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Carbon capture and utilisation refers to a range of applications through which CO2 is captured and used either directly (i.e. not chemically altered) or indirectly (i.e. transformed) in various products. CO2 is today primarily used in the fertiliser industry and for enhanced oil recovery. New uses such as producing CO2-based synthetic fuels, chemicals and building aggregates are gaining momentum.
CO2 use does not necessarily lead to emissions reduction. Climate benefits associated with a given CO2 use depend on the source of the CO2 (natural, fossil, biogenic or air-captured), the product or service the CO2-based product is displacing, the carbon intensity of the energy used for the conversion process, and how long the CO2 is retained in the product.
While some CO2 use could bring substantial climate benefits, the relatively limited market size for these applications means dedicated storage should remain the primary focus of carbon capture, utilisation and storage deployment. However, support for research and development and demonstration can play a key role in the deployment of promising CO2-derived products and services that are scalable and have good prospects to become competitive over time.
Carbon capture and utilisation (CCU) refers to a range of applications through which CO2 is captured and used either directly (i.e. not chemically altered) or indirectly (i.e. transformed) into various products. Around 230 Mt of CO2 are currently used each year, mainly in direct use pathways in the fertiliser industry for urea manufacturing (~130 Mt) and for enhanced oil recovery (~80 Mt).
New utilisation pathways in the production of CO2-based synthetic fuels, chemicals, and building aggregates are gaining momentum. The current project pipeline shows that around 10 Mt of CO2 per year could be captured for these new uses by 2030, including around 7 Mt CO2 in synthetic fuel production. If all announced projects are commissioned, they could reach around half the level of CO2 utilisation for synthetic fuel production by 2030 envisaged in the Net Zero Emissions by 2050 (NZE) Scenario. In addition, to be compatible with the NZE Scenario, all the CO2 would need to come from air or biogenic sources, which is currently only the case for around 4 Mt CO2 per year of planned CCU to fuels capacity for 2030.
CCUS and synthetic fuel policies are being strengthened in the United States and Europe
Countries and regions making notable progress to advance CO2 utilisation include:
CO2 use can bring important climate benefits, but with caveats
CO2 use does not necessarily lead to emissions reduction. Climate benefits associated with a given CO2 use depend on the source of the CO2 (natural, fossil, biogenic or air-captured), the product or service the CO2-based product is displacing, the carbon intensity of the energy used for the conversion process, how long the CO2 is retained in the product, and the scale of the market for this particular use. The use of low-carbon energy is particularly critical for CO2 use in fuels and chemical intermediates, as these processes are highly energy-intensive.
In the NZE Scenario, as fossil fuel use declines, the value of CO2 displacement ultimately decreases and all of the CO2 used needs to be sourced from biomass or the air to achieve climate benefits.
While some CO2 use could bring substantial climate benefits, the relatively limited market size for these applications means dedicated storage should remain the primary focus of carbon capture, utilisation and storage (CCUS) deployment.
In the NZE Scenario, over 95% of the CO2 captured in 2030 is geologically stored, and less than 5% is used. With a retention time in the order of millions of years, building aggregates are the only CO2 use application that could qualify as permanent sequestration, in contrast to fuels and chemicals, which typically retain the CO2 for one year and up to ten years, respectively.
CO2 use for synthetic fuels remains the leading new utilisation route
Only a handful of large-scale (> 100 000 t CO2 per year) capture plants using CO2 for the production of fuels and chemicals and yield enhancement are in operation today, with the most recent commissioned at a steel plant in December 2022. Plans are underway for around 15 additional capture facilities targeting CO2 utilisation for synthetic hydrocarbon fuels, through Fischer-Tropsch (FT) synthesis, direct conversion to methanol, or fermentation to ethanol. Together, these large-scale plants could be capturing and using around 7 Mt CO2 by 2030.
An increasing share of the synthetic fuel project pipeline is targeting sources of CO2 which are compatible with a net zero trajectory, including air and bioenergy or waste plants:
Of the circa 7 Mt CO2 in planning, around 4 Mt CO2 would be captured from the air or biogenic sources. This would need to increase to around 13 Mt CO2 to meet the level of low-emission synthetic fuel production in 2030 in the NZE Scenario.
The deployment of other utilisation routes remains limited at large scale (>100 000 t CO2 per year). Only a handful of large-scale capture projects are targeting the use of CO2 for the production of building materials or yield enhancement.
