June 07, 2021 • Paul Rodden • Season: 2021 • Episode: 18
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In episode 018, There is alot of positive news in the CCUS (Carbon Capture Utilization and Storage) market and it needs to be addressed. CCUS companies in United States and Canada are both utilizing existing governmental tax credit to their benefit and the UK is injecting resources into their CCUS programs to help speed up their results.
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Carbon capture and sequestration market to touch 6.13 billion by 2027. A rare climate by partisanship emerges on carbon storage and air capture. The city of Houston Texas could become a CCUS power. The carbon capture and storage Association in the UK announces 14 projects that received funding and other government funded competitions in the UK. All of this on today’s carbon capture focused hydrogen podcast.
So the big questions in the energy industry today are how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen. And this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
Okay, so to start off today’s podcast, I’d like to talk about a CCUS market research project by Fortune Business Insights, saying that the markets going to reach $6.13 billion by 2027. Now this report covers several big players in the CCUS market, including floor Corporation, Exxon Mobil, Carbon Engineering Limited, add nongroup, Ecuador, China National Petroleum Corporation, Dakota Gasification Company, Shell, BP, Chevron, Lindy, Total, Aker Solutions and NRG Energy. So keeping in mind that in 2019, the CC US market was 1.75 billion. And if this report is right, that by 2027, it’s going to be 6.3 billion. That means a compound annual growth rate of 19.2%, which is over three times the estimated growth rate for hydrogen. And this report also has some other very interesting figures. And one of those figures includes the increasing number of EOR projects.
And if you don’t know what EOR stands for, stands for enhanced oil recovery, where co2 is reinjected into a field to help stimulate wells to recover almost 65% of the oil that’s not produced in the primary and secondary phases of production. And with the estimated increase of EOR projects. Over the next 10 years, we could see the last IEA estimated 374 projects increase of substantially keeping in mind that of those 374 projects, almost half of those used carbon dioxide versus mitigated gas. Two of the areas heavily focused in this report are North America and the Asia Pacific region. North America is projected to dominate the carbon capture and sequestration market share because the prominent presence of carbon sequestration plants in the US and Canada, which is adding the regional market growth, development of such facilities in the region is being further fueled by the rising investments in r&d activities aimed at engineering emission reduction solutions.
In 2019. The region boasts a market size of 1.3 billion US dollars. And in the Asia Pacific region, several big scale carbon capture and sequestration projects in varying development phases in Australia and China are expected to boost the market. Additionally, the growing presence of high volume storage solutions implementing EOR operations is expected to favor the growth of the regional market. In the Middle East and Africa. The abundance of oil and gas reserves is expected to boost market growth. Additionally, the region has an enormous potential for the production of hydrocarbons using EOR methods.
Next, I’d like to talk about an article from Axios titled rare climate bipartisanship emerges on carbon capture storage and air capture. Apparently, bills aimed at trapping industrial carbon emissions or pulling co2 directly from the atmosphere are piling up in Congress. And instead of the usual gridlock, some of them may actually gain momentum. And what further makes this interesting are the two senators who are spearheading this. Michael Bennett, a Democrat from Colorado, and Rob Portman, a Republican from Ohio, who both introduced on Wednesday May 26 The Carbon Capture Improvement Act to help power plants and industrial facilities to finance carbon capture and storage equipment, as well as more unproven direct air capture projects. This bill would permit businesses to use private activity bonds, which local and state governments currently have access to, in order to finance a carbon capture project.
These bonds have tax advantages over other financing mechanisms, and have previously been used for installing pollution control systems or power plants. And that’s according to a summary from the lawmakers. The bill would also allow facilities to use an existing tax credit known as the 45 Q which I’ve covered before for capturing industrial emissions. And in a quote from Senator Portman, the senator states carbon capture and direct air capture are Common Sense technologies that will allow states like Ohio to continue to utilize our natural resources while protecting our environment at the same time.
Other moves going on in the US include a bipartisan group of House members, who introduced a bill known as the catch Act, which would make changes to the 45 q tax credits in order to make them available to new types of projects. The bill would also boost the credit levels available. There’s also another bill with bipartisan backing called the scale Act, which was introduced in March by Senators Chris Coons, a Democrat from Delaware. And again, Senator Cassidy, as well as representatives Mark Beezy, a Democrat from Texas and David McKinley, Republican out of West Virginia. This bill helps support the build out of more comprehensive carbon capture infrastructure to include transporting carbon dioxide from where it’s captured, to where it could be stored or used in manufacturing. Next, I’d like to talk about an article from upstream online titled Houston uniquely positioned to become a CCUS power.
