What went wrong? Learning from three decades of carbon capture, utilization and sequestration (CCUS) pilot and demonstration projects

Nan Wang, Keigo Akimoto and Gregory Nemet

Energy Policy, 2021, vol. 158, issue C

Abstract: The delivery of operational clean energy projects at scales is essential for addressing climate change. Carbon capture and sequestration (CCUS) is among the most important clean technology, however, most CCUS projects initiated in the past three decades have failed. This study statistically evaluates the reasons for this unfavourable outcome by estimating a hazard model for 263 CCUS projects undertaken between 1995 and 2018. The results indicate that larger plant sizes increase the risk of CCUS projects being terminated or put on hold; increasing capacity by 1 Mt CO2/y increases the risk of failure by nearly 50%. We also examined the impact of technology push and market pull policies and found that existing support mechanisms have not been sufficient in mitigating the risks associated with project upscaling. CCUS deployment at the gigaton scale depends on substantially reducing project risk while increasing expectations of financial returns. Gradual upscaling, increased policy support, particularly for demonstrations of the viability of CCUS, while also building a market through carbon pricing would help remedy the current imbalance between risk and return. Increasing the expected payoffs for CCUS so that hundreds of real projects are brought on-line will require the co-evolution of technology innovation, institutions, investment, and deployment strategy for CCUS technology.

Keywords: CCUS; Deployment policy; Hazard model; Technology penetration (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:158:y:2021:i:c:s030142152100416x

DOI: 10.1016/j.enpol.2021.112546

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