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The Essential Role of CCUS in the Energy Transition Oil and Gas IQ: An Interview with Charles McConnell by Diana Davis

Carbon Capture, Utilization and Storage (CCUS) technologies have been around for decades but were widely seen as too capital intensive and lacking sufficient ROI.

However, the technologies - which allow for the carbon released during power generation or other industrial processes to be captured and stored or used for another product or service (e.g., using it as an input to create methanol) - are now firmly back on the agenda as countries aim to achieve ambitious net zero climate goals.

The Biden administration, for instance, has earmarked more than $12 billion in CCUS investments as part of the bipartisan infrastructure bill. It will also be issuing further guidance on CCUS as part of its plans to reduce emissions in the industrial sector.

Many European governments have also pledged increase support for CCUS, such as Norway’s Longship project and the UK’s support for 5 industrial CCUS hubs.

Some environmentalists, however, are opposed to the widespread deployment of CCUS. They believe it fosters continued dependence upon fossil fuels and detracts from investment in alternative energy sources.

That’s an argument that simply takes time away from the technical and business challenge that confronts us, says Charles McConnell, Executive Director, Carbon Management and Energy Sustainability at the University of Houston.

Renewables are unable to meet our global energy needs, he says, and we need to reduce our carbon emissions as quickly as possible.

“We need to keep our eye on the ball. Our goal is not to eliminate fuels and technologies. Our goal is to eliminate emissions,” he says.

The IEA says the current pipeline of CCUS projects still falls well short of the needed 1.7 billion tonnes of CO2 capture capacity that must be in place by 2030. The world needs to dramatically increase its investment and pursuit of CCUS deployment.

“We need to do everything we can to create pathways for rapid and successful deployment [of CCUS]," says McConnell. "We must translate that political will into deployable technology and commercial activity. It’s a must and not an option."

McConnell has decades of industry experience and served as Former US Assistant Secretary of Fossil Energy, a politically appointed role to execute policy and operate the Fossil Energy Department. In this interview, he discusses the role of CCUS in the energy transition and what he thinks it will take to make widespread commercial deployment of the technologies a reality.

Diana Davis, Oil and Gas IQ: In the past, CCUS technologies were seen as incredibly capital intensive. Where are we now with the current state of these technologies?

Charles McConnell: In the past, people looked at CO2 emissions capture and ultimately CCUS as a big cost that had no rate of return. The capital intensity of the investments for capture and storage was – and remains - very high. But while previously there was no marketplace to support carbon capture in any type of sustainable manner, this is now changing. Governments, in Europe and here in the US, have begun to consider much more aggressive marketplace incentives to promote carbon capture. Shareholders and investors in the marketplace are asking the questions about the carbon intensity of products. If industries with large emissions intend to continue to have a sustainable pathway for growth, they're going to have to address their emissions. The question is not whether CCUS technologies are too expensive. They are clearly more expensive. But in terms of global energy strategy, you must analyze the full lifecycle impact of carbon reduction strategies in terms of energy reliability, affordability and decarbonization. We need to now make the compelling choice where we can decarbonize most effectively while still ensuring energy sustainability. I believe that CCUS are an essential part of that mix.

Diana Davis, Oil and Gas IQ: Effectively, CCUS technologies were uneconomic and still are now, but we need to consider them as part of the greater strategy in the energy transition?

Charles McConnell: CCUS technologies have been recognized as a necessity. That would not have been the case if it were not for the desire to decarbonize rapidly and effectively and the realization that renewables such as wind and solar alone will not be enough to meet our energy needs. CCUS could mean that energy is going to cost more. But those that argue for decarbonization would suggest that increased energy costs are far outweighed by the far higher cost to society of continuing to pump CO2 into the atmosphere. We have choices now that we weren’t considering 10 years ago. These are greatly enhanced and improved by the broad commercial deployment of CCUS. We need to look at now where it can it be most effectively and efficiently deployed to get the impacts for which we're looking.

Diana Davis, Oil and Gas IQ: How large a role do you think CCUS technologies are going to play in the energy transition?

Charles McConnell: Research from the International Energy Agency (IEA) suggest that for us to meet our climate targets requires at least 15% of the impact to come from CCUS and as much as 25 to 30%. That's going to require incredibly broad commercial deployment strategies, at levels currently unimaginable to most of us. However, it would be even more expensive to reach climate targets without CCUS. The IEA suggests that it would cost 139% more to reach net zero without CCUS. The reason is that building renewables that only run 20% of the time is a wildly inefficient way to deploy capital. We need to think about where we are spending our money and what impact are we getting for it.

Diana Davis, Oil and Gas IQ: US President Joe Biden has recently announced plans to reduce carbon emissions in the industrial sector. Further guidance on CCUS deployment is expected to be part of that. Additionally, there's expected to be more than $12 billion in CCUS investments provided by the bipartisan infrastructure law. What do you think of these proposals?

Charles McConnell: I think it's a recognition that without CCUS, we're not going be successful in our decarbonization strategy. We have an opportunity through the Infrastructure Bill to accelerate the broad commercial deployment of these technologies. The global climate tzar for Joe Biden, John Kerry, has stated that it's critical for the reliability of the electricity grid to have natural gas combined facilities with CCUS as a primary involvement in the energy transition. We cannot make it without them.

Diana Davis, Oil and Gas IQ: Where do you think those investments should go? What do we need to invest in to get us there?

Charles McConnell: You need to do it where it's going to make the most impact. So, how do we identify that? You want to look at the places in the country where there are large amounts of emissions and the vast geologic reserves that are important for carbon storage. When you figure out where you have a large amount of proximal emissions, combined with the geologic resources required for the long term permanent safe storage of carbon, you get the answer to your question. That's where we ought to be putting the money. It's nice to have a project here and there all over the place, but if you really want to think strategically, you must do it in places where it's going make the most impact.

Diana Davis, Oil and Gas IQ: What will it take to tip the balance in favor of CCUS? What are we going to need to see?

Charles McConnell: We need legal and policy frameworks that allow for the implementation of successful business development. Organizations like the EPA and others must provide the pathways for the logical and informed deployment of policies and legal constructs to de-risk the deployment of CCUS. Ultimately, that means we need to embrace CCUS as a public good rather than arguing as if it's something that we're not sure that we want to do. Once we’ve got that consensus, we need to do everything we can to create pathways for rapid and successful deployment. We must translate that political will into deployable technology and commercial activity. It’s a must and not an option.