The world faces the twin challenge of reducing greenhouse gas emissions while meeting growing energy demand. It is a tough circle to square.
Oil and gas cannot be easily replaced and will be integral to global energy security for decades to come. Technology such as carbon capture, therefore, has a vital role to play in helping the world achieve its climate targets.
Evidence is growing that carbon capture, in particular, will be critical — especially in addressing carbon dioxide emissions in hard-to-abate sectors.
The International Energy Agency estimates that 8 gigatonnes of carbon dioxide will need to be captured annually by 2050 to support a net-zero scenario — a significant jump from slightly under 45 million tonnes per annum being captured today.
Carbon capture technology has been around for a while but the market has been slow to take off. Now that is changing and analysts forecast global capacity could reach anywhere from 250 million tonnes per annum to more than 550 million tonnes per annum by 2030.
Activity will likely be driven by the North American and European markets, thanks to regulations such as the US Infrastructure Investment and Jobs Act, and the Inflation Reduction Act, which provide financial support for Carbon Capture and Storage (CCS) and related activities.
Likewise, Canada has introduced a $2.6 billion CCS tax credit initiative while Europe has funding programmes in place to support CCS expansion.
Global CCS projects have already grown by 44 per cent over the past year, according to data published in October by the Global CCS Institute. But even this progress isn’t fast enough.
To achieve net-zero emissions by 2050, it has been suggested that carbon capture capacity needs to increase 190-fold. And the Energy Transitions Commission believes investment of more than $100 billion a year is needed by 2030 to build the capacity required to meet 2050 climate targets, up from about $3 billion in 2020.
Such vast numbers illustrate why the world needs to move more quickly in embracing this critical technology of the energy transition.
At Aramco, our Hawiyah NGL Plant has been capturing carbon dioxide emissions since 2015 for use in enhanced oil recovery.
Now, through a joint venture with Linde and SLB — and in partnership with the Ministry of Energy — we intend to create one of the world’s largest centres to capture carbon dioxide emissions from Aramco plants and others.
The first phase of the CCS Hub has a target capacity of 9 million metric tonnes of carbon dioxide annually by 2027, and we plan to expand this even further in future, supporting Aramco’s ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across its wholly owned and operated assets by 2050.
Meanwhile, the creation of a growing number of carbon markets around the world is also helping to make projects more viable, including a regional voluntary carbon market in Saudi Arabia.
In Europe, Dutch bank ING says the business case for carbon capture and storage becomes feasible at prices above €80 ($85) per tonne of carbon dioxide — with analysts expecting the average price in Europe to exceed €92 a tonne in 2024.
Carbon capture also has the potential to transform the energy value chain. It could possibly provide an important chemical feedstock — carbon dioxide — at a time of rising global demand. And it enables the production of ‘blue’ hydrogen from natural gas, while stripping out the carbon dioxide.
This blue hydrogen can then be transported as blue ammonia — as demonstrated by Aramco for the first time in 2020, with a 40-tonne shipment from Saudi Arabia to Japan.
With low-carbon hydrogen potentially contributing more than a fifth of annual emissions reductions by 2050, the opportunity is clear. In addition to our newly announced CCS Hub, Aramco is exploring options to produce low-carbon hydrogen and ammonia competitively, in terms of both cost and scale, for use in a range of transport and heavy industry applications.
As CCS technology develops, and the cost of making hydrogen declines, there is a unique opportunity to reshape global energy and chemical markets by reimagining the role of the carbon dioxide molecule in our world.