Touseornottouse?WoodMackenzieCCUSresearchteamAugust2024CO2utilisationasacarboncaptureenablerExecutiveSummaryTouseornottouse:CO2utilisationasacarboncaptureenablerCO2utilisationcouldbolstercarboncaptureeconomicsbutrepresents<5%ofglobalannouncedcapturecapacity.Highcosts,insufficientsubsidies,andunsubstantialmarketsforgreenpremiumsarelimitingappetiteforutilisationgrowth.e-Hydrocarbonsareuncompetitivetodayandcost>3xvsincumbenttechnologywhenusinggreenH2,whichcomprises>80%ofcostofproduction.Subsidiestodayareinsufficienttoovercomethesecosts.CO2mineralisationtohigh-puritylimestoneiscompetitivewithtraditionalmanufacturing,showing15%+returnsiftechnologyisscaledeconomically,butmarketsizeislimitedto40Mtpa.Aggregatescouldbea500+Mtpamarket,butconversiontoaggregatesistooexpensivetodaytobecompetitive.Policysupportingdemandforutilisationproductsisnotstrongenough.Withoutmarketsfortheseproducts,utilisationeconomicswillcontinuetobedisadvantaged.TaxincentivesliketheUS45QandCanadianInvestmentTaxCreditsupportutilisationbutarelimitedinscopeandprovideinsufficientrevenuetojustifyprojects.OnlytheEUhasalegislatedCO2utilisationmandate,whichisconstrainedtoe-fueluseinaviation.Declinesinfeedstockandtechnologycostsanddevelopmentofstrongpolicyincentivesarecrucialforutilisationtobecomealegitimate,widespreadenablerofcarboncapturedeployment.222Utilisation472StorageAnnouncedcarboncapturecapacitygoingtoutilisationvsstorage(Mtpa)05001,0001,5002,0002,5003,0003,5004,0004,500TraditionalfuelcostspluspenaltiesLevelisedcostofe-fuelproduction2030US$/tonnejet05001,0001,5002,0002,5003,0003,5004,0004,5005,000TraditionalfuelcostspluspenaltiesLevelisedcostofe-fuelproductionTraditionalfuelcostspluspenaltiesLevelisedcostofe-fuelproductionTraditionalfuelcostspluspenaltiesLevelisedcostofe-fuelproduction203020402050US$/tonnejetTraditionalFuelProductionCostETSReFuelEUPenaltiesGreenH₂CostBiogenicCO₂CostOthere-FuelProductionCostsRangeLevelisedcostofe-fuelsvstraditionalfuelswithEUpenalties,2030Illustrativeeconomicsofpost-combustioncapturepairedwithhigh-puritylimestone(CaCO3)productionPre-tax5.7%IRRUSD-144MMPV@10%USD-144MMPVRemPost-tax16.4%IRRUSD207MMPV@10%USD207MMPVRem12.80.557.247.32.1LCOCCUS@10%USD120.0/tCaptureopexCapturecapexTransportcapexTransportopexStoragefee-tollopex51.762.542.2LROCCUS@10%PricepremiumfromCO2capturedUtilisationprofitsfromhigh-purityCaCO3production45QUSD156.4/tTouseornottouse:CO2utilisationasacarboncaptureenabler3Over7Btofcapturecapacityisneededby2050inanetzeroscenarioCCUScapacitybuild-outisacrucialelementofglobaldecarbonisation…Source:WoodMackenzieEnergyTransitionServiceNote:CCUSincludesBECCS.Point-sourceanddirectaircarboncapture,MtpaCO201,0002,0003,0004,0005,0006,0007,0008,000203020402050DelayedtransitionBasecasePledgesscenarioNetzeroscenarioInourbasecase,CCUSandengineeredremovalsreach2billiontonnesperannumby2050InourNetZeroScenario,7billiontonnesperannumofCCUSandengineeredremovalsarerequiredDevelopersneedalternaterevenuepathways,likecreditgenerationandproductpremiums,tosupplementgovernmentsupportandbolsterprojecteconomics…butcurrentincentivesareinsufficienttospurwideCCSdeploymentinsomesectors4Source:WoodMackenzieLensCarbonValuationsNote:Samplevaluationassumes25-yearprojectlife,whichexceeds12-year45Qeligibility.1:Carbondioxideremoval(CDR)istechnologyusedtoproducenetremovalofCO2fromtheatmosphereTouseorn...
