Underground carbon disposal has to increase 172-fold to hit the global greenhouse gas (GHG) cleanup target set by the International Energy Agency (IEA), according to an industry review by consulting firm Sproule Associates.
The role for carbon capture, utilization and storage (CCUS) as outlined by IEA in August, spells “tremendous growth and revenue generation,” said Sproule, the 70-year-old dean of Canadian petroleum engineering and geology houses.
The IEA agenda for “energy transition” to net-zero emissions directs CCUS to achieve annual permanent carbon burials of 6.9 billion tons, or one-fifth of the agency’s vision for eliminating fossil fuel exhaust blamed for global climate change as of 2070.
Sproule said global CCUS currently stands at 40 million tons by 33 projects, led by 12 in the United States, four in Canada and three in Norway. Disposal sites are also at work in Brazil, Saudi Arabia, the United Arab Emirates, China and Australia.
Environmental motivation is a newcomer to the CCUS scene, according to Sproule. Most established sites serve commercial oil production by using carbon dioxide as enhanced recovery injections into wells to extend their lives.
Evolving climate change policies are adding a potent economic incentive to the GHG cleanup campaign by creating increasingly stiff “carbon price” penalties for emissions.
“A recent surge in CCUS investment is being spurred by strengthening national climate commitments and evolving carbon pricing mechanisms,” said Sproule.
“There are over 100 commercial projects currently proposed, being developed or under construction, with 10 of these linked to enhanced oil recovery. Many of these projects are being designed around CCUS industrial hubs and shared transportation networks.”
By Sproule’s count, the new CCUS crop would permanently bury 130 million tons of emissions per year. The additional GHG cleanup volume would be more than triple the fossil fuel industry’s current disposal performance.
Canada, the U.S. and Norway lead the creation of economic incentives for environmental action, according to the firm.
The Canadian carbon price per ton, currently C$40 ($32), is scheduled to rise annually to C$170 ($136) by 2030. Over the same period, the Norwegian carbon price is to rise to $237/ton from the current $70.
The United States provides a tax credit, known as 45Q, that values CCUS disposal at $50/ton. Proposed legislation would increase the 45Q emissions cleanup benefit to $85.
“A clear and well-structured CCUS regulatory framework is critical for widespread CCUS,” added Sproule. “But due to the limited number of existing projects to date, most jurisdictions are in early stages of regulation development.”
Alberta, as the mainstay of Canada’s rank in the global top five oil and gas producers, has adopted policies aimed at securing an international leadership position in CCUS and protecting the province’s biggest industry in the process.
The Alberta legislature has enacted CCUS-enabling legislation. The government has posted a call for industry expressions of interest in creating carbon disposal hubs. A request for proposals is scheduled for December, followed by project acceptance decisions as early as March 2022.
“It is now industry’s turn to get smart and leverage new policy into action,” Sproule said.
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