Carbon capture and storage outlook worsens amidst high costs, performance

It is predicted to diminish in the coming years.

Carbon capture and storage (CCS) prospects are threatened due to high costs and performance concerns, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

The International Energy Agency (IEA) has halved its projections for CCS use in fossil fuels by 2040 and 2050, primarily driven by a steep decline in expected CCS use with gas power generation and hydrogen production. CCS use with coal has also decreased, and its role in steel production has been limited.

Amandine Denis-Ryan, CEO of IEEFA Australia, noted that CCS is not competitive with renewable energy solutions, especially in the power sector. The IEA estimates that fossil fuels with CCS will account for only about 1.5% of global electricity generation by 2050.

In the hydrogen sector, blue hydrogen is expected to be pricier and less environmentally friendly than green hydrogen by 2030, according to IEEFA.

For steel production, CCS has limited commercial application, with only a few projects in early development. Direct reduced iron projects using electric arc furnaces powered by gas and green hydrogen dominate the pipeline for low-carbon steel production.

In the gas sector, many gas fields have low carbon dioxide content, making CCS less attractive. Given the anticipated glut in liquefied natural gas supply, IEEFA believes that developing carbon-intensive gas fields is not the most cost-effective solution.

The outlook for CCS is further hindered by its high costs and inconsistent performance. An IEEFA review of 13 global flagship CCS projects found that many failed or underperformed, with significant technical challenges and financial burdens.

Due to these factors, IEEFA predicts that CCS associated with fossil fuels is unlikely to compete effectively with renewable alternatives, leading to diminishing in the coming years.