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Because of its potential role in creating a more circular global economy, carbon capture and utilization (CCU) has attracted growing interest from both policymakers and investors in recent years. As the name suggests, captured CO2 is recycled into carbon-dependent products.

But CCU still plays second fiddle to carbon capture and storage (CCS), which permanently sequesters CO2 in subterranean aquifers. Of the $7.1 billion of private sector money invested in the two technologies since 2017 by venture capital, private equity, and other financial players, twice as much has gone to CCS as to CCU.

To assess the nascent CCU market and explore an important climate change and sustainability topic, BCG partnered with the Oil and Gas Climate Initiative on a joint report, Carbon Capture and Utilization as a Decarbonization Lever. We discovered the following:

• While the size of the CCU market could in time be meaningful—with CCU accounting for 10% to 33% of total captured carbon by 2050, according to some estimates—the amount of captured carbon required to achieve net zero far exceeds the potential of CCU. As a result, CCS will remain the dominant decarbonization lever.
• Although more than 25 CCU applications are under development, 4 applications—resulting in CO2-derived construction aggregates, CO2-cured concrete, e-kerosene, and e-methanol—stand out as the most feasible and attractive market opportunities in the near term.
• CCU is important because it can provide another means of limiting the overall level of carbon in the atmosphere. But we found that this is not a given, with the decarbonization impact of CCU applications highly dependent on the source of the utilized CO2, the relative efficiency of the production process, and whether CO2 is emitted during use.

Notably, we also found that CO2 utilization increases the unit cost of our four end products by as much as five times compared with conventional versions. As a result, policymakers will need to be proactive. They will have to deploy a raft of direct and indirect measures—including financial incentives, carbon pricing, and better carbon-accounting rules and emission measurement mechanisms—to improve the economics of applications, support scaling, and turn CCU into a decarbonization lever for the longer term.

The Potential of CCU
Carbon capture is an essential climate mitigation tool because it can tackle hard-to-abate emissions from large stationary industrial sources and remove historical emissions directly from the atmosphere. As part of the International Energy Agency’s Net Zero Emissions by 2050 Scenario, CCUS—which includes storage and utilization—will need to capture 4 gigatons per annum (Gtpa) of CO2 by 2040 (about 90 times 2022 levels) and 6 Gtpa by 2060.

CCU capacity is a small fraction of that amount today. About 250 million tons per annum (Mtpa) of captured or mined CO2 is currently used across applications, with most of it going toward urea production or enhanced oil recovery (which relies on the gas to increase the volume of oil extracted from a reservoir).

Assessments of the future size of CCU vary significantly. The International Energy Agency and Energy Transitions Commission project that 430 Mtpa to 840 Mtpa of CO2 will be captured and recycled by 2040 using CCU. For this report, we have created our own assessment by analyzing the four applications with the greatest near-term potential.

Four Applications
More than 25 CCU applications are in development. These rely on a handful of conversion pathways—from mineralization to artificial photosynthesis—that embed CO2 in new products through chemical reactions. (See Exhibit 1.) READ MORE

By Oluseye Owolabi, Rukmini Sarkar, Bas Sudmeijer, and Carl Clayton

Source: bcg.com