High Costs And Limited Support Hinder CO2 Utilization As A Decarbonization Tool, Says Report

CO2 utilization as a global decarbonization tool is facing significant challenges due to current economic conditions, according to a recent report from Wood Mackenzie. While Carbon Capture Utilization and Storage (CCUS) is seen as a crucial part of global decarbonization efforts, the high costs and lack of sufficient subsidies are limiting the widespread deployment of CO2 utilization.

In a scenario outlined by Wood Mackenzie, achieving net zero emissions by 2050 will require more than 7 billion tonnes per annum (Btpa) of CCUS capacity. However, as of now, only 500 million tonnes per annum (Mtpa) of carbon capture capacity has been announced globally. Of this, over 95% is directed toward storage, with less than 5% (22.4 Mtpa) focused on CO2 utilization.

A research analyst at Wood Mackenzie, stated that expanding CO2 utilization could improve the overall economics of carbon capture. However, current high costs, insufficient subsidies, and a lack of strong markets for green premiums are limiting its growth. One example highlighted in the report is e-Hydrocarbons, which, when using green hydrogen, are three times more expensive than existing technologies due to green hydrogen accounting for over 80% of production costs.

On a more positive note, the report found that CO2 mineralization into high-purity limestone is competitive with traditional manufacturing and could offer double-digit returns if the technology is scaled effectively. However, the market size for this technology is limited.

Research Analyst also pointed out that tax incentives, such as the US 45Q credit and the Canadian Investment Tax Credit, offer some support for CO2 utilization but remain limited in scope and insufficient to justify large-scale projects. The European Union is the only major market with a legislated CO2 utilization mandate, and it is focused on e-fuels in aviation.

According to Research Analyst, stronger policy support for CO2 utilization products is essential. Without more substantial markets and stronger incentives, CO2 utilization will continue to face economic disadvantages, making it difficult to become a widespread enabler of carbon capture. Lowering feedstock and technology costs, along with better policy incentives, is crucial for making CO2 utilization a viable part of global decarbonization efforts.