Carbon capture investment nears the 1.5° pathway
The number of new carbon capture, utilization and sequestration (CCUS) projects is close to what's needed to avert the most catastrophic impacts of climate change, according to a report from Wood Mackenzie. But another seven-fold increase in investment will be required to achieve net-zero,
Why it matters: The U.S. has led the way in CCUS investment. Now countries around the world are starting to announce ambitious carbon-capture plans of their own.
Driving the news: There were 50 new CCUS projects announced in Q2, bringing the global project pipeline to 905 million metric tons per annum, according to the quarterly market report from Wood Mackenzie.
- New capacity in the U.S. alone jumped by more than 20% from just Q1.
- Meanwhile, Norway, Russia, Australia and the U.K. emerged as new CCUS hotspots.
Yes, but: Whether those press releases and investor updates will translate into steel into the ground remains the big question.
Zoom in: The U.S. remains a CCUS leader, buoyed by lucrative federal incentives under the existing 45Q tax credit. Those incentives were further enhanced this month via tax credits included in the Inflation Reduction Act.
- The U.S. and Canada together account for two-thirds of global CCUS capacity, with key regions being the U.S. Gulf Coast and Midwest, and Alberta, Canada.
What they're saying: Still more investment is needed.
- "The CCUS capacity pipeline is close to aligning with Wood Mackenzie’s 1.5-degree pathway to 2030, but it will need to grow seven-fold by 2050 to reach the capacity required for net zero,” senior research analyst Lucy King said in a statement accompanying the data.
- North America's share of the CCUS market is expected to shrink to about 50% as soon as 2030, as projects in Europe scale up. As far as climate mitigation, that could be a good thing.
What we're watching: Investment announcements are outpacing policy, particularly in more nascent CCUS markets such as Europe, Wood Mackenzie says.
- We'll be keeping an eye toward not only potential incentives, but standards for ensuring that CCUS projects absorb the carbon that they claim.
- More important: Whether companies and countries follow through on their bold investment announcements.