REGIONAL OVERVIEW

OVERVIEW

Canada’s 2022 Federal Budget strongly supports CCUS via an investment tax credit. The tax credit rate is 60 per cent for direct air capture projects, 50 per cent for all other carbon capture projects, and 37.5 per cent for transportation, storage, and use.

The US enacted the historic Inflation Reduction Act (US) of 2022, which includes enhancements to Internal Revenue Service section 45Q and US$369 billion in funding for climate and energy.

Infrastructure Investment and Jobs Act includes over US$12 billion to be spent on CCS over the next five years.

Brazil continues progressing toward its goal of injecting 40 million tonnes of CO₂ by 2025.

CANADA

POLICY

In November 2021, the Province of Saskatchewan announced the eligibility of pipelines transporting CO₂, whether for CCUS or enhanced oil recovery (EOR), for the provincial oil infrastructure investment program (OIIP) (1). The province of Alberta also announced in the fourth quarter of 2021 the Alberta Hydrogen Roadmap, outlining Alberta’s intention to become an international leader in clean hydrogen. CCUS is key in the roadmap (2). In the first quarter of 2022, the government of Canada released its 2030 Emissions Reduction Plan (3). Canada’s goal is to position its industries to be green and competitive, which includes developing a CCUS strategy to incentivise the development and adoption of this technology. The plan provides a roadmap for how Canada will meet its enhanced Paris Agreement nationally determined contributions (NDC) target to reduce greenhouse gas emissions to 40–45 per cent below 2005 levels by 2030 across the Canadian economy, and puts the country on a path to achieving net-zero emissions by 2050.

Figure 10: Carbon Pricing Across Canada

Following the release of the plan, Canada issued its 2022 federal budget, which strongly supports CCUS via an investment tax credit (4). The tax credit rate is 60 per cent for direct air capture projects, 50 per cent for all other carbon capture projects, and 37.5 per cent for transportation, storage, and use from 2022 through 2030. After that, from 2031 to 2040, the tax rates drop to 30 per cent, 25 per cent, and 18.75 per cent, respectively. The tax credit can be claimed by businesses that, beginning 1 January 2022, incur eligible expenses related to purchasing and installing equipment used in a suitable new project that captures CO₂ emissions. Companies can claim the tax credit only if they agree to abide by a validation and verification process, prove that the project meets CO₂ storage requirements, and produce a climate-related financial disclosure report.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

In December 2021, Canada’s Prime Minister, Justin Trudeau, directed Cabinet ministers to move toward mandatory climate-related financial disclosures as part of Canada’s strategy to transition to net-zero by 2050 (5). The 2022 Budget included this mandatory reporting requirement across a broad spectrum of the Canadian economy, based on the international Task Force on Climate-related Financial Disclosures (TCFD) framework (6).

OTHER PROVINCES – ONTARIO

Hard-to-decarbonise sectors of Ontario’s economy, such as steelmaking and cement, do not have obvious paths to a carbon-neutral future. In these sectors, CCS likely provides the most viable decarbonisation option. Therefore, the government is evaluating CO₂ storage as a decarbonisation option. The likely storage area will be in the western part of the province in saline aquifers. But existing laws prohibit storage, so the province must revise the governing statutes by narrowing the prohibition on the injection of CO₂ into a well regulated under the Oil, Gas, and Salt Resources Act (Canada), and by enabling authorisation to store carbon on Crown land under the Mining Act (Canada) (7).

PROJECTS

A large percentage of CCUS-specific action and strategy lies in the provinces of Alberta and Saskatchewan. Alberta is developing Canada’s first carbon storage hubs to help cut climate-warming emissions by permanently sequestering CO₂ underground. In March 2022, the province selected six proposals to move forward with developing Canada’s first carbon storage hubs servicing Alberta’s industrial heartland region near Edmonton. The selected proposals came from: Enbridge Inc.; Shell Canada Limited; ATCO Energy Solutions Ltd; Suncor Energy Inc.; Wolf Carbons Solutions; Bison Low Carbon Ventures; Enhance Energy; and a joint-venture project from TC Energy and Pembina Pipeline Corp. (8,9). Alberta’s abundance of geological formations for CO₂ storage makes it an ideal location to develop a series of CCUS hubs (10).

Entropy Inc. announced that it has begun commissioning its first post-combustion CCS project at the Glacier Gas Plant in Alberta. Permanent geologic carbon injection will likely start during the summer of 2022. The project is considered to be the world’s first commercial project to capture and store carbon dioxide from the combustion of natural gas (11).

The government of Saskatchewan’s Ministry of Energy and Resources and others will support a study, developed by the Transition Accelerator and the Saskatchewan Research Council, to provide investors with an analysis of commercial-scale hydrogen opportunities and synergies with CCUS infrastructure in Saskatchewan.

UNITED STATES

POLICY

The national climate goals of 100 per cent clean electricity by 2035 and achieving a net-zero emissions economy by 2050 involve significant reliance on CCS. Through enacted legislation in late 2021 and during 2022, the US committed to record investments into carbon capture technologies, while also addressing environmental justice concerns.

LEGISLATIVE

In November 2021, the US enacted the Infrastructure Investment and Jobs Act (IIJA) (US), which included over US$12 billion to be spent on CCS over the next five years. The legislation includes funding for CCUS research, development, and demonstration, CO₂ transport and storage infrastructure, carbon utilisation market development and four regional direct air capture with carbon storage (DACCS) hubs, and DAC Technology Competition (12).

The US enacted the bipartisan Creating Helpful Incentives to Produce Semiconductors for America fund in 2022, or the CHIPS Act (US). CHIPS provides funding for increased carbon removal research, development and demonstration (13).

The US also enacted the historic Inflation Reduction Act (US) of 2022, which includes enhancements to Internal Revenue Service section 45Q. The Act increases the credit amount per tonne for entities satisfying prevailing wage and apprentice requirements (14,15). The legislation also extends the start of construction timing to the end of 2032; lowering capture thresholds, including direct pay; and expanding transferability.

POLICY GUIDANCE AND ANNOUNCEMENTS

The Council on Environmental Quality (CEQ) issued guidance to promote the responsible development and permitting of CCUS projects. Guidance elements include facilitating federal decision making on CCUS projects and CO₂ pipelines, public engagement, understanding of environmental impacts, and carbon dioxide removal (16). 

The Department of Energy Office of Fossil Energy and Carbon Management (FECM) published its strategy for advancing CCS. The Strategic Vision establishes a framework for making informed carbon management decisions regarding deep decarbonisation and addressing legacy emissions. FECM prioritises justice, labour and engagement; carbon management approaches toward deep decarbonisation; and technologies that lead to sustainable energy (17).

The Pipeline and Hazardous Materials Safety Administration (PHMSA) announced new safety measures for CO₂ pipelines and initiated new rulemaking. PHMSA also issued an updated advisory bulletin addressing issues resulting from geological hazards (18).

The Bureau of Land Management (BLM) issued guidance for CO₂ storage in line with the Federal Land Management Policy Act (US). BLM’s instruction memorandum addressed carbon storage on public lands, including pore space managed by BLM (19).

OFFSHORE STORAGE

The IIJA legislation amends the Outer Continental Shelf Lands Act (US), directing the Department of Interior to develop regulations for establishing a permitting framework for offshore CO₂ storage.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

The Securities and Exchange Commission proposed a rule addressing climate-related disclosures. The proposed rule would require company disclosure on how it plans to attain climate-related targets (such as investing in renewable energy or carbon capture technology). The proposal recognises that CCS will likely have a role to play in the governance of some companies regarding ESG (20).

JUDICIAL

The US Supreme Court issued its decision in West Virginia v United States Environmental Protection Agency (USEPA), a case challenging the 2015 Obama administration’s Clean Power Plan’s (CPP) rule. The court held that the USEPA exceeded its statutory authority under the Clean Air Act (US) in attempting to regulate the nation’s energy sector by adopting the CPP. The court ruled that the agency could not “force a nationwide transition away from the use of coal” (21). The decision limits the USEPA’s ability to regulate greenhouse gases. States will likely use their authority to regulate GHGs.

