples for CO2 captured from DAC: $60/tonne for utilization from industrial and power sectors, $85/tonne for storing CO2 captured from industrial and power generation facilities in saline geologic formations, $130/tonne for utilization from DAC, and $180/tonne for storage in saline geologic formations from DAC. 

This support is coupled with funding under the Infrastructure Investment and Jobs Act (IIJA), which provides approximately $12 billion across the CCUS value chain in the form of R&D funding, loans, and permitting support over the next 5 years. These funding measures by the US government are the most ambitious of any country. 

In Canada, the 2022 federal budget included an investment tax credit for CCUS projects that permanently store captured CO2 between 2022 and 2030, valued between 37.5 - 60% of the project cost depending on the type of project. 34 CCUS projects were announced in 2022 and 2023, which will help increase Canada’s CCUS capacity by almost 27 Mt CO2 per year by 2030.

In the European Union, funding programs and regulatory reforms will fuel much of this projected growth, particularly the Connecting Europe Facility - Energy ($6.3 billion between 2021 and 2027) and the Innovation Fund ($41.2 billion between 2020 and 2030) that fund CCUS and other clean energy projects. 

Global Oil and Gas Players Lead the Market

While government policies are pivotal for expanding global CCUS capacity, it is companies that ultimately plan, develop, and operate these projects. This section identifies the major players listed in the IEA CCUS Database and highlights the efforts of some of these companies. 

The table below shows the ten companies involved in the largest CO2 capture capacities and the core sector in which each company operates.

Company Name Headquarters Country Company Sector Announced Avg. Capacity (Mt CO2/yr)
Equinor Norway Oil and gas 134
Fluxys Belgium Oil and gas 76
Shell UK Oil and gas 62.9
Air Liquide France Industrial 51.9
BP UK Oil and gas 41.3
Wintershell DEA Germany Oil and gas 38
Exxonmobil USA Oil and gas 38
Mitsubishi Heavy Industries Japan Industrial 27.3
Open Grid Europe (OGE) Germany Oil and gas 24.2
Denbury USA Oil and gas 21.5

Several patterns can be observed. First is the predominance of oil and gas companies in the CCUS industry. Oil majors including ExxonMobil, Shell, BP, and Equinor are also some of the largest players developing CO2 capture infrastructure. With the recent announcement by ExxonMobil to acquire Denbury to expand its CCUS and enhanced oil recovery (more on this below) capacity, the oil majors in this list are set to consolidate even further. Although not included in the top 10, other US oil companies such as Valero and Chevron are also leading players in this field.

Also notable is the absence of companies that specialize in carbon capture in the top 10. Recently, several firms have garnered attention for their proprietary CCUS technologies, such as CarbFix, CarbonFree, Aker Carbon Capture, and LanzaTech. Yet compared to the multinational energy and manufacturing companies that occupy the top spots in the industry, these pure plays are still small, with total CCUS project capacities of less than 5 Mt CO2 per year each. However, the entry of these specialized companies into the CCUS value chain is encouraging. The IEA notes that the value chain that has historically been dominated by vertically integrated oil and gas companies are starting to break up, allowing new players to innovate and reduce costs in parts of the chain. 

To offer deeper insight into the projects in which these companies are involved, we highlight four companies from the table above.

Equinor is a Norwegian oil and gas company whose portfolio also encompasses renewables and other low-carbon solutions. It is the largest provider of pipeline gas to Europe. 

  • Since 1991, Equinor has been a partner in 23 CCUS projects, totalling an average announced capacity of 134 Mt of CO2 per year.
  • 19 of these projects are still in the planning phase, 2 two are operational, 1 one is under construction and one has been decommissioned. 
  • 8 of these projects capture carbon from hydrogen/ammonia production processes, 8 others are related to CO2 transport and/or storage, and 3 are applied to natural gas processing. 
  • In 20 of the 23 projects, the captured CO2 is stored permanently. 
  • All but one of these projects are located in Europe (including the UK), with the sole exception of one project being in Algeria.

Shell, a British multinational oil and gas company that was formed in 1907, is vertically integrated and is active in every area of the oil and gas industry. 

  • Shell participates in 28 CCUS projects around the world, with a total capacity of 62.9 Mt of CO2 per year. 
  • 23 of these projects are in the planning phase, with the expected operation date ranging from 2024 to 2030. 
  • 3 of the projects are already operational, and 2 are under construction. 
  • These projects’ applications vary widely, from 11 projects dedicated to CO2 transport and/or storage, 6 to hydrogen and ammonia production, 3 to natural gas processing, 3 to other fuel transformation, and the rest applied to power and heat, biofuels, and other industries. 
  • In 22 of these projects, the captured CO2 is put into dedicated storage. 

