At the COP28, European nations are pushing to phase out “unabated” fossil fuel use, advocating for carbon capture and storage (CCS) as part of the solution, while countries like Saudi Arabia support CCS as a key discussion point, potentially aiding an industry with only 41 active projects, mostly used for controversial enhanced oil recovery. Investor hesitation has been due to high costs, long project lead times, and setbacks such as those at Chevron’s Gorgon CCS project.
Despite these challenges, the CCS industry is gaining momentum with over 350 projects in development, spurred by North American incentives like the Inflation Reduction Act’s tax credits for CCS and direct air capture (DAC). Costs are projected to fall, particularly for DAC technology, and while oil majors have funded CCS initiatives, significant scaling will require bank financing. However, the presence of cheaper energy alternatives may mean CCS growth will be incremental.
Source: COP28: carbon capture is grabbing investors’ attention