STATES

Several states are progressing carbon management policies. The California Air Resources Board (CARB) released its Draft 2022 Scoping Plan for comment. The Scoping Plan presents a path for carbon neutrality by 2045, while supporting economic, environmental, energy security, justice, and health priorities. The Scoping Plan calls for the deployment of CCS technology in sectors where non-combustion options are not technically or economically viable for meeting 2045 goals (22).

Several other states have enacted legislation or policies covering CO₂ storage. These include Indiana, West Virginia, and Wyoming. States continue to face permitting concerns where only two states, Wyoming and North Dakota, have primacy for issuing permits under the Underground Injection Control Program, which covers injection wells for geologic storage of CO₂. The existing permitting process can take years. The state of Louisiana has a primacy permit application pending. Texas, Arizona, and West Virginia are in the pre-application primacy application process.

DIVERSE PARTNERSHIPS PROMOTE CCS DEPLOYMENT

Significant momentum for CCS project developments and announcements in various sectors continues. The high level of activity related to CCS project developments is likely due to a number of reasons that include collaboration and partnerships between companies with differing capabilities and requirements in the CCS value chain; policy changes such as enhanced 45Q tax credits; and innovative pipeline service changes from natural gas to CO₂ transport conversions. Examples of some of these innovative projects include:

• Talos Energy, Carbonvert, and Chevron announced an expanded joint venture to develop the Bayou Bend CCS hub, with Talos being the operator (23).
• NEXT Carbon Solutions and California Resources Corporation jointly announced an agreement to explore further the decarbonisation of CRC’s Elk Hills Power Plant. The companies seek to capture and utilise the emissions from the Elk Hills Power Plant for permanent storage in oil-producing reservoirs (24).
• Carbon America will finance and operate systems in Colorado ethanol plants to capture and store underground 95 per cent of CO₂ emissions from two Colorado plants (25).
• Tallgrass plans to convert its Trailblazer natural gas pipeline to transport CO₂ captured from a carbon capture project at an ADM corn processing complex in Nebraska. The 400 mile (644 km) pipeline expands the reach of its Eastern Wyoming Sequestration Hub (26).
• The Red Trail Energy CCS project at its ethanol facility near Richardton, North Dakota, is officially operating. The project is the first in the US to operate under a state-led regulatory authority for carbon storage. Red Trail is advancing the project utilising the 45Q tax credit (27).
• More companies announced support for the massive proposed carbon capture and storage hub in the Houston Ship Channel, bringing the number of companies in the project to 14 (28).
• Occidental will build 70 – 135 carbon capture facilities by 2035. The facilities are expected to each remove as much as 1 Mtpa of CO₂ directly from the atmosphere (29).

DEVELOPMENTS IN BRAZIL

Brazil hosts an operating CCS facility in the Santos Basin where Petrobras continues progressing toward its goal of injecting 40 million tonnes of CO₂ by 2025. Significant policy developments regarding CCS deployment occurred in 2021 and 2022 in Brazil. In addition to updating its NDC, significant legislation was introduced into Brazil’s legislature (30). Bill 1.425/2022 establishes a legal framework for the geological storage of carbon dioxide, addressing pore space property rights, long-term responsibilities and its transfer from private to public agent, the definition of regulatory agencies, and the period of monitoring. (31)

Additionally, Decreto 11.075/2022 establishes the procedures for the preparation of “Sectoral Plans for Mitigation of Climate Change” and sets the National System for the Reduction of Greenhouse Gas Emissions (31).

