By Mitchell Beer
After a half-century of research and development, carbon capture and storage projects are far more likely to fail than to succeed, and nearly three-quarters of the carbon dioxide they manage to capture each year is sold off to fossil companies and used to extract more oil, according to a sweeping industry assessment released today by the Institute for Energy Economics and Financial Analysis (IEEFA).
The report lands just as analysts in the United States warn of major verification problems with a CCS tax credit that received a major boost in the Biden administration’s new climate action plan, and as Canadian fossil fuels lobby for more tax relief to match what’s becoming available in the U.S.
One of the case studies in the 79-page IEEFA report concludes that the troubled Boundary Dam CCS project in Saskatchewan has missed its carbon capture by about 50%. The 13 “flagship, large-scale” projects in the analysis account for about 55% of the world’s current carbon capture capacity, the institute says in a release.
Those 13 projects captured a grand total of 39 million tonnes of CO2 per year, the report found, about one-ten thousandth of the 36 billion tonnes that emitters spewed into the atmosphere in 2021.
“CCS technology has been going for 50 years and many projects have failed and continued to fail, with only a handful working,” said report co-author Bruce Robertson, a veteran investment analyst and fund manager now serving as IEEFA’s energy finance analyst for gas and LNG. The report, co-authored by energy analyst Milad Mousavian, concludes that seven of the 13 projects underperformed, two failed outright, and one was mothballed.
“Many international bodies and national governments are relying on carbon capture in the fossil fuel sector to get to net-zero, and it simply won’t work,” Robertson said in the release. Though there is “some indication it might have a role to play in hard-to-abate sectors such as cement, fertilizers, and steel, overall results indicate a financial, technical, and emissions reduction framework that continues to overstate and underperform.”
Robertson said the two most successful projects in the study, both of them in Norway, benefitted from the country’s “unique regulatory environment” for fossil companies.
When CCS or carbon capture, utilization and storage (CCUS) projects did succeed, it was usually in the natural gas processing sector, where CO2 has to be removed to deliver a marketable product, IEEFA explains. But that’s often the CO2 that is handed off for Enhanced Oil Recovery (EOR), a process that involves injecting the gas into declining oil wells to boost their production. Canada’s new CCS tax credit excludes EOR projects, but IEEFA says 73% of the CO2 captured across the 13 projects in the study was used for that purpose.
“Producing the primary usable product (i.e. natural (methane) gas) is impossible without separating CO2,” the report states. “This explains why the sector has been using carbon capture technology for decades, not necessarily as a climate-friendly solution, but as an inevitability to produce the fossil fuel natural gas. On top of that, selling the captured CO2 primarily to oil producers for enhanced oil recovery improves the economic viability of gas development projects.”
But last year’s Net Zero by 2050 report by the International Energy Agency “explicitly expressed alarm about the danger of developing any new oil and gas projects globally,” the two authors add. “It emphasized not developing any new oil and gas projects if the world wants to reach net zero by 2050.”
Leave a Reply