The Rise of Community Solar Explained: A Data-Driven Analysis of the New York Market
August 4, 2021
Owing to supportive policy and lucrative incentives for developers, community solar capacity has seemingly grown exponentially over the previous 5-10 years. In New York State in particular, it now makes up the lion’s share of new distributed generation capacity entering investor-owned utilities’ interconnection queues, or list of generators set to come online in the near future.
However, why have we not seen corresponding growth in on-site solar? After all, there is no shortage of incentives for residential rooftop solar, and rooftop solar capacity undoubtedly furthers the state’s policy goals. Is it merely limitations of the rooftop model, or is there more to the story? The nuances behind New York State’s unprecedented community solar capacity uptake – and its established dominance over the rooftop solar model of distributed generation in the state – deserve a more nuanced look.
The community solar business model: improved access to clean energy
Across many U.S. states, policymakers have pursued rooftop solar incentive programs to help meet ambitious renewable portfolio standards and fight to mitigate the worst effects of rising global temperatures. The obvious value proposition here – apart from offset grid emissions – is that homeowners and businesses get to save significantly on their utility bills.
However, installing solar panels on-site is not possible for all residential and commercial customers. Even after incentives, the upfront cost of on-site solar can reach tens of thousands of dollars for a household, making it financially inaccessible to a large portion of the population. Moreover, the rate of home ownership across the United States stood at just 65.8 percent at the end of 2020 according to the U.S. Census Bureau, meaning that as many as 35 percent of households lack the agency to install rooftop solar in the first place.
Many buildings also face technical issues in terms of either rooftop space, shading from nearby trees or buildings, or low annual “irradiance” (i.e. the amount of useful light energy from the sun that can be converted into electricity). These issues make rooftop solar less feasible for many homeowners and businesses.
Recent policy support for community solar aims to directly address these issues. Sometimes referred to as “community solar gardens” (CSG) or “community distributed generation” (CDG), these solar projects are built similarly to traditional, free-standing utility-scale solar farms. The only difference is that they operate on a much smaller scale.
Instead of selling electricity to a customer via a power purchase agreement (PPA), community solar installations typically interconnect directly to the distribution network and offer subscriptions to local homes and businesses, who in turn receive credits on their utility bill. This makes the benefits of clean, “behind-the-meter” solar electricity significantly more accessible.
Community solar dominates distributed solar uptake in New York
New York is already a clear leader in community solar adoption. NY-Sun, the state’s pioneering solar incentive program, has provided robust project revenue streams for developers of distributed solar since 2012.
Key among these is the Value of Distributed Energy Resources (VDER), or “value stack”, approach to compensating distributed electricity generation. Since VDER’s inception in 2017, solar projects have received a level of compensation that is determined by a “stack” of metrics. The stack includes traditional metrics, such as “energy” and “capacity”, but also compensates projects based on their “environmental” and “demand reduction” value. So far, this has resulted in strong project economics for developers of distributed renewable energy in the state. The VDER tariff also includes a specific component for community solar projects – the “Community Adder”.
Despite strong incentives, the extended $111 million budget from 2020 has already been exhausted because of community solar's popularity among developers and subscribers.
From a strong market to exponential growth
In 2016, 227 of 463 megawatts (MW) of distributed solar capacity entering utilities’ interconnection queue pipeline was community solar. This represented 49 percent of all new capacity, a figure that was remarkable at the time because it came only a year after the state’s very first community solar project was approved. However, this was far from the end of the story.
Figure 1: New Solar Capacity Added to Interconnection Queue - Community Solar vs. Customer-Sized - 2016
By 2020, community solar had completely taken over the market for distributed generation across the state. Last year, a whopping 2,128 of 2,329 MW of distributed solar added to the queue was community solar – over 91% of all capacity.
Figure 2: New Solar Capacity Added to Interconnection Queue - Community Solar vs. Customer-Sized - 2020
Indeed, while annual capacity of traditional “behind-the-meter” rooftop and other distributed solar approved in the queue has remained relatively constant, community solar as a share of capacity has ballooned. Community solar now dominates distributed solar in capacity terms, and may even be on its way to rivaling traditional, front-of-the-meter utility scale solar farms.
Of course, it is important to note that interconnection queues are merely a “snapshot” of future generation resources. Projects can take years to develop, and some simply never reach completion. While it is likely that most of this capacity will come online within the next few years, challenges may lie ahead for developers.
A second wave of community solar dominance?
One might think that as incentives run out and the community solar market begins to saturate, the rate of new community solar capacity in the New York interconnection queue would begin to slow. However, exactly the opposite has happened.