REFERENCES

1. Speer R. OIl Infrastructure to Support CC. 2021 [cited 2022 Aug 12]; Available from: https://www.saskatchewan.ca/government/news-and-media/2021/november/04/oil-infrastructure-program-expanded-to-support-carbon-capture
2. Government of Alberta. Industrial Energy Efficiency, Carbon Capture Utilization and Storage [Internet]. [cited 2022 Aug 4]. Available from: https://www.alberta.ca/industrial-energy-efficiency-carbon-capture-utilization-and-storage.aspx
3. Government of Canada. 2030 Emissions Reduction Plan. 2022 [cited 2022 Aug 12]; Available from: https://www.canada.ca/content/dam/eccc/documents/pdf/climate-change/erp/Canada-2030-Emissions-Reduction-Plan-eng.pdf
4. International CCS Knowledge Centre. 2022 Federal Budget Signals Strong Support for Carbon Capture Technology in Canada. 2022 [cited 2022 Aug 12]; Available from: https://www.globenewswire.com/en/news-release/2022/04/07/2418981/0/en/2022-Federal-Budget-Signals-Strong-Support-for-Carbon-Capture-Technology-in-Canada.html
5. Mark Segal. Canada Moves Towards Mandatory Climate Disclosure. 2021 [cited 2022 Aug 12]; Available from: 8. https://www.esgtoday.com/canada-moves-towards-mandatory-climate-disclosures/
6. Government of Canada. 2022 Budget: A plan to grow our economy and make our life more affordable. 2022.
7. Government of Canada. Discussion Paper: Geologic Carbon Storage in Ontario. 2022 [cited 2022 Aug 12]; Available from: https://prod-environmental-registry.s3.amazonaws.com/2022-01/Geologic%20Carbon%20Storage%20Discussion%20Paper%20-%20FinalENG%20-%202022-01-04_0.pdf
8. Williams N. Alberta picks six proposal to develop Canada’s first carbon storage hubs. 2022 [cited 2022 Aug 12]; Available from: https://www.reuters.com/business/environment/enbridge-shell-among-projects-picked-explore-developing-canadas-first-carbon-2022-03-31/
9. Cherniak-Kennedy A. The Government of Alberta and the federal government advance the potential development of carbon storage hubs. 2022 [cited 2022 Aug 12]; Available from: https://www.dentons.com/en/insights/articles/2022/april/11/the-government-of-alberta-and-the-federal-government-advance-the-potential
10. Reuters. Factbox: Proposed capital projects relying on Alberta carbon capture and storage build-out. 2022 [cited 2022 Aug 13]; Available from: https://www.reuters.com/business/sustainable-business/proposed-capital-projects-relying-alberta-carbon-capture-storage-build-out-2022-04-05/
11. Entropy Inc. Entropy Announces Commissioning of the First Phase of CCS Project. 2022 [cited 2022 Aug 13]; Available from: https://carboncapturemagazine.com/articles/263/entropy-announces-commissioning-of-the-first-phase-of-ccs-project#:~:text=ADVERTISEMENT-,Entropy%20Inc.,%2C%20effective%20June%2027%2C%202022.
12. Clean Air Task Force. Carbon Management Provision in the Infrastructure Investment and Jobs Act. 2021 [Internet]. [cited 2022 Aug 13]; Available from: https://www.catf.us/resource/carbon-management-provisions-in-the-infrastructure-investments-and-jobs-act/
13. US Congress. Creating Helpful Incentives to Produce Semiconductors for America fund, or the CHIPS Act, of 2022. [Internet]. 2022 [cited 2022 Aug 13]. Available from: https://science.house.gov/imo/media/doc/the_chips_and_science_act.pdf?mc_cid=d904691b73&mc_eid=10a5ff616d
14. Riddle J. Schumer and Manchin’s Inflation Reduction Act Includes Significant Tax Incentives to Combat Climate Change [Internet]. 2022 [cited 2022 Aug 13]. Available from: https://www.kirkland.com/publications/kirkland-alert/2022/08/schumer-manchin-inflation-reduction-act-climate-investment
15. US Senate. Inflation Reduction Act [Internet]. 2022 [cited 2022 Aug 12]. Available from: https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf
16. Council on Environmental Quality. Carbon Capture, Utilization, and Sequestration Guidance. 2022 [cited 2022 Aug 13]; Available from: https://www.federalregister.gov/documents/2022/02/16/2022-03205/carbon-capture-utilization-and-sequestration-guidance
17. Office of Fossil Energy and Carbon Management. FECM’s Strategic Vision: Achieving Net-Zero Greenhouse Gas Emissions. 2022;
18. U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). PHMSA Announces New Safety Measures to Protect Americans From Carbon Dioxide Pipelines Failures After Satartia, MS Leak. 2022 [cited 2022 Aug 13]; Available from: 21. https://www.phmsa.dot.gov/news/phmsa-announces-new-safety-measures-protect-americans-carbon-dioxide-pipeline-failures
19. U.S. Department of the Interior – Bureau of Land Management. National Policy for the Right-of-way Authorizations Necessary for Site Characterization, Capture, Transportation, Injection, and Permanent Geologic Sequestration of Carbon Dioxide in Connection with Carbon Sequestration Projects. 2022 [cited 2022 Aug 13]; Available from: 22. https://www.blm.gov/policy/im-2022-041
20. Securities and Exchange Commission. SEC Proposes Rules to Enhance and Standardize Climate-Related Disclosures for Investors. 2022 [cited 2022 Aug 13]; Available from: https://www.sec.gov/news/press-release/2022-46
21. King & Spaulding. West Virginia v. EPA: The Forecast is Cloudy for Environmental and Agency Regulation. 2022 [cited 2022 Aug 13]; Available from: https://www.kslaw.com/news-and-insights/west-virginia-v-epa-the-forecast-is-cloudy-for-environmental-and-agency-regulation
22. California Air Resources Board. DRAFT 2022 SCOPING PLAN UPDATE MAY 10, 2022. 2022 [cited 2022 Aug 12]; Available from: 22. https://ww2.arb.ca.gov/sites/default/files/2022-05/2022-draft-sp.pdf
23. Talos. TALOS, CARBONVERT AND CHEVRON ANNOUNCE CLOSING OF PREVIOUSLY ANNOUNCED JOINT VENTURE EXPANSION OF THE BAYOU BEND CCS PROJECT OFFSHORE JEFFERSON COUNTY, TEXAS. 2022 [cited 2022 Aug 12]; Available from: https://www.talosenergy.com/investor-relations/news/news-details/2022/TALOS-CARBONVERT-AND-CHEVRON-ANNOUNCE-CLOSING-OF-PREVIOUSLY-ANNOUNCED-JOINT-VENTURE-EXPANSION-OF-THE-BAYOU-BEND-CCS-PROJECT-OFFSHORE-JEFFERSON-COUNTY-TEXAS/
24. NextDecade. NEXT Carbon Solutions and California Resources Corporation Agree to FEED Study. 2022 [cited 2022 Aug 12]; Available from: https://investors.next-decade.com/news-releases/news-release-details/next-carbon-solutions-and-california-resources-corporation-agree
25. Sweet C, Kramer D. Carbon America to Construct, Own and Operate the First Two Commercial Carbon Capture and Sequestration Projects in Colorado. 2022 [cited 2022 Aug 12]; Available from: https://www.businesswire.com/news/home/20220512005336/en/Carbon-America-to-Construct-Own-and-Operate-the-First-Two-Commercial-Carbon-Capture-and-Sequestration-Projects-in-Colorado
26. Reuters. Tallgrass Energy Plans to Convert Natgas Pipeline into CO2 Transport System. 2022 [cited 2022 Aug 12]; Available from: 29. https://pgjonline.com/news/2022/may/tallgrass-energy-plans-to-convert-natgas-pipeline-into-co2-transport-system
27. Red Trail Energy LLC. Red Trail Energy begins carbon capture and storage. 2022 [cited 2022 Aug 12]; Available from: https://ethanolproducer.com/articles/19447/red-trail-energy-begins-carbon-capture-and-storage
28. Klinge N. Proposed Houston CCS hub gains supermajor support. 2022 [cited 2022 Aug 12]; Available from: https://www.upstreamonline.com/energy-transition/proposed-houston-ccs-hub-gains-supermajor-support/2-1-1149392
29. 1PointFive. 1PointFive and Carbon Engineering Announce Direct Air Capture Deployment Approach to Enable Global Build-Out of Plants. 2022; Available from: https://www.1pointfive.com/1pointfive-and-carbonengineering-announce-directaircapture-deployment-approach
30. Government of Brazil. FEDERATIVE REPUBLIC OF BRAZIL Paris Agreement NATIONALLY DETERMINED CONTRIBUTION (NDC). 2022 [cited 2022 Aug 12]; Available from: https://unfccc.int/sites/default/files/NDC/2022-06/Updated%20-%20First%20NDC%20-%20%20FINAL%20-%20PDF.pdf
31. Brazilian Senate. Bill No. 1425, of 2022. 2022 [cited 2022 Aug 12]; Available from: https://www25.senado.leg.br/web/atividade/materias/-/materia/153342

OVERVIEW

The first commercial project was announced in Thailand.

On 25 February 2022, the world’s first shipment of liquid hydrogen in a purpose-built ship, from the port of Hastings in Victoria, Australia, was successfully unloaded in Kobe Japan successfully completing the Hydrogen Energy Supply Chain project.

China’s first million-tonne CCUS project commenced operation.

Japanese shipping companies are increasingly active in liquified CO₂ transportation for CCS, working on shipping technology and demonstration projects. 

Part of the complexity of regional climate ambition is that many Asian economies, particularly those in Southeast Asia, are reliant on fossil fuels to drive their growth. Many also remain home to a substantial portion of the world’s emissions-intense industries, highlighting the necessity of CCS in managing the dual challenge of growth and decarbonisation.

Some notable progress has been made over the past 12 months. Several new projects have been announced, including the first commercial project in Thailand, and institutional momentum is clear as CCS regulations and policy mechanisms have begun to emerge at national and sub-national levels. Collaboration continues to accelerate, with MOUs proliferating across both the private and public sectors. However, three broad barriers to CCS remain across the region to varying extents – geological storage resource data, legal and regulatory frameworks, and incentivising policy.

Figure 11: CCUS Deployment in Southeast Asia in the Sustainable Development Scenario (Source: International Energy Agency 2021) (note: values shown are from the IEA Sustainable Development Scenario; corresponding CCUS deployment levels are generally higher in the Net Zero 2050 roadmap)

MALAYSIA

OVERVIEW

Malaysia, in large part through its well-established oil and gas industry, is positioning itself to be a CCS leader in Southeast Asia. At a Global CCS Institute event in April, a representative from Malaysian national oil and gas operator, Petronas, stated that the national vision was to become an offshore storage hub by the end of the decade (2). MPM Senior Vice President, Mohamed Firouz Asnan, publicly said that “sixty per cent of storage capacity will be allocated to Malaysia – for Petronas and our partners – while the remaining 40 per cent will be made available to other users” (3).

PROJECTS

More information has been released regarding the Kasawari CCS project, located offshore from Sarawak. Linked to the Kasawari Ph2 Field, the project forms part of a strategy to monetise high CO₂ gas resources and part of the organisation’s broader objective of achieving net-zero by 2050. The project seeks to capture approximately 4.5 Mtpa CO₂, beginning in 2025, transported via pipeline 135 km to a depleted reservoir in the M1 field (2).

The second project emerging in Malaysia is the Lang Lebah CCS project. Offshore from Sarawak, Lang Lebah is the largest discovery from PTTEP, Thailand’s national oil operator (4). The reservoir is estimated to contain 17 per cent CO₂, necessitating CCS (5).

POLICY

In September 2021, during the release of the 12th Malaysia Plan 2021–2025, the Malaysian Government committed to achieving net-zero by 2050 ‘at the earliest’, with a commitment to a 45 per cent reduction in emissions by 2030, based on 2005 levels (6). The national commitment, in line with the same commitment from Petronas, highlights a necessary role for CCS for the world’s fourth-largest liqufied natural gas (LNG) producer (7).

