Solar Marketing Mistakes That You Can Fix

David Ganske
January 2, 2020

It’s no secret that the solar industry has grown at a furious pace over the last decade. Jobs are up 159% from 2010 to 2018 and installed capacity stood at a whopping 2.6 gigawatts for the third quarter of 2019.

Despite this growth, some firms are struggling in a competitive environment to maintain revenue certainty. This is especially the case for commercial and industrial (C&I) solar companies as installed capacity has actually decreased 6 percent during the last year of available data.

Solar companies can and should do better by learning from other industries and embracing proven marketing strategies to fix what they’ve been doing wrong or poorly for years. Plus, other clean energy segments like electric vehicle infrastructure and energy storage can learn from the missed opportunities of the solar industry.


Lack of Sales Promotions

Don't give away the whole (solar) farm, but at least do something to get a customer to move more quickly to a buying decision.

The Status Quo

It’s incredible how little promotion there is in the solar industry. The business-as-usual approach is to present a standard value proposition to customers that includes electricity cost savings and sustainability benefits, such as renewable energy credits and carbon savings.

What’s lacking is a strategy to create sales promotions and special offers to drive customers closer to a buying decision. Promotions and special offers are commonplace in business to consumer (B2C) marketing around us every day. Here are some examples:

“Get 20 percent off if you purchase by the end of the month.”
“Buy two pairs of shoes, get one free.”

Business to business (B2B) marketing can use sales promotions as well to effectively push a customer into a sale. The solar industry’s issue is that instead of sales promotions, companies are using policy and incentive deadlines as promotions. Here’s what it looks like:

“Sign a PPA by the end of 2019 to get the full federal ITC.”
“Purchase rooftop solar now to get the full utility incentive.”

These promotions are tremendously successful across the industry, but they fall short in creating any type of differentiation for one company over another. It’s simply a race to the finish to get customers before a given deadline and it doesn't align with any long-term strategy.

Plus, they can alienate potential customers that are early in the buying process and not ready to sign so quickly.

Over time, potential customers will tire of the same message and simply wait until they are ready. If solar costs are declining so much over time, why is a particular incentive such a big deal?

Ideas for Improvement

The good news is that any business can brainstorm sales promotions that create differentiation and drive a customer toward contract signing. You might even be able to up-sell and cross-sell through the process! Here are some examples:

“Sign by the end March to get a free electric vehicle charger for each megawatt of solar.”
“Penny pinch after the holidays. Take a penny off your solar rate through February.”

Overall, the goal of a promotion is to get the sale made. The degree to which you are able to promote a particular benefit or advantage for a customer will depend on your product margins and capacity to execute on the promotion when it succeeds.

Benefits of Sales Promotions

  • Increase sales velocity
  • Differentiate your business
  • Lower reliance on policy-based promotions


No Product Differentiation

It's currently a scramble to sell the same thing.

The Status Quo

The latest Solar Jobs Census from The Solar Foundation suggests that there are nearly 14,000 establishments in the solar industry today. That’s an incredible number of manufacturers, developers, consultants, and more that drive the industry forward.

It’s inevitable that some of these firms will stand out from the pack. Some may have the most innovative or beautiful products. Others might have the lowest price or the best financing rates. Outside of these superlatives, however, there is still an opportunity to secure a competitive advantage through product differentiation.

Solar's Standard Features

Buyers are more educated than ever before, so features that were once innovative in the market are no longer exceptional. This makes the sales process much more difficult because buyers hold the bargaining power to push for more concessions from solar businesses. Information is also readily available, and customers can research contract terms and common pitfalls.

Whether it’s residential or commercial, wind or solar, here are the standard features buyers now expect at a bare minimum:

  • 100% renewable energy procurement
  • Price per kilowatt-hour below existing utility rates
  • No upfront cost or cheap financing
  • Renewable energy credits (RECs) or their value in a lower rate

Because these are minimal expectations now in the marketplace, they are no longer differentiating factors. If no differentiating factor exists, then it becomes a race to the bottom on price.