Air Liquide is a French multinational supplier of industrial gasses and services to a variety of industries, including medical, chemical, and electronic manufacturers. 

  • It is involved in 29 CCUS projects whose average announced capacity totals 51.9 Mt CO2 per year. 
  • 17 of these projects transport the captured CO2, while 6 are in other fuel transformation, 3 are applied to cement manufacturing, 2 are in the iron and steel sectors, and 1 in other industry. 
  • All 29 projects are still in the planning phase, with the expected operation date ranging from 2024 to 2040. 
  • 27 of these projects will be located in Europe, and the rest in the US. 

Mitsubishi Heavy Industries is an industrial and electrical equipment manufacturer headquartered in Japan, whose wide-ranging portfolio includes aerospace and automotive components, air conditioners, utility vehicles, defense equipment and weapons, and power systems. 

  • Mitsubishi is a partner on 17 CCUS projects, totaling 27.3 Mt CO2 per year in average announced capacity. 
  • All 17 are still in the planning phase and will be located mostly in North America and the UK. 
  • Their sectoral applications will be varied, with 5 projects capturing CO2 from hydrogen/ ammonia production processes, 3 from power and heat, 3 from natural gas processing, 3 dedicated to CO2 transport and storage, 2 from cement manufacturing, and the rest from other industries. 
  • The CO2 captured from 11 of the projects will be permanently stored.

2030 Global Projections

The IEA data includes CCUS projects that have been announced as of March 2023, and whose construction and operation are expected in the future. In this section, we use that data to predict developments in the global CCUS landscape between now and 2030, both in terms of the geographic distribution of growth and the different fates of carbon.  

North American and European Policy Will Drive Lead in Regional Capacity Growth 

Growing recognition of the role of CCUS technologies in meeting net zero goals is translating into increased policy support all over the world, which in turn is spurring increased growth in CCUS projects. The predominant forms of policy support are tax credits for projects, funding for R&D, and regulatory reforms. Owing to these measures, over 140 new projects were announced globally in 2022, bringing the global announced CCUS capacity up to 45.8 Mt CO2 per year. This compares to 35.7 Mt CO2 per year in 2017, a 28.3% increase over five years.

Looking ahead to 2030, this growth in CCUS capacity is set to accelerate. We can see this trend in the chart below.

Hover over graph to interact

North America will likely account for the vast majority of the increase in CCUS capacity over the next decade, rising roughly 6x from 27.7 Mt CO2 per year in 2023 to 161.8 Mt CO2 per year in 2030. This capacity expansion is in large part due to the region’s established policies designed to stimulate CCUS market growth. Country-specific analysis reveals that the United States will be the primary policy driver of this acceleration, with Canada playing a secondary but important role. With around 80 projects planned for operation by 2030, the CO2 capture capacity in the US is expected to increase by nearly a factor of five, from over 20 Mt CO2 to over 100 Mt CO2 per year, more than 60% of North America’s expected growth.

Although not as drastically as in North America, Europe is also expecting capacity growth, from 2.5 Mt CO2 per year in 2023 to 95 Mt CO2 in 2030 –  a nearly 40x increase in less than a decade.

Changes in the Fate of Carbon: High Hopes for Dedicated Storage

Rapid CCUS deployment over the next several years will be accompanied by changes in how the captured carbon is used, known as the “fate of carbon.” As of 2022, most of the captured CO2 was used in enhanced oil recovery (EOR), at 39.9 Mt CO2 per year. EOR is the process of extracting oil from an oil field that has already gone through the primary and secondary stages of oil recovery. In other words, the use of CO2 in EOR is a way to rejuvenate oil production at mature oil fields. This explains the fact that large oil producers have been the leading players developing CCUS capacity and the recent renewed interest from many of those same companies. Although CO2-EOR can produce “carbon negative” oil (depending on a variety of factors), it is often not considered a reliable decarbonization strategy. At the same time, the clear commercial value of additional oil production has driven CO2 use in EOR to be the earliest and primary fate of carbon.

Starting in 2023, this is predicted to change: As shown in the chart below, dedicated storage is set for a take-off as the biggest fate of carbon. By 2030, we expect that 426.5 Mt CO2 per year will be put into dedicated storage infrastructure around the world, which is more than a 38-fold increase over eight years. On the other hand, EOR is projected to experience a more modest 1.7x growth.

Hover over graph to interact

Note: The second fastest growing fate of carbon is labeled “Unknown/Unspecified” because the IEA’s CCUS Database is based on publicly available information, and unfortunately many of the project announcements do not make the fate of carbon clear. 