In the same plan, the President announced the introduction of a carbon pricing mechanism (6). However, little information has been released as to rates and administration. A national climate change legal framework is expected near the end of 2022. CCUS regulations are believed to be under development.

INDONESIA

OVERVIEW

Indonesia remains a CCS proponent and appears to be a deployment frontrunner in Southeast Asia. Like Malaysia, the broad vision for Indonesian CCS is delivering project-level abatement, while also opening the opportunity for the country to become a storage facility in the region. The Indonesian Government is progressing policy and regulatory development as foreign oil and gas operators drive projects.

PROJECTS

In late 2021, bp announced that the Indonesian oil and gas regulator, SKK Migas, had approved the expansion of the Tangguh LNG project and the development of the Vorwata CCUS project (8). The project, slated for completion by 2026 or 2027, will inject up to 4 Mtpa for incremental gas recovery and permanent storage (9).

Repsol is planning its first injection at its Sakekamang CCS project by 2027, which is estimated to be able to permanently store 2.5 Mtpa.

In May, Pertamina announced it would collaborate with Air Liquide Indonesia to develop CCUS technology at the Balikpapan Refinery Processing Unity, with CO₂ utilised or stored in the Kutai Basin (10). Elsewhere, four organisations, Japan Oil, Gas and Metals National Corporation (JOGMEC); Mitsubishi Corporation (MC); Bandung Institute of Technology (ITB); and PT Panca Amara Utama (PAU), have agreed to conduct a joint study on the production of ammonia with CCS.

POLICY AND REGULATORY DEVELOPMENTS

Indonesia established a taskforce in mid-2021, coordinated by the Ministry of Energy and Mineral Resources, to draft CCUS regulations. The regulations are expected to be disseminated by the end of 2022. The Presidential Regulation 98/201 on the Instrument for the Economic Value of Carbon for the Achievement of the NDC and Control, a carbon pricing mechanism, was meant to launch in early 2022, but has been delayed several times. The mechanism effectively sets up a legal framework for both domestic pricing and trading of carbon and will operate in conjunction with the carbon tax set to be imposed on coal-fired power plants (at US$2.09 per tonne).

AUSTRALIA

PROJECTS — NEW AND UPDATED

Perhaps the most significant development in the Australian CCS project landscape has been the progress of the Middle Arm Sustainable Development Precinct, a natural gas processing and low-carbon manufacturing hub in the Northern Territory. The Middle Arm hub is now in the early planning phases, having received project commitments from the previous federal government, as well as major natural gas operators INPEX and Santos, in the past 12 months.

In November 2021, Santos announced a final investment decision on its Moomba CCS project, which will commence operations in 2024 and inject 1.7 Mtpa (11). Santos entered into the FEED phase in March for the proposed Bayu-Undan CCS project, located offshore from Timor-Leste (12). Bayu-Undan could store up to 10 Mtpa CO₂, acting as a regional storage hub (12).

In April, ExxonMobil, through Esso Australia, signalled it was undertaking pre-FEED studies to determine the potential for a CCS hub in the Gippsland Basin (13). Woodside, BP, and Japan Australia LNG are undertaking feasibility studies for a CCS network on the Burup Peninsula in North-West Australia. (14) Mitsui E&P Australia is assessing the feasibility of commercialising the Mid-West Modern Energy Hub, a natural gas processing and blue hydrogen facility (15).

POLICY AND REGULATORY DEVELOPMENTS

Notably, a new Australian Government was elected in May. The Labor Government has pledged to strengthen baselines for major emitters under the existing safeguards mechanism, effectively meaning that companies will be able to emit less each year or else pay for offsets. Significantly for CCS, deployment may be spurred in hard-to-abate industrial sectors as a result.

In late 2021, a CCS methodology was included under the Emissions Reduction Fund, allowing projects to generate Australian carbon credit units (ACCU) and thereby generate income (16). In June, the Minister for Climate Change and Energy, Chris Bowen, announced an independent review into the Emissions Reduction Fund, highlighting CCS among several recently adopted methodologies for specific scrutiny.

In March, the Western Australian Minister for Mines and Petroleum, Bill Johnston, approved the drafting of the Greenhouse Gas Storage and Transport Bill, which will underpin the regulatory regime for CCS in the state (17).

JAPAN

OVERVIEW

A reliance on energy imports and limited CO₂ storage capacity, coupled with a net-zero by 2050 commitment and associated decarbonisation targets, has driven Japan to act as a convenor for climate and energy in the region. In line with this, Japan continues to promote bilateral and multilateral CCUS collaboration in the Asia-Pacific region.

PROJECTS AND NOTABLE UPDATES

Japanese shipping companies are increasingly active in liquefied CO₂ transportation for CCS. Japan CCS is working with Kansai Electric Power on a demonstration project to transport CO₂ from Kansai Electric Power’s coal-fired power complex in Kyoto to the Tomokomai CCS project, commencing operation in 2024 (18). NYK and the Knutsen Group have established a new business for liquefied CO₂ transportation and storage; Mitsubishi Shipbuilding is working on the construction of a CO₂ demonstration ship; and MOL and Petronas have signed an MOU on liquefied CO₂ transportation for CCUS (19–21).

In January, the Suiso Frontier, the world’s first liquefied hydrogen carrier, arrived in Victoria, Australia to transport hydrogen to Japan (22). The shipment marked an important milestone for the Hydrogen Energy Supply Chain (HESC), a coal gasification hydrogen pilot project. If the HESC moves to the commercial phase, captured CO₂ will be stored at the CarbonNet CCS project. Elsewhere in Australia, INPEX is playing a leading role in the development of the Middle Arm CCS hub in Darwin.

J-POWER and ENEOS have announced a feasibility study for a domestic CCS project, with a potential final investment decision (FID) projected for 2026 and subsequent commencement in 2030 (23). The project aims to decarbonise oil refining and coal-fired and biomass-fired plants and stored CO₂ in western Japan.

POLICY AND REGULATORY DEVELOPMENTS

A new strategic energy plan was approved by Cabinet in late 2021, mapping a pathway toward a 46 per cent greenhouse gas emissions reduction by 2030 (based on 2013 levels) and carbon neutrality by 2050. Hydrogen is expected to play a key role in achieving the plan. The Ministry of Economy, Trade and Industry has drafted a long-term CCS roadmap, aiming to store 120–240 Mt CO₂ offshore from Japan by 2050.

CHINA

OVERVIEW

CCUS has been the subject of increasing attention in China over the past 12 months. Research has highlighted the potential role for CCUS under the carbon neutrality target, suggesting the technology suite may account for reductions of 0.6–1.45 billion tonnes of CO₂ per annum by 2050 and 1–1.82 billion tonnes per annum by 2060 (24).

Figure 12:  Potential CCUS deployment China (24)

PROJECTS

Major state-owned energy companies are leading project development. China’s first integrated million tonne (1 Mtpa) CCUS project, developed by SINOPEC, came into full operation at the end of August 2022. The captured CO₂ from Qilu Petrochemical plant is transported to the Shengli Oil Field for Enhanced Oil Recovery. Huaneng has commenced construction on a 1.5 Mtpa coal-fired power CCUS project in the Ordos basin, widely anticipated to be the world’s largest coal power CCUS project. CNPC plans to begin injecting up to 5 Mtpa CO₂ from 2025. CNOOC is starting China’s first CO₂ offshore storage in the mouth of the Pearl River. On June 27, ExxonMobil, Shell and CNOOC signed a MoU with Guangdong Provincial Government to evaluate a world-scale hub project in Dayawan Petrochemical Industry Park. Additionally, several private companies, including Guanghui and Hengli, have announced CCUS projects.^[1]

POLICY AND REGULATORY DEVELOPMENTS

In 2020, China announced its 30/60 climate policy framework, outlining a goal of achieving carbon peaking by 2030 and climate neutrality before 2060.^[2] The 1+N framework lays some of the groundwork for CCUS policy directions. The People’s Bank of China launched a carbon emissions reduction facility, a structural monetary policy instrument providing financial institutions with low-cost loans to support decarbonisation projects, in which CCUS was included (25). Despite progress and some policy documents outlining a role for CCUS, lack of a policy-based, sustainable business model for CCUS remains a deployment hurdle.