Ideas for Improvement

So what can a renewable energy provider do to differentiate itself? The answer will be different for every business, but each one can follow an innovation or design thinking process to find solutions.

Here are some examples of potential product differentiation:

Membership Access for Preferred Rates: Millions of people join AAA (American Automobile Association) for the peace of mind of emergency roadside assistance. On top of that main offer, they also provide a seemingly endless array of benefits like hotel discounts, identity theft protection, free rental car days, and much more. Any business can create a suite of benefits like AAA to provide even more value for customers.

Strategic Partnerships: There are a number of complementary products on the market today for solar, wind, electric vehicle charging, lighting, heating and air-conditioning, and more. In fact, these can be complimentary products in themselves! What if a residential solar company also did energy audits and retrofitted the lighting of a customer’s home for a package rate? Some companies are likely doing this already to cross-sell to their customers.

There’s no silver bullet to product differentiation and it can take a lot of hard work to get it right.  Some things to consider toward how your business can differentiate itself across a number of product categories include:

  • Quality and durability
  • Design and form
  • Service and customer experience
  • Features and functionality
  • Customization
  • Pricing

Once you have an idea of how you can differentiate, then you can develop your own strategic positioning (i.e. customer messaging) to connect with your existing and future customer base to ensure that you are meeting their needs.

Benefits of Product Differentiation

  • Increase brand loyalty and equity
  • Build a competitive advantage
  • Meet customers' needs with your products and services


Limited Customer Experience

If you engage with your customers after the project is complete, they will thank you for it over the long run.

The Status Quo

The Power Purchase Agreement created a solar power boom over the last decade by allowing customers to procure electricity on a per kilowatt-hour basis with little or no upfront cost or investment.

The downside with this model is that it doesn’t reward companies for a positive customer experience. Terms are typically 20 or more years in length so there is little incentive for companies to engage customers over the long term. In other words, the solar company sells the deal, installs and delivers electricity, and then moves on to the next customer.

This issue is exacerbated because projects are sometimes sold and flipped several times; meanwhile, the customer no longer knows who actually owns the solar array on their property.

Moreover, sales teams lose contact with the customer over the years and then must start from scratch to re-sell a customer with more than one property or location. Another downside of this issue is the lack of a solid base of references for use in future sales efforts.

Ideas for Improvement

There are easy ways for solar companies to provide a more long-term customer experience. Here are some ideas:

Customer Newsletter: Simply sending a scheduled email with related content and news or even a newsletter in the mail can do wonders to keep your company top of mind. You can even use this as an opportunity to up-sell and cross-sell over time.

Branded Monitoring: Depending on the monitoring platform that your customer uses, you might be able to integrate your branding. This is the place customers go when they are curious about their system’s production.

Customized Updates: Just before the holidays, Arcadia sent a customized email to all customers that translated their electricity production into an offset for cookies! It’s fun and ties their choice to real impact, even if it is measured in a unique way.

Benefits of Customer Experience Investment

  • Increase brand awareness and stickiness
  • Future up-sell and cross-sell opportunities
  • Engaged customers for references and testimonials


Reliance on RFPs

Responding to too many RFPs can be taxing on your bottom line and your employee morale.

The Status Quo

Customers of big infrastructure projects love the benefits of running a Request for Proposal (RFP) process to find the best vendor for a given good or service. Some customers, especially public entities, are even required to run an RFP to work with a vendor on projects of a certain size.

When a big customer releases an RFP, it doesn’t take more than a few minutes for mouths to water. It’s too good to be true, right? Yes, it likely is and that is why you should avoid the pitfalls of responding to RFPs.