In April 2021, utility interconnection queues saw a staggering 378 MW of community solar capacity enter the pipeline, by far the highest monthly figure in the state’s history. Hardly an anomaly, this was followed by another remarkable 370 MW in May 2021. To put these figures into perspective, the nearly 750 MW combined capacity from these two months is equivalent to more than 10 percent of New York’s entire state goal of 6 gigawatts (GW) of installed solar by 2025. It’s worth reinforcing that community solar is a form of distributed generation, as opposed to traditional, megawatt-scale solar farms.
So, why is this happening?
One possible explanation for the dominance of community solar could lie in the nature of how stakeholders perceive these incentives. Community solar is developed similarly to utility-scale solar farms in project finance terms, with monetary credits exchanged for each kilowatt-hour of electricity. Similar to a power purchase agreement (PPA) model, community solar developers monetize the credits by selling subscriptions to households (subscribers).
Renewable energy developers with advanced financial models are far more likely to understand how various incentives can increase returns on their investment in a community solar project, while a home or small business owner is less likely to have the knowledge or resources to determine how such incentives for rooftop panels will increase their long-term savings. There is also a well-known “myopia” among the general public towards clean energy investments with long payback periods, making community solar subscriptions far less risky than installing rooftop panels.
In addition, as community solar developers require customer subscriptions to earn revenue from credits, marketing campaigns are paramount. Because rooftop solar and community solar subscriptions are effectively direct substitutes, increased community solar adoption is a form of market “cannibalization” of on-site rooftop solar. The more households that subscribe to community solar, the fewer rooftops there will be for customer-sited panels.
Another reason could be the state's enhanced focus on environmental justice and equity in the energy transition, recently enshrined in the Community Leadership and Climate Protection Act (CLCPA). Despite the environmental benefits, a common criticism of traditional rooftop solar programs is that they are regressive in nature. If only higher-income households can bear the upfront cost burden of rooftop solar, and thus reap the benefits of distributed generation, low-income households not only miss out on bill savings from solar, but also risk seeing increased tariffs as utilities spread their rate base across increasingly fewer customers – a concept known as the “utility death spiral”.
Community solar, in turn, removes the upfront cost barrier and thus allows low-and-moderate income (LMI) customers, including non-homeowners, to save on their bill by means of distributed generation while largely mitigating the rate base issue. As the CLCPA seeks to ensure that the distributional impacts of the transition to a low-carbon economy do not unfairly fall onto low-income households, it is unsurprising to see the state adopt further policy to support progressive distributed generation business models like community solar. The forthcoming LMI CDG Adder is another example of this trend.
A period of uncertainty
In spite of these positive trends, developers continue to voice their concerns as to whether state support is sufficient for future community solar market growth in New York. While the state has recently announced new, supportive policies, including the above-mentioned LMI CDG Adder, many feel that these are insufficient to take over the vital role that the Community Adder played as a project revenue stream. Evidently, policy support will prove critical to the future direction of the market, and lack of it may not only lead to a stagnation of new capacity entering the pipeline, but also to the development of existing projects being put on hold.
Ironically, the recent 2021 boom may therefore be indicative of a market slowdown. As the CDG Community Adder incentive inched closer to exhaustion in spring 2021, developers were rushing to get their projects into the queue by paying 25 percent of the interconnection cost required to receive the last of the incentive. The unprecedented growth in pipeline capacity in April and May of this year might be a sign of an end to the seemingly unstoppable growth of New York’s community solar industry, rather than future market expansion.
The future of community solar
Like any solution to a complex problem – be it rising global temperatures, energy affordability, or equity in the energy transition – community solar enjoys both strengths and weaknesses. On one hand, community solar lacks the scale of traditional, front-of-the-meter solar farms. On the other hand, it reaches an economy of scale that is far more effective than smaller, more expensive rooftop solar systems. Plus, it solves an equity issue by ensuring that cost savings from the energy transition are also enjoyed by disadvantaged households and renters.
The result is a “middle-ground” approach that, arguably, maximizes the trade-off between efficient grid decarbonization and equitable distribution of the impacts of the energy transition. Time will tell if community solar's time to shine will soon end in New York. In the meantime, many more households will be able to subscribe to a local solar farm.
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:
Natural gas processing: CCUS is used to capture carbon emissions from purifying raw natural gas to produce pipeline quality natural gas.
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.
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.
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.
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.
Other industry: CCUS is applied to industrial facilities other than iron and steel, such as aluminum smelters, pulp and paper mills, etc.
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.
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.
Announced Avg. Capacity (Mt CO2/yr)
Oil and gas
Oil and gas
Oil and gas
Oil and gas
Oil and gas
Oil and gas
Mitsubishi Heavy Industries
Open Grid Europe (OGE)
Oil and gas
Oil and gas
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:
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.
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.
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.
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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