REST OF ASIA PACIFIC

THAILAND

In June, Thailand’s national oil and gas operator, PTTEP, announced the country’s first CCS project^[3] (26). The project, located at the Arthit offshore gas field, has entered FEED and is expected to commence operations in 2026. PTTEP has also signed an MOU with Japan’s JGC Holdings and INPEX on the Thailand Carbon Capture and Storage Initiative, a feasibility study investigating the potential for deployment across oil and gas, hard-to-abate industrial sectors, and power generation (27).

SINGAPORE

Shell and ExxonMobil (the latter through its Low Carbon Solutions business unit), both with oil refining and petrochemical manufacturing plants in Singapore, are investigating regional CCS hubs to capture CO₂ and transport it to nearby storage (28). Capture could span petrochemicals, biofuels, refineries, and hydrogen development (28).

THE REPUBLIC OF KOREA

Korean energy company, SK E&S, signed an MOU with Australia’s Santos to support and collaborate on the development of CCS projects and hubs in Australia and at Bayu-Undan (29). Korea’s domestic petrochemical industry continues to investigate and deploy CCUS at feasibility study and pilot demonstration levels.

FOOTNOTES

[1]. Guanghui Industry Investment is mainly engaged in automobile dealership, energy, real estate, and logistics businesses. Hengli Group produces and sells crude oils, aromatics, purified terephthalic acids, polyester, and other products. Hengli Group also produces textile materials.

[2]. “30/60” refers to current China’s climate targets – peaking its emissions before 2030 and achieving carbon neutrality by 2060. The “1” refers to the “guiding opinions” that set out the overarching principles of all forthcoming climate policies that aim to facilitate China’s 30/60 goal. The “N” stands for a combination of sub-plans, starting with the Action Plan for Carbon Dioxide Peaking by 2030.

[3] The Arthit project was added to the database after project number and capacities were finalized for this report and consequently this project is not included in those totals.

REFERENCES

1. PwC. Code Red – Asia Pacific’s Time to Go Green [Internet]. 2021 Nov [cited 2022 Jul 20]. Available from: https://www.pwc.com/gx/en/asia-pacific/net-zero/asia-pacific-code-red-to-go-green.pdf
2. Global CCS Institute. The Emergence of CCS in Malaysia and Indonesia [Internet]. Global CCS Institute. 2022 [cited 2022 Jul 1]. Available from: https://www.globalccsinstitute.com/resources/multimedia-library/the-emergence-of-ccs-in-malaysia-and-indonesia/
3. Battersby A. Malaysia revs up carbon, capture and storage developments [Internet]. Upstream Online. 2022 [cited 2022 Jul 1]. Available from: https://www.upstreamonline.com/field-development/malaysia-revs-up-carbon-capture-and-storage-developments/2-1-1159919
4. PTTEP. PTTEP confirms its largest-ever gas discovery with Lang Lebah-2 appraisal well offshore Malaysia [Internet]. PTTEP Website. 2021 [cited 2022 Jul 20]. Available from: https://www.pttep.com/en/Newsandnmedia/Mediacorner/Pressreleases/
5. Jacobs T. What You Should Know About Offshore and Sour Gas CCS: High Cost, Leak Mitigation, and Transportation [Internet]. Journal of Petroleum Technology. 2022 [cited 2022 Jul 4]. Available from: What You Should Know About Offshore and Sour Gas CCS: High Cost, Leak Mitigation, and Transportation
6. Yab Dato’ Sri Ismail Sabri Yaakob. Speech by the Prime Minister in the Dewan Rakyat: Twelfth Malaysia Plan 2021-2025. 2021.
7. PETRONAS. PETRONAS Declares Aspiration: To achieve net zero carbon emissions by 2050 [Internet]. 2020 [cited 2022 Jul 4]. Available from: https://www.petronas.com/media/press-release/petronas-sets-net-zero-carbon-emissions-target-2050
8. BP. SKK Migas approved Plan of Development for Ubadari Field and Vorwata CCUS [Internet]. 2021 [cited 2022 Jul 4]. Available from: https://www.bp.com/en_id/indonesia/home/news/press-releases/skk-migas-approved-plan-of-development-for-ubadari-field-and-vorwata-ccus.html
9. Erwinda Maulia. BP unveils up to $3bn CCUS project in Indonesia, country’s first [Internet]. Nikkei Asia. 2021 [cited 2022 Jul 4]. Available from: https://asia.nikkei.com/Spotlight/Environment/BP-unveils-up-to-3bn-CCUS-project-in-Indonesia-country-s-first
10. Pertamina. Pertamina – Air Liquide Agree to Collaborate in Developing CCU Technology at the Balikpapan Refinery [Internet]. 2022 [cited 2022 Sep 8]. Available from: https://www.pertamina.com/en/news-room/news-release/pertamina-air-liquide-agree-to-collaborate-in-developing-ccu-technology-at-the-balikpapan-refinery
11. Santos. Santos Announces FID on Moomba Carbon Capture and Storage Project [Internet]. 2021 [cited 2022 Jul 4]. Available from: https://www.santos.com/news/santos-announces-fid-on-moomba-carbon-capture-and-storage-project/
12. Santos. Globally Significant Carbon Capture and Storage Project a Step Closer [Internet]. 2022 [cited 2022 Jul 4]. Available from: https://www.santos.com/news/globally-significant-carbon-capture-and-storage-project-a-step-closer/
13. ExxonMobil. The South East Australia Carbon Capture Hub [Internet]. 2022 [cited 2022 Jul 20]. Available from: https://www.exxonmobil.com.au/Energy-and-environment/Energy-resources/Upstream-operations/The-South-East-Australia-Carbon-Capture-Hub
14. Oil and Gas Today. Woodside, BP and MIMI to explore CCS project in WA [Internet]. 2021 [cited 2022 Sep 8]. Available from: https://www.oilandgastoday.com.au/woodside-bp-and-mimi-to-explore-ccs-project-in-wa/
15. MEPAU. MEPAU’s Mid West Modern Energy Hub [Internet]. [cited 2022 Sep 8]. Available from: MEPAU’s Mid West Modern Energy Hub
16. Taylor A. New ERF method and 2022 priorities announced [Internet]. 2021 [cited 2022 Jul 4]. Available from: https://www.minister.industry.gov.au/ministers/taylor/media-releases/new-erf-method-and-2022-priorities-announced
17. Johnston B, Whitby R. Draft Bill to help WA’s resources industry reduce emissions [Internet]. Media Statement from the Government of Western Australia. 2022 [cited 2022 Jul 20]. Available from: https://www.mediastatements.wa.gov.au/Pages/McGowan/2022/03/Draft-Bill-to-help-WAs-resources-industry-reduce-emissions.aspx
18. Japan CCS Co. Ltd. A groundbreaking ceremony was held for the CO2 Ship Transportation Project Tomakomai Liquefied CO2 Receiving Facility on May 23 [Internet]. Japan CCS Co. Ltd. Website. 2022 [cited 2022 Jul 20]. Available from: https://www.japanccs.com/en/news/20220524/
19. Mitsui OSK Lines. MOL and PETRONAS Sign MoU on Liquefied CO2 Transportation for CCUS [Internet]. 2022 [cited 2022 Jul 4]. Available from: https://www.mol.co.jp/en/pr/2022/22019.html
20. NYK Knutsen Group. NYK and Knutsen Group Establish New Company for Liquefied CO2 Transportation and Storage Business [Internet]. 2022 [cited 2022 Jul 4]. Available from: https://www.nyk.com/english/news/2022/20220118_02.
21. Mitsubishi Heavy Industries. Mitsubishi Shipbuilding Concludes Agreement on Construction of World’s First Demonstration Test Ship for Liquefied CO2 Transportation — Ship Will Integrate Company’s Liquefied Gas Handling Technologies, for Tomorrow’s Long-distance, High-volume LCO2 Transport Needs [Internet]. 2022 [cited 2022 Jul 20]. Available from: https://www.mhi.com/news/220202.html
22. HESC. The Suiso Frontier Departs Australia for Japan [Internet]. 2022 [cited 2022 Jul 4]. Available from: https://www.hydrogenenergysupplychain.com/the-suiso-frontier-departs-australia-for-japan/
23. J-POWER and ENEOS. J-POWER and ENEOS collaborate on carbon neutralization of energy supply [Internet]. 2022 [cited 2022 Jul 4]. Available from: https://www.jpower.co.jp/english/news_release/pdf/news220510e.pdf
24. Cai B, Li Q, Zhang X. China CCUS Annual Report 2021 – China CCUS Roadmap. 2021.
25. The People’s Bank of China. The People’s Bank of China Launches the Carbon Emission Reduction Facility [Internet]. 2021 [cited 2022 Jul 20]. Available from: http://www.pbc.gov.cn/en/3688006/3995557/4385345/index.html?&&&&&&&&&&header=false&footer=false&releatedInsights=false&shareInsights=true&xyz=1543190452255
26. PTTEP. PTTEP initiates Thailand’s first CCS project, pushing towards Net Zero Greenhouse Gas Emissions [Internet]. 2022 [cited 2022 Jul 20]. Available from: https://www.pttep.com/en/Newsandnmedia/Mediacorner/Pressreleases/Pttep-Initiates-Thailand-First-Ccs-Project-Pushing-Towards-Net-Zero-Green-House-Gas-Emissions.aspx
27. PTTEP. PTTEP, INPEX and JGC Partner to Explore Carbon Capture and Storage Project [Internet]. 2022 [cited 2022 Jul 20]. Available from: https://www.pttep.com/en/Newsandnmedia/Mediacorner/Pressreleases/Pttep-Inpex-And-Jgcpartner-To-Explore-Carbon-Capture-And-Storage-Project.aspx
28. Tan F. Exxon Mobil keen to build carbon storage hubs in SE Asia, similar to Houston project [Internet]. Reuters. 2021 [cited 2022 Jul 20]. Available from: https://www.reuters.com/article/singapore-energy-exxon-mobil-idAFL4N2RI2QM
29. Santos. Santos and SK E&S Sign MoU to Develop CCS Projects in Australia [Internet]. 2022 [cited 2022 Jul 20]. Available from: https://www.santos.com/news/santos-and-sk-es-sign-mou-to-develop-ccs-projects-in-australia/