And why Houston? Well, Charles McConnell, a former Assistant Secretary of Energy during the administration of former US Democratic President Barack Obama, and the energy center officer of the university’s center for carbon management and energy, said the Houston area has a number of advantages when it comes to being a potential CCUS hub. According to McConnell, Houston is uniquely positioned globally as a place where this should flourish and be able to advance commercially faster than anywhere else in the world, and the most effectively. He also noted that the region already has a number of industries that could support CCUS activities in a close area, pipeline systems that could be put to use and good geology for carbon dioxide storage. The Houston area, he said it could have as much as 100 years worth of underground carbon storage. It’s suitable geology, it’s permeable, it’s porous, but it’s also safe and permanent in terms of permanency of the formations, so that when the carbon dioxide is injected into it, it will be safely and permanently stored. This is also good news for those operators in oil and gas. According to his plan, instead of actively opposing the idea of energy transition.
McConnell believes they can be participants and benefit financially, many of the companies in the oil and gas segment are under investor and shareholder pressure to decarbonize and produce projects that have a lower carbon footprint. So the carbon intensity of the way they operate, the products they produce, all of these things McConnell believes going forward are part of what all of these companies believe will be important value propositions for themselves, considering the existential threat that they currently are feeling right now, because they’re either going to get with it, or they’re going to end up extinct and still on the positive note for oil and gas operators is that the university’s plan does not call for the elimination of hydrocarbons, especially when it comes to natural gas. Instead, it believes the correct approach would be to eliminate their carbon emissions, as alternative sources of energy are currently incapable of handling the entire power demands of Texas and beyond. And natural gas with its lower carbon footprint than oil or coal will be needed to handle the demands that wind and solar power can’t.
Again, according to McConnell, he said the use of CCUS is a methodical pathway that is more technologically viable and takes advantage of existing geology and infrastructure. Steady development of CCUS in Houston over the next three decades may not be cheap, but it would allow the region to remain an energy powerhouse throughout the transition. McConnell ended his statement with this saying CCUS has now found the light of day in terms of people’s recognition. It’s not an option. It’s a must have.
And now to switch our focus from North America, to the UK, where CCUS projects successful in government funding are announced. This is according to gas world.com, the carbon capture and storage Association CCSA, which is the trade body for the carbon capture, utilization and storage industry in the UK. Welcome to the announcement of 14 projects that have successfully received funding three of the projects relate to CCUS which is the Phillips 66 Ltd refueling the Humber refinery, which is linked to the Humber CCUS cluster, the Tate and Lyle sugars limited application of advanced cryogenic carbon capture to smaller scale and dispersed industrial sites and SR oil limited stanlow refinery netzero ready furnace replacement, that one being linked to the high net CCUS project of the announcements.
Olivia Powis head of the ccsa Uk office said “today’s announcements are further proof that the government is committed to delivering on its CCUS ambitions as moving forward with the projects at pace this year is already shaping up to be critical for CCUS development with a number of key decisions expected that will ensure we can deliver at least four CCUS clusters. By 2030.” Other announcements made regarding funding competitions, which support CCUS and related industry include the launch of UK industrial, decarbonisation Research and Innovation Center, a selection of 24 projects under phase one of the direct air capture and greenhouse gas removal program. The opening of the 60 million pound low carbon hydrogen supply to competition and launch of the 20 million pound CCUS innovation 2.0 competition.
In phase two, the UK Government announced 166 point 5 million pound cash injection to support the build out of carbon capture technologies. This according to independent commodity intelligence services, or ISIS, an expression of interest for the carbon capture usage and storage innovation 2.0 competition was also launched The competition will receive 20 million pounds of the newly released 166.5 million pounds to help with projects developing novel technologies that reduce the cost of deploying CCUS.
So it looks like the US and the UK governments are doing their part to back carbon capture innovation, and I look forward to seeing where this goes in the next five years. That’s it for me everyone. If you have any questions or comments about today’s episode, stop by my website at thehydrogenpodcast.com leave a question or comment. I’d very much love to hear from you. And as always, take care. Stay safe. I’ll talk to you later.
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