A number of facilities exist on a smaller scale for the production of CO2-based chemicals and polymers:
And in the field of mineral carbonation for the production of building materials, aggregates and specialty carbonates:
CCU supply chains can benefit from synergies with fossil-based synthetic fuel production and CCS
While there are only a handful of pilot-scale low-emission synthetic fuel production operating today, much larger fossil-based synthetic fuel plants have been operated for decades by large engineering and oil and gas companies such as Sasol, Shell and Synfuels China. Many components and competences are therefore easily transferrable from adjacent industries.
The extensive use of hydrogen and CO2 for conversion into fuels and chemicals would require the deployment of large-scale transport infrastructure, including pipelines and, in some places, terminals, ships and trucks. Given the low capture capacity of most CCU projects, benefits could be achieved by combining CO2 transport for use in products and for geological storage, especially as part of future CCUS hubs in areas with emissions-intensive industries.
Reducing the energy cost of CO2 conversion and demonstrating the reliability of CO2-based construction materials remain a priority
One of the main innovation priorities for CCU is reducing the energy needed to convert CO2 to fuels and chemicals. Large-scale demonstration of the reverse water-gas shift process is needed, as well as the development of advanced conversion routes such as CO2 electrolysis and plasmosis, and solar-based thermochemical conversion. In building materials there is also a need for long-term trials of CO2-cured concrete in structural applications to demonstrate its performance and reliability.
Smaller-scale CO2 use opportunities can also support the demonstration of novel CO2 capture routes, such as membranes and direct air capture, by providing a revenue stream. These early demonstrations can contribute to refining and reducing the cost of technologies for carbon capture and storage and CO2 use and support the future deployment of both.
Policy incentives for low-emission fuels and materials are supporting CCU development
Mandates and public procurement for low-emission products, low-emission standards and tax credits are supporting the development of CCU projects:
Venture capital investment in CCU continues to grow
The increasing interest in CO2 conversion technologies is reflected in the growing amount of private and public funding that has been channelled to companies in this field. Corporate goals and quotas for low-emission fuels and materials are boosting CO2 use for sustainable aviation fuels and building materials.
In 2022, global venture capital (VC) investment in utilisation companies reached nearly USD 500 million, making up around 20% of total VC investment in CCUS. US companies dominate investment, totalling around 80% of the cumulative total in the 2015-2022 period. Even though fuel production is the leading utilisation application for large-scale capture facilities, investment is well distributed among utilisation routes, with fuels, chemicals and building materials each making up around a third of the total.
Public funding is targeting the RD&D of various CCU applications, as well as specific commercial projects:
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There is a need for robust life cycle analyses based on clear methodological guidelines and transparent datasets to inform policy decisions. International standards and best practice guidelines need to be put in place for consistent and transparent accounting across jurisdictions.
The use of CO2 in building materials for non-structural applications, such as roads and floors, is one such opportunity, as is its use in polymers and plastics. Policy makers should consider revising waste regulations to allow conversion of waste into building materials, provided their environmental integrity can be assured.
Governments have an important role to play in co-ordinating the deployment of shared or multi-user transport networks which would benefit individual CO2-using companies, especially small ones, by delivering economies of scale and providing access to hydrogen and CO2 sources that are not necessarily located close to demand. This co-ordination can also be part of a wider effort to co-ordinate the deployment of CCUS hubs in areas with emission-intensive industries.
Public procurement can create an early market for CO2-based products and assist with the establishment of technical standards and specifications. Policy makers should consider developing procurement guidelines, which should be underpinned by a robust framework for emissions accounting and measurement, reporting and verification to ensure climate benefits are achieved.
Environmental labelling can also help support the market uptake of CO2-based products, but clear taxonomy must be used for transparency (e.g. not confusing carbon avoided and carbon negativity) to maximise climate benefits.
Trials are required to demonstrate reliable performance and gain broader acceptance for CO2-derived building materials, in particular in markets for structural materials that have to support heavy loads, for example in high-rise buildings. In addition, close collaboration between government and industry is needed to update and extend existing product standards and codes, particularly performance-based standards which can take longer to develop.
Support for RD&D into future applications of CO2 could play a role in a net zero CO2 emissions economy, including in aviation fuels and chemicals manufacturing. This should be in conjunction with RD&D for low-emission hydrogen production and CO2 capture from biomass and the air. Support for international RD&D programmes and knowledge transfer networks can facilitate accelerated development and uptake of these technologies. Governments could also provide direct funding for the demonstration of technologies with good prospects for scalability, competitiveness and CO2 emission reductions.
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