OVERVIEW

11 CCS/CCUS projects funded by the EU Innovation Fund.

Dutch Government Increases SDE++ Budget to €13bn.

UK Awards Funding for two CCS clusters.

Notable factors driving CCS momentum include supportive climate policy programs and measures by the European Commission, including an increase to the number of projects funded through the EU Innovation Fund – a grant program launched in 2020 that aims to support the Commission’s 2050 climate neutrality targets (1). Similarly, in the Netherlands, the Sustainable Energy Transition Subsidy Scheme (SDE++), under which CCS projects are eligible for funding, increased from €5 billion to €13 billion over the last year alone (2) In the UK, through its CCUS Infrastructure Fund (CIF), the government committed to establishing two CCS clusters by the mid-2020s, and two more by 2030 (3). The past 12 months have illustrated a promising trajectory of industry deploying CCS projects on the foundation of existing policy.

POLICY AND FINANCE DEVELOPMENTS

Legislative proposals are being developed to introduce regulatory mechanisms in the EU that could further support CCS deployment, including carbon removal certification, which remains underway.

In December 2021, the European Commission released a formal communication on sustainable carbon cycles, which affirmed that reaching climate objectives will require a significant scale-up of carbon removal solutions, particularly within the next 10 years. The Commission further acknowledged that accounting for CO₂ removals accurately and transparently will be needed, and legislated, if carbon removal options are to be further realised. The communication seeks to incorporate CDR into the EU’s regulatory and compliance framework, as it relates to Europe’s climate neutrality targets (4).

EUROPEAN UNION

CCS FUNDING

The EU Innovation Fund, which aims to invest around €38 billion by 2030 toward innovative clean technologies in Europe (based on the auctioning of 450 million allowances from 2020 to 2030), announced its first successful grant recipients following the first and second call for projects (5). Out of a total seven successful applicants, four projects selected in the 2021 first call had a CCS component. CCS facilities in Finland, Belgium, Sweden and France will all be beneficiaries of funding to support their CCS projects in hydrogen, chemical, bioenergy and cement production, respectively (5). Results of the second call announced in 2022 saw seven CCS and CCU projects awarded with funding. Projects in Bulgaria, Iceland, Poland, France, Sweden and Germany have been selected, ranging from low-carbon cement production, carbon mineral storage site development and sustainable aviation fuel production (6). The upcoming third call will have a funding pool of around €3 billion, up from €1.5 billion for the previous call, in an effort to accelerate green transition (7).

Figure 13: EU Innovation Fund Applications and CCS Contenders – First Call (number of applications/number of pre-selected proposals)

TRANSPORT MODALITIES

The broadening of CO₂ transport modalities in the Trans-European Energy Networks regulation (TEN-E), which would include shipping, trains and trucks, did not progress further in 2021 (8). As the TEN-E goes under review, CO₂ transport modalities aside from pipelines are not favoured according to a provisional agreement and recent trialogue discussions between the European Commission (EC), the Council of the European Union and the European Parliament (EP). Consequently, CCS efforts looking to be included in the EU’s Projects of Common Interest – a designation which eases permitting processes, along with providing access to funding – will not be explicit in legislation.

REPowerEU

The European Commission has responded to the energy crisis prompted by the Russia-Ukraine conflict through the development of the REPowerEU Plan. Under the plan, the Commission announced aims to end the EU’s reliance on Russian energy resources while also tackling climate change. Although carbon capture and storage is not explicitly mentioned in the REPowerEU communication, the commission notes its intention to further support Europe’s hydrogen economy.

UNITED KINGDOM

FUNDING PROGRAMS

Following a £1 billion announcement in 2020 to develop CCUS clusters through the UK Government’s CCS Infrastructure Fund, the first two recipients of the grant were announced in late 2021, with an expected completion date by the mid-2020s. The HyNet Cluster consortium operating in North West England and North West Wales, and the East Coast Cluster along England’s North Sea shore by Humber and Teesside, will enter the Track 1 project negotiations as preferred beneficiaries of the CIF (9). Scotland’s CCS project, Acorn, has been placed on the “back-up” to the Track 1 clusters. Through the CIF-selected projects, the UK Government aims to capture and store 20 to 30 Mtpa CO₂ by 2030 onward (10).

In August 2022, as part of the Track 1 clustering process, the UK Government announced the shortlist of 20 CCUS capture projects that can receive possible support from government, once it has established that the projects represent a “value for money” investment for the taxpayer.

POLICY

Over the last 12 months, the UK Government focused its CCS policy sights on building a cadence around CCS funding programs and policy announcements made in 2020. The government’s 10-Point Plan for a Green Industrial Revolution committed to investing in carbon capture usage and storage. This gave way to a number of CCS-specific policies and funds, including the UK CCUS Innovation Programme, which aims to enhance CCS research and innovation programs along with the CCS Infrastructure Fund, that are intended to support the development of four CCS networks (11).

To further highlight the breadth of public-private partnerships and funding efforts across the UK region – including the CIF, the UK CCUS Innovation Fund and more – the UK Government released a CCUS Investor Roadmap, illustrating its CCUS delivery plan from 2021 to 2035 (12).

