CCUS Growth Faces Economic Hurdles Despite Market Potential, Experts Warn

At the Wood Mackenzie Carbon Capture, Utilization, and Storage (CCUS) Conference in Houston, Peter Findlay, research director and head of CCUS economics at Wood Mackenzie, discussed the challenges facing CCUS growth. He noted that while the market for carbon capture is expanding, the economics remain difficult, putting many projects at risk.

Findlay explained that while some CCUS projects are financially feasible, the overall economic outlook for the sector is unstable. He highlighted that there are currently 1,200 announced projects worldwide, but only 10% are operational. More than 60% of the projects are still in the early stages of development and will require significant investment and clearer market conditions to advance.

Despite these challenges, there is potential for substantial market growth. Wood Mackenzie’s analysis, based on a scenario projecting a 2.6°C rise in global warming, forecasts a capture capacity of 2,450 million tonnes per annum (Mpta) by 2050. However, current market conditions pose a challenge for more than 780 Mpta of this capacity.

Findlay emphasized that most of the announced projects are at risk due to uncertain economics. To unlock further capacity, appropriate CCUS regulations and support are necessary. Current incentives are not enough to drive widespread deployment, and developers need additional revenue streams, such as credit generation and product premiums, to supplement government support.

He also pointed out that there are opportunities in the utilization of products, particularly in e-hydrocarbons, minerals, agriculture, and next-generation materials like fuel cells, which could help stimulate the market.

Findlay mentioned that while challenges remain, there are reasons for optimism. The US Department of Energy recently announced more than $2 billion in funding for CCUS, and as more companies enter the market, competition could drive costs down by as much as 50% by 2050. However, he cautioned that the lack of market certainty may prevent many projects from progressing. Long timelines and inconsistent policies leave developers without the confidence to invest in future projects.