This projected growth in dedicated storage is encouraging. Since more CO2 needs to be sequestered than can be used, much of the captured CO2 needs to be permanently stored. This means that dedicated storage infrastructure is a prerequisite for carbon capture technologies to be deployed. 

Many factors, both market- and policy-driven, are propelling the expansion of carbon storage. A growing number of companies, particularly in the manufacturing and energy sectors, are adopting net-zero targets that carve out a role for CCUS. Another factor is the growing proliferation of CCUS “hubs,” or clusters of infrastructure to capture, transport, store and/or use carbon. These hubs help to improve the economics of and therefore facilitate investments in CCUS projects. In the US, a slew of policy incentives, such as the 45Q tax credit passed in 2018 and those in the IRA and IIJA mentioned above, are boosting investments in CCUS projects. In the EU, the revenue from the Emissions Trading System began funding carbon capture, transportation, and storage projects from 2020. 

The predicted growth of dedicated permanent storage infrastructure is welcome news from a climate perspective: According to the IEA, getting to net-zero emissions by 2050 requires that 95% of captured CO2 be permanently stored. There is more than enough geologic CO2 storage capacity globally to meet climate goals, and the technology for achieving this – such as pipelines for CO2 transportation, mechanisms for injecting, trapping, and monitoring CO2 underground – is well-established. Since CO2 transport and storage infrastructure needs to be operational before CO2 capture projects are developed, this projection is encouraging.

Barriers Remaining for Future CCUS Growth

More Policy Support is Needed to Boost Private Investment and Innovation in CCUS

Including all announced and planned CCUS projects in the IEA CCUS Database, the global CCUS capacity will reach 265.25 Mt CO2 per year by 2030. How does this projected increase compare to the amount of CO2 that needs to be sequestered to reach the IEA’s net-zero scenario? 

Sadly, it falls far short of the target. According to the IEA, to stay aligned with its Net Zero by 2050, CCUS technologies need to capture 1.66 gigatons of CO2 (Gt CO2) per year by 2030 globally, and 7.6 Gt CO2 per year by 2050 to reach net-zero emissions. This means that current and planned capacity of CCUS projects expected in 2030 only accounts for less than 20% of the IEA’s target for 2030. The chart below puts this gap into perspective.

Hover over graph to interact

Given this gap, what more can governments and industry around the world do to rapidly scale up CCUS capacity to meet this target over the next decade? The IEA outlines four high-level priorities:

  1. Creating the conditions that make private investment in CCUS more commercially attractive. Policymakers can achieve this by attaching value on CO2 emissions, providing funding support for capital and operating costs for early projects, and allocating risks across the public and private sectors.
  2. Facilitate the development of CCUS hubs with shared CO2 transport and storage infrastructure. Identifying opportunities for CCUS deployment in specific industrial regions and establishing a business model for carbon transport and storage infrastructure, will go a long way toward this goal.
  3. Identifying CO2 storage. The first step would be to characterize and assess geological CO2 storage around the world. The second is to establish a robust legal and regulatory framework around CO2 storage. Lastly, a concerted campaign to support public awareness will ensure that the general public understands and accepts CO2 storage technology.
  4. Boosting innovation to reduce costs and increase the availability of critical technologies. This can be done through public-private partnerships in R&D and increased funding to revamp innovation in key CCUS applications (especially heavy industry, CO2 use for synthetic fuels, and carbon removal).

The policy support in North America, Europe and elsewhere mentioned above are instances of governments working toward meeting these priorities. But there are additional policy and technological developments that promise to accelerate growth faster than projected in this report. 

The US Environmental Protection Agency recently proposed rules that would require power plants to capture or otherwise reduce their carbon emissions. Technological innovations are taking place in chemical absorption systems that can increase CO2 capture rate. The International CCS Knowledge Centre’s feasibility study found that retrofitting existing power plants with CCUS can be cost-competitive, suggesting that the barriers for power plant operators to build retrofit capture facilities may be lower than we assume today. All of these developments point toward the possibility of more rapid CCUS deployment than the IEA dataset projects. 

Technologies to capture carbon from the atmosphere or from point sources are integral to the net zero roadmap. The key take-away is that the business case for CCUS is getting stronger each year as policymakers and investors support its development as a necessary climate solution. Yet, much more rapid deployment is necessary if we are to meet emissions targets to stabilize the climate by mid-century. As North America and Europe are set to experience accelerated growth in CCUS capacity, they may act as the catalysts for policymakers and project developers in other regions to also scale up their CCUS capabilities. 

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