Companies around the globe are increasingly looking to decarbonize operations in line with national climate policies and support of a global green transition. One of the ways that many are achieving this goal is through investments in carbon capture and storage technologies. While we are still in the transition phase away from fossil fuels to renewable alternatives, particularly in heavy industries such as manufacturing, companies can reduce their carbon emissions using CCS technologies. Although in the long-term we believe there should be a movement away from fossil fuels, CCS is helping companies to decrease air pollution and meet climate targets in the short- to mid-term.
What are Carbon Capture Technologies?
Carbon capture and storage (CCS) equipment uses technology that captures carbon dioxide from the atmosphere and sequesters it to reduce carbon emissions. This CO2 can either be stored underground, to avoid it entering the atmosphere, or it can be used for activities such as steel and cement production or, more recently, cryptocurrency mining. CCS technologies are viewed by the International Energy Organization as vital for supporting the decarbonization of energy production and other core industries.
U.S. National Drive for CCS Technology
The Department of Energy (DoE) Office of Fossil Energy’s Carbon Storage program has been developing CCS technologies since 1997. In recent years, the U.S. government has increasingly recognized the importance of CCS technologies in achieving the country’s climate aims, including meeting the 2050 net-zero goal.
At the beginning of 2023, the DoE announced $131 million in funding for 33 research and development projects aimed at advancing the wide-scale deployment of carbon management technologies. The U.S. Secretary of Energy Jennifer Granholm explained the investment “By deploying tools to capture, remove, and store CO2 emissions, we can dramatically reduce the air pollution harming our health and intensifying extreme weather events.” Granholm added, “The projects announced today will get us closer to achieving our climate goals while helping to revitalize local economies and deliver environmental benefits to communities too often left behind.”
We believe there is huge potential for CCS technologies. And as governments and international organizations worldwide put increasing pressure on companies to decarbonize, they will be a vital tool in supporting low-carbon operations. This is true both for the oil and gas industry, which continues to supply energy to meet the ongoing demand for fossil fuels, as well as heavy industries. However, despite being in use since the 1970s, the CCS industry remains underdeveloped with the potential for significant innovation and technological improvements. We expect greater private investment in the CCS industry to improve the efficiency of the technology, supporting companies in their decarbonization efforts.
The Importance of Investing
As the world undergoes a shift to green, the global energy transition market is projected to reach $5.6 trillion by 2031, growing at a CAGR of 9.3%. However, there is a significant funding gap at present, with a recent IRENA report stating that $35 trillion of funding will be needed in transitional technologies by 2030 to meet global climate aims. We believe that investing in CCS technologies will not only produce a good return on investment but will also support a successful green transition.
Our Outlook Remains Positive
With a strong outlook for growth in CCS technologies and a firm political will in the U.S. to support sectoral growth, we expect CCS to be rolled out across several industries as part of the green transition. With more companies looking to decarbonize operations, CCS tech will be at the center of their climate policies in the short- to mid-term and will be key to achieving their ESG goals.