Without large-scale carbon capture initiatives, heavy industry is sleepwalking towards a costly future
Failing to introduce technologies capable of capturing, utilising and storing CO2 emissions from industrial processes could drastically raise the cost of CO2 abatement in future decades, according to a recent analysis by the International Energy Agency.
Because industrial facilities are long-lived assets, infrastructure already built or under development could consume as much as one quarter of the carbon budget through to 2060 consistent with the Paris climate agreement, the analysis notes.
The prospect of locking in future emissions is not to be taken lightly. The sector needs to begin building industrial CO2 transportation and storage infrastructure soon or risk facing potentially insurmountable challenges further down the line.
Industry is one of the key areas of focus for climate experts. It accounts for approximately 23% of direct CO2 emissions, placing it on a par with transportation. The top industrial emissions sources are cement, iron/steel and chemicals production.
Unabated, emissions from the industrial sector alone could by 2060 exceed the total annual allowance consistent with the Paris climate agreement, says the IEA.
Two industrial emissions sources present a unique challenge. These are applications that require high temperatures (of 1600 °C or higher), and emissions released directly from industrial processes, such as the calcination reaction that takes place during cement production.
Carbon Capture Utilisation and Storage (CCUS) is one of a limited number of options available for reducing emissions from these areas, and – at scale – one of the most cost effective. According to the IEA’s analysis, nearly a fifth of the reduction in industrial CO2 emissions needed to stay on track with the Paris agreement could come from CCUS.
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The most pronounced role for the technology is in the chemicals subsector, where it accounts for 38% of the reduction in CO2 emissions envisioned through to 2060. This is because chemical processes like ammonia production release a comparatively pure stream of CO2, making emissions easier to capture.
For the cement industry, CCUS accounts for 17% of the anticipated reduction, with the lion’s share of the decrease attributed to reduced demand due to more efficient usage of materials. For iron and steel, the proportion is 15%, with energy efficiency and technology improvements playing the most important role.
If the recommended level of CCUS deployment is achieved in each subsector, it will prevent 29 gigatons of CO2 being released into the atmosphere through to the year 2060. Fuel transformation accounts for a further 31 gigatons and power generation for 56 gigatons in a scenario consistent with the Paris goals.
At present, only 30 million tonnes of CO2 are captured by industrial facilities annually, much of that from ammonia production and natural gas processing.
The IEA’s analysis compares the recommended level of deployment to a more pessimistic set of outcomes in which the global availability of CO2 storage amounts to only 10 gigatons. Should this happen, the marginal abatement cost – i.e. the relative cost of removing each additional unit of CO2 released – would be increased by a factor of two, the analysis predicts.
There are advantages to moving quickly on industrial CCUS. Almost half the global production capacity for the cement, iron and steel subsectors has been added since 2000, the IEA says, and the build out of new capacity is continuing apace.
Petrochemical production is growing even more rapidly, driven principally by increasing global demand for plastics. Through to 2030, oil demand from the petrochemical industry is expected to grow three times faster than oil demand from other sources.
The longer we wait before adopting CCUS, the more facilities will be built without it. This is a problem, because there are efficiencies and cost savings that come with developing industrial infrastructure with CCUS in mind.
Clustering new industrial facilities around CO2 transport and storage infrastructure can substantially reduce the unit cost of capturing, storing and utilising carbon. Early movers will be the first to tap into rising demand for low carbon materials from construction and other sectors.
Unfortunately, early movers will also have to contend with economic hurdles that may prove impassable in the current environment. Markets for plastics, metals and other commodities are highly price sensitive, and the added cost of CCUS could make industry uncompetitive if it moves ahead unilaterally.
To solve this problem, regulators may need to consider compensatory subsidy schemes or broader cooperation on carbon taxes.
