Is CCUS viable in power generation?

With global power demand set to grow substantially, fossil fuels will continue to contribute a significant proportion of global power generation through to 2050. The need to decarbonise thermal generation is critical, yet so far, the development of carbon capture, utilisation and storage (CCUS) for commercial-scale powerplants has been slow. 

With the help of our Lens Carbon platform, our experts have conducted in-depth analysis into the challenges facing CCUS adoption in power generation — and set out what needs to change to make it viable. Fill out the form to download an extract from their report, and read on for a brief summary of the issues. 

Fossil fuel generation and industrial heat dominate energy-related emissions 

Global power demand will grow substantially over the coming decades, whether the current pathway is continued, politics delay the transition, or efforts are strengthened to achieve net zero by 2050. Despite strong penetration from renewables in developed markets, thermal powerplants still dominate global power, with current buildout in Asia dwarfing the combined capacity of older plants elsewhere. While thermal generation will continue to lose overall market share to solar, wind and hydro, it would be uneconomic to shut in much of existing fossil fuel power and industrial heat generation. The use of fossil fuel for power generation and industrial heat creates far more energy-related emissions than transport and other sources, making emissions reduction critical to wider decarbonisation goals.  

CCUS use in power generation presents unique challenges 

The use of CCUS in power is more challenged than in other sectors. For one thing, utilisation is lower for powerplants than for other industries, making CCUS more costly per tonne of CO2. Power plants are also typically spread out across regions, making transportation of captured CO2 more expensive. What’s more, most power consumers are highly price sensitive, making them potentially less willing to pay a premium for decarbonised power. More positively, industrial heat is often collocated with power generation, providing the opportunity to make CCUS more cost effective by combining flues. 

CCUS alone cannot decarbonise power — but neither can other options 

Implementing CCUS in power generation will never be a complete solution. However, if methane and parasitic emissions are minimised, CCUS can reduce emissions to 50-200 kg of CO2 equivalent per megawatt hour across the lifecycle. That approaches the carbon intensity of other ‘decarbonised’ options such as backed-up solar and hydro, once raw material sourcing and equipment production is taken into account (although emissions from nuclear are notably lower). 

CCUS is currently too costly for most power generation applications   

Low CO2 concentrations, low-capacity factors and high transport costs mean CCUS is currently an expensive option for most coal, gas, waste-to-energy and biomass fuelled power generation. Costs differ by a factor of ten