‘The longer you sit and wait, the more you need a solution at scale and CCS is that solution’
CCS is not a new technology, but its evolution as a tool to mitigate climate change is relatively recent. We are seeing an accelerated development of carbon capture projects around the world, with the UK leading the way.
At the AIEN’s International Energy Summit, the panel ‘CCS as a Decarbonization Tool: Pathway to Net Zero in the Oil and Gas Industry’ asked what has changed in the global energy and political landscape that has caused the momentum of CCS.
Yelda Guven, VP Policy, EMEA, ExxonMobil Low Carbon Solutions, said: ‘It’s true that CCS isn’t new, but we are seeing more activity these days than 10-20 years ago. Business models now have incentives. The legal basis in the EU has been around since 2009 but haven’t seen FIDs since then. Now governments have put incentives in place, and we also have regulatory certainty.’
Ross Brown, Global Policy Lead, CCUS, Shell, agreed with this. ‘The policy and regulatory landscape have absolutely enabled CCS. There was appetite 10 years ago but now there is a practical recognition that we need it. Recognition that in order to decarbonize some industries, CCS is essential. Recognition that deindustrialization should be avoided at all costs and CCS can help prevent this. There is a level of bipartisan support in Europe and North America which is very helpful.’
Gabrielle Finger, CCUS Commercial Manager, Storegga, said: ‘We need to look at what is the next best alternative. If the premise is that we’re going to decarbonize, CCS is one of the lowest hanging fruits. The new and alternative fuels just increase the cost. CCS keeps existing industries going. It allows things to perpetuate in a way that the next best alternative might not.’
Phillip Solomon, Managing Director,BRG, added: ‘There is also now a sense of urgency. The longer you sit and wait, the more you need a solution at scale and CCS is that solution.’
Moderator Paul Greening, Partner, Jones Day asked what the biggest handbrakes around investment decisions were. And the panel was fairly unanimous.
‘It’s not the technology, it’s the business models,’ said Ross. ‘How do we make this industry work? How do we make it profitable? The problem is that CO2 is a waste product. Other waste is funded municipally – CO2 is not. We need to be creating a demand by subsidizing CCS.
Yelda agreed. ‘Policies don’t always incentivize the whole market, just individual projects. We need market-based policies. We don’t talk much about cross chain risk – capture, transportation and sequestration. It’s not one entity that deals with each phase. What if the infrastructure in one part isn’t ready?’
Phillip added to this. ‘Cross chain risk is project-based. Once we’ve addressed this, we’re in government-to-government risk – for example, a sovereign nation transferring waste and asking someone to look after it into perpetuity. But some countries are embracing it – Asia is seeing it as revenue and a business, subject to the aforementioned complexities.’
Gabrielle concluded: ‘The main issue I see is the regulatory environment and then funding requirements. They are very expensive projects for a non-revenue bearing commodity. How do you fund it and justify it? How do you make money if you are a Carbon Capture company? But we are seeing this bring new players who aren’t usually in the oil & gas space and that’s a good thing.’
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