Here are some common consequences of relying on RFPs for new business:

Wasted Time and Money: This is clearly the biggest consequence. Pages of requirements, tens of engineering schematics, legal reviews, number crunching, sales pitching, proposal creation, printing, shipping, and much more can put a huge strain across your entire business. Is it really worth it?

Low Pricing (and Margins): Customers want the lowest price possible for a good product and that’s why they released the RFP. Sales teams know this and will try to push pricing down as far as possible to win the proposal. Don’t forget that if you win, you’ll need to actually build the project and that might be a tough pill to swallow.

It might be “baked”: A baked RFP is one that already has an incumbent winner. Maybe the RFP issuer is a repeat customer of your competitor. It’s also possible that your competitor has been working with the customer for months to try and sell outside the RFP process. If this is the case, it will be an uphill battle to win.

Employee Stress: All businesses have deadlines and all employees are under stress at some point during their jobs. RFPs are especially taxing on employee health because there are always more of them. Remember finals week in college? Working on RFPs can feel like it’s going through a week of finals every single week of the year.

Ideas for Improvement

Does this mean that you shouldn’t respond to any RFPs? Likely no, but your decision should follow a strict rubric that keeps all members of your team on the same page. The key word is strict. There will always be exceptions to the rubric. Always. The key is to stand firm.

Here are some ideas to mitigate bad RFP consequences:

  • Set a margin threshold
  • Create a minimum timeframe to respond
  • Limit responses to key segments or products

Once you limit RFP responses, your business can turn that focus to direct sales efforts to close deals outside of the RFP process. Then, you will be able to turn the consequences of RFPs around to create organizational benefits.

Benefits of Reduced Reliance on RFPs

  • More time for direct sales efforts
  • Higher project margin potential
  • Better employee morale and culture


Poor Content Marketing

Effective articles or content (1) address an issue in the market today, (2) show detailed solutions, and (3) are not sales pitches.

The Status Quo

Content Marketing has exploded across the internet over the last decade. There is a plethora of information available about any imaginable topic. We can all learn by simply clicking on a social media post or searching Google.

This also means that we get bombarded every day with emails and posts about the latest trends, advice, news, and so much more. In turn, we weave through the noise of all this information to click on just a small fraction of items that cross our newsfeed and inboxes.

The solar industry has started to embrace content marketing as the market gets more competitive. Simply put, companies see it as a way to get to a customer first and generate more leads, but there is much more to it than that. What makes the state of solar content marketing poor is that it is can come across as too pushy or as a sales pitch.

Ideas for Improvement

Joe Pulizzi, the author of Epic Content Marketing, had the following observation that I found useful:

“We have found that the biggest obstacle is in the ‘why’? – helping our teams to understand that if we think and act like a publisher, we will create more of the content our customers are looking for. And less of the content they ignore.”

Clean energy businesses can easily follow this approach to provide more useful content. Give the customers what they want. What do they care about? What issues are they facing?

One company that stands out from the crowd for its content marketing is REC Solar. They have a number of articles that elevate the company as a thought leader in the space while also providing information on how customers can solve their issues related to power reliability and clean energy procurement. Here are a few examples from their blog:

  • "Energy Demand Charges Explained: What They Are and Why You Should Care"
  • "Microgrids Mitigate the Impact of Public Safety Power Shut-offs & Grid Outages"
  • "RE100: How to get to 100% renewable energy"

Again, these articles are effective because they (1) address an issue in the market today, (2) show detailed solutions, and (3) are not sales pitches.

Here are some recommendations to ensure that your content succeeds.

  1. Focus on customer needs and issues; not yours
  2. Aim for high quality and detailed content
  3. Create a plan and content schedule
  4. Don’t write a sales pitch

If you stay on schedule and continue to produce high quality content that addresses your customers, your business stands to gain over time.

Benefits of Effective Content Marketing

  • Elevate your brand as a trusted advisor
  • Earn your customers' trust
  • Generate more leads and sales wins

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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.


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.

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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.

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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.

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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.

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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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