Figure 14: UK Government CCUS Delivery Plan

Following the announcement of CIF recipients in England, where HyNet and East Coast Cluster consortiums were selected to progress as part of Track 1 projects, the national government increased its CCUS funding commitment and ambitions. If selected as part of the CIF-awarded applicants, the Aberdeenshire-based Acorn project will see the Scottish Government provide £80 million to launch the initiative – a project, the government says, that is required if Scotland is to meet its net-zero targets (13).

THE NETHERLANDS

In 2020, the Dutch Government expanded the Sustainable Energy Transition Subsidy Scheme (SDE+) into the SDE++ to include support for renewable energy projects and CO₂ reduction efforts, such as CCS. In 2022, the Dutch Government announced it would more than double the annual budget for the SDE++, increasing it from €5 billion to €13 billion (14). The Porthos Project, which aims to store CO₂ in the North Sea sub-surface and had previously been announced as a grant recipient, was awarded nearly half of the 2021 budget (15). The SDE++ funding commitment will continue until 2035.

DENMARK

Through three government programs, the Danish Government announced it would invest a total of €5 billion in support of carbon, capture and storage projects (16).  Part of the funding will be rolled out across a period of ten years under the Energy Technology Development and Demonstration Programme (EUDP), with Project Greensand and Total Energies-led Bifrost having already received funding from the Danish Government (16). The EUDP aims to support Denmark’s target of reducing emissions by 70 per cent by 2030 – Europe’s most ambitious 2030 target thus far (17).

In addition to funding support, the Danish Government has entered a bi-lateral agreement with the Belgian Government, along with Flanders, which aims to support cross border CO₂ transport between the two countries (18). The move follows EU Innovation Funding approval of the Kairos@C project – a cross-border CCS effort led by BASF’s Belgian operations, alongside Air Liquide (19). The bi-lateral agreement is expected to lead the way for transboundary CCS, both in Europe and beyond.

NEW CCS MARKETS

Several countries in Europe are entering the CCS market for the first time, including Bulgaria, Poland and Finland. Enabling these projects is the EU Innovation Fund’s granting program (19, 20).

EU INNOVATION FUND PROJECTS – LARGE-SCALE CCS PROJECTS

• Holcim Deutschland’s Carbon2Business project will retrofit its German cement plant with CCS to capture over 1 Mtpa CO₂.
• The full-scale ANRAV project will capture CO₂ from cement facilities in Bulgaria and store it in an offshore storage site in the Black Sea.
• Coda Terminal, by Carbfix, will develop a mineral storage hub in Iceland with the capacity to store 880 million tonnes of CO₂.
• Perstorp’s Project Air will develop a full-scale fossil-free methanol plant in Sweden.
• Shell’s HySkies project will produce sustainable aviation fuel through waste-to-energy CCUS operations in Sweden.
• The GO4ECOPLANET project in Poland will capture and store CO₂ from Larfarge Cement’s Kujawy cement production operations.
• The CalCC project in France will capture CO₂ emissions from exhaust gases, produced during lime production, for permanent storage.
• Kairos-at-C will mitigate 14.2 million tonnes of CO₂ through a cross-border CCS value chain in Belgium, the Netherlands and Norway, which includes CO₂ capture from hydrogen and chemical plants.
• BECCS@STHLM will capture and store 7.8 million tonnes of CO₂ over 10 years from Exergi’s Stockholm-based biomass plant.
• The K6 Program in France will capture 8.1 million tonnes of CO₂ from its cement plant, to be stored in the North Sea.
• The SHARC effort in Finland will reduce CO₂ emissions from a diesel refinery through green and blue hydrogen production.

NORTH SEA

With its substantial storage capacity, carbon capture and storage projects are being established with the aim of storing CO₂ beneath the North Sea basin:

• The Norcem Brevik Cement Plant in Norway, operated by HeidelbergCement, will capture and store 0.4 Mtpa CO₂. Once completed, it will be the first cement plant with a full-scale CCS facility (21).
• The UK’s largest power station, Drax, seeks to retrofit its biomass-powered facility with CCS. The project will be part of the Zero Carbon Humber consortium operating on England’s North Sea coast (22).
• The H21 North of England project will decarbonise power, heating and transport across the north of England, and will be inclusive of CCS. It aims to convert the UK gas grid from natural gas to zero-carbon hydrogen. By 2035, the project will have the potential to have one of the world’s largest CCS schemes (23).

REFERENCES

1. European Commission. Innovation Fund (InnovFund) Call for proposals Innovation Fund. 2022.
2. Ministry of Economic Affairs and Climate Policy. SDE++ 2022 Stimulation of Sustainable Energy Production and Climate Transition. 2022.
3. Department of Business E and IS. Government Response to Carbon Capture Usage and Storage: Market Engagement on Cluster Sequencing. 2021.
4. European Commission. Communication From the Commission to the European Parliament and the Council: Sustainable Carbon Cycles. 2021.
5. European Commission. Innovation Fund: Key Statistics from the First Call for Large-Scale Projects. Brussels: European Commission; 2022.
6. European Commission. Innovation Fund Second Call for Large Scale Projects: List of Proposals Pre-selected for a Grant. 2022.
7. European Commission. Innovation Fund: EU invests €1.8 Billion in Clean Tech Projects. 2022.
8. European Commission. Questions and Answers on the EU Taxonomy Complementary Climate Delegated Act Covering Certain Nuclear and Gas Activities. 2022.
9. Department for Business E and IS. Track-1 Clusters Confirmed. 2021.
10. Department for Business E and IS. The Carbon Capture and Storage Infrastructure Fund: An Update on its Design. 2021.
11. UK Government. CCUS Innovation 2.0 Call 2 Guidance. Department of Business Industry Energy & Industry Strategy. 2022.
12. UK Government. CCUS Investor Roadmap: Capturing Carbon and a Global Opportunity. 2022.
13. Scottish Government. Scottish Cluster Support. https://www.gov.scot/news/scottish-cluster-support/. 2022.
14. Netherlands Enterprise Agency. SDE++ 2022: Stimulation of Sustainable Energy Production and Climate Transition [Internet]. 2022 [cited 2022 Aug 14]. Available from: https://english.rvo.nl/sites/default/files/2022/07/20220712-English-brochure-opening-round-2022_1.pdf
15. Porthos CO2 Transport and Storage. Dutch Government Supports Porthos Customers with SDE++ Subsidy Reservation. 2021.
16. Danish Energy Agency. Invitation to Second Market Dialogue – CCUS Fund. 2022; Available from: https://ens.dk/sites/ens.dk/files/CCS/note_regarding_second_round_of_market_dialogue_-_07.03.2022.pdf
17. Energy Technology Development and Demonstration Program. About the EUDP.
18. The Danish Ministry of Climate E and U. Denmark, Flanders and Belgium sign groundbreaking arrangement on cross-border transportation of CO2 for geological storage. https://en.kefm.dk/news/news-archive/2022/sep/denmark-flanders-and-belgium-sign-groundbreaking-arrangement-on-cross-border-transportation-of-co2-for-geological-storage-. 2022.
19. European Commission. Commission awards over €1 billion to innovative projects for the EU climate transition. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_2163. 2022.
20. European Commission. Innovation Fund Second Call for Large Scale Projects: List of Proposals Pre-selected for a Grant. 2022.
21. HeidelbergCement Group. Norcem Brevik. https://www.norcem.no/en/NorcemBrevik_eng. 2022.
22. Drax. Drax submits plans to build world’s largest carbon capture and storage project. https://www.drax.com/press_release/drax-submits-plans-to-build-worlds-largest-carbon-capture-and-storage-project/. 2022.
23. H21 North of England. Revolutionary Thinking. Real World Infrastructure. https://together.northerngasnetworks.co.uk/wp-content/uploads/2019/03/H21-NoE-Exec-Sum-Print-Final.pdf. H21 North of England; 2018

OVERVIEW

The Gulf Cooperation Council states are poised to see CCS take off in the coming decade.

Global CCS Institute opens office in Abu Dhabi.

The potential for CCS growth in the MENA region is being driven by climate commitments and the increasing potential to act as a hub for low-carbon hydrogen.

The MENA region is considered one of the most carbon-intensive, with countries such as Qatar, Kuwait, the United Arab Emirates (UAE), Bahrain, and Saudi Arabia among the world’s top 10 per capita carbon emitters. Without a change in energy policies and energy consumption behaviour, MENA’s energy-related GHG emissions will continue to grow (1). The figure below shows the GHG emissions in the individual MENA region countries (2). Moreover, the MENA region holds a major stock of the world’s oil and gas reserves and has always been a key player in the geopolitics of energy. To maintain this position, the region is required to invest in decarbonisation and clean energy technological options.

Figure 15: Greenhouse Gas Emissions Across the MENA Region

CCS represents an opportunity in the region to reduce carbon dioxide emissions. Three operational CCS facilities in the UAE, Saudi Arabia and Qatar already account for around 10 per cent of global CO₂ captured each year (3). Moreover, the region has extensive experience in CO₂ injection and storage with the In Salah CCS project in central Algeria being a world-pioneering onshore CO₂ capture and storage project, which has built up a wealth of experience highly relevant to CCS projects worldwide (4).

The potential for CCS growth in the MENA region is driven by multiple factors:

• Different MENA countries such as Saudi Arabia, the UAE, Bahrain, Egypt, Iraq, and Iran have explicitly included CCS in their nationally determined contribution (NDC) registry maintained by the United Nations Framework Convention on Climate Change (5).
• The announced commitment to net-zero and emissions targets. The UAE and Saudi Arabia announced their net-zero target by 2050 and 2060, respectively. Oman has set a net-zero target by 2050, Qatar has committed to emissions reductions of 25 per cent by 2030 and Bahrain 30 per cent by 2035 (6).
• The launch of the Saudi Arabian and Middle East Green Initiatives.
• The increasing potential for the MENA region to be a hub of low carbon hydrogen (7).
• Future industrialisation plans with a major focus on clean and sustainable industries (8).
• The region has the required geological formation and expertise in managing subsurface injection of CO₂.

PROJECTS

CCS project activity is spread across Qatar, Saudi Arabia, and the UAE – more specifically in Abu Dhabi. The combined annual capture capacity is around 3.7 Mtpa of CO₂ at three CCS facilities:

• Qatar Gas captures 2.2 Mtpa of CO₂ from the Ras Laffan gas liquefaction plant.
• Saudi Aramco captures 0.8 Mtpa of CO₂ at its Hawiyah Naturals Gas Liquids plant. The CO₂ is used to demonstrate the viability of enhanced oil recovery (EOR) at the Uthmaniyah oil field.
• In Phase I (of at least three phases) of Abu Dhabi National Oil Company’s (ADNOC) Al Reyadah project, 0.8 Mtpa of CO₂ is captured at the Emirates Steel plant in Abu Dhabi.

Both the Ras Laffan and Al Reyadah projects are already developing expansion plans:

• Qatar Gas expects to expand its capture rate to 5 Mtpa by 2025 (9). This carbon capture new phase is expected to be accelerated after the announcement that the North Field expansion is the world’s largest liquefied natural gas (LNG) project (10).
• ADNOC estimates that Phase II and Phase III will capture about 5 Mtpa of CO₂ before 2030. This is expected to be captured from two sources: 2.3 Mtpa of CO₂ from the Shah sour gas plant and another 1.9 Mtpa from the Habshan and Bab gas processing facility (11,12).

There are two regional CO₂ utilisation facilities:

• Saudi Basic Industries Corporation captures 0.5 Mtpa of CO₂ at its Jubail ethylene facility for use in methanol and urea production.
• Qatar Fuel Additive Company captures 0.2 Mtpa of CO₂ at its methanol refinery.

Aiming to develop a fully integrated CCUS supply chain, the MENA region shows a very high potential for CCUS hubs. A recent study conducted by AFRY and GaffneyCline on behalf of the Oil and Gas Climate Initiative (OGCI) evaluated the potential for carbon capture and CCUS hubs in the Gulf Cooperation Council (GCC) countries (Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman) (13). With current carbon capture facilities, industrial facilities, available natural CO₂ sinks and future plans in the GCC countries, the GCC countries could be a world-class hub for CCS. In addition, CCUS has promising applications across multiple industrial activities in the GCC countries and will play a role in the decarbonisation of hard-to-abate industries.

Figure 16: Geological storage map in GCC region

AFRY and GaffneyCline have revealed the significant subsurface potential for storage in the GCC countries, both in depleted gas reservoirs and saline aquifers, with the greatest opportunity found in the Rub’al Khali Basin and in the sequences beneath Kuwait. Based on this study, the current estimated storage capacity for the GCC countries is 170 Gt of CO₂ – see the figure above, which shows potential locations for CO₂ geological storage in the Gulf Cooperation Council region.

Moreover, the AFRY and GaffneyCline study revealed that the Gulf Cooperation Council region has the potential to develop active CCUS hubs due to the availability of natural sinks and concentrated sources of CO₂ emissions. Clusters of high-purity, low-cost capture industries coupled with nearby geological storage make it possible to develop hubs that could benefit from economies of scale. This study has identified 10 promising hub locations with the most favourable being in Jubail (Saudi Arabia), northern Qatar, and Abu Dhabi (see figure below).

Figure 17: Potential hubs across the GCC countries (source: Energy Review MENA) (^‎10)

In addition to the Gulf Cooperation Council, other countries in the MENA region and wider Africa could form a potential location for CCUS hubs. The region in the north of Egypt with its current natural gas facilities and gas reservoirs has great potential. The potential for CCS in Egypt, Nigeria, South Africa, and other countries in the region is being evaluated. The World Bank Group has been aiding its partner countries on carbon capture capacity-building and the evaluation of CO₂ geological storage potential. The most recent study on the potential for CCS in Nigeria was announced in 2022 (14).

POLICY

Most countries in the MENA region have introduced climate policies, but not CCS-specific policies. Ahead of COP26 in Glasgow in November 2021, Lebanon, Israel, the UAE, and Yemen pledged to be carbon neutral by 2050, Turkey by 2053, and Saudi Arabia and Bahrain by 2060. Jordan, Morocco, Oman, Palestine, Tunisia, and Qatar submitted more ambitious nationally determined contributions and increased their gas emissions reduction goals (1).

The trend of CCS growth in the region is driven by the commitments and vision of national governments, which makes it less dependent on policy incentives than other parts of the world. The governments in the region are focusing on the environmental impact and strategic growth of decarbonisation technologies. In addition, the deployment of CCS in the region could be driven by EOR value, low-carbon hydrogen production and the potential of the region as a hub for CCUS and carbon trading.

Saudi Arabia, the UAE and Egypt have announced the establishment of voluntary carbon market initiatives and fully regulated carbon trading exchange and trading schemes (15–17). The establishment of such platforms is expected to drive the carbon market in the region, which benefits all decarbonisation technologies, including CCS.

OUTLOOK

The UN climate change partners organised the first MENA region climate week in 2022, with the aim of enhancing regional collaboration (18). In addition, the region will also welcome COP27 and COP28, in Egypt and the UAE respectively in 2022 and 2023. This will bring outstanding opportunities to push forward negotiations on vulnerability points for the two countries. From a regional perspective, in October 2021 Saudi Arabia launched the first Middle East Green Initiative, which gathered leaders from the region and foreign partners to exchange opinions on regional climate action.

With the current international geopolitical situation, the growth in LNG exports from the different countries in the region presents an opportunity for low carbon fuels and CCS. Being one of the major LNG exporters in the region, Qatar has announced the extension of the North Field capacity to produce 126 Mtpa by 2027 (10). This extension will also be integrated with CCS to reduce emissions (19).

The Global CCS Institute has been actively monitoring the CCS development in the MENA region. To build on this momentum and future activities, the Institute has established its presence in the region with a regional office in Abu Dhabi. In addition, the Institute is working on increasing its MENA-based members.

REFERENCES

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