In the race to achieve global carbon neutrality, a century-old technology is gaining new traction, promising to reshape the energy landscape and drive economic growth. Carbon Capture, Utilization, and Storage (CCUS) is no longer just a theoretical solution to climate change; it’s becoming a commercial reality, with significant implications for the energy sector.
At the forefront of this shift is WEI Haifeng, a researcher from the Development Planning Department at Sinopec in Beijing. Wei’s recent study, published in the journal ‘Youqicang pingjia yu kaifa’ (translated as ‘Oilfield Evaluation and Development’), delves into the economic benefits and fiscal policies surrounding CCUS, offering a roadmap for its industrialization, particularly in China.
CCUS involves capturing CO2 emissions produced from the use of fossil fuels in electricity generation and industrial processes, transporting it, and either using it to extract more oil or storing it underground. The technology has been around since the early 20th century, but it’s only recently that it’s started to gain serious momentum, thanks to supportive policies in Europe and America.
“We’re seeing a convergence of global carbon neutrality goals, and CCUS is a key part of that,” Wei explains. “Developed countries are investing heavily in CCUS technologies and demonstrations, creating a broad market prospect.”
The economic benefits of CCUS are substantial. According to Wei’s research, foreign projects typically receive direct government subsidies, with capture costs accounting for 70% to 80% of operating costs. The output benefits are twofold: direct benefits from selling captured CO2 for enhanced oil recovery or other uses, and indirect benefits from reduced environmental risks and additional emissions.
However, the economic viability of CCUS projects depends heavily on gas prices. Wei’s analysis shows that when gas prices exceed 200 RMB per ton, CO2 enhanced oil recovery projects struggle to turn a profit. This highlights the need for supportive fiscal policies and regulations.
In China, the CCUS landscape is different. Policies and regulations are mainly guiding in nature, with a relatively small carbon market and low carbon prices. Wei argues that China urgently needs to strengthen its CCUS policy and regulatory framework to support the industry’s growth.
So, what does this mean for the future of CCUS? Wei suggests several steps for China’s industrialization of CCUS. These include accelerating technological research and development, increasing the construction of CCUS cluster hub centers, and issuing progressive and combined CCUS policies and regulations.
The implications for the energy sector are significant. As CCUS technologies advance and become more cost-effective, they could play a crucial role in helping countries meet their carbon neutrality goals while also driving economic growth. For energy companies, this presents a significant opportunity to invest in and develop CCUS technologies, potentially opening up new revenue streams.
Moreover, the development of CCUS could also impact the global energy market. As more countries adopt CCUS technologies, the demand for fossil fuels could increase, as captured CO2 is used for enhanced oil recovery. However, this would need to be balanced against the need to reduce overall emissions.
In the coming years, as countries around the world strive to achieve carbon neutrality, CCUS is set to play an increasingly important role. With supportive policies and continued technological advancements, it could become a key driver of economic growth and a vital tool in the fight against climate change. As Wei’s research shows, the future of CCUS is bright, and the energy sector would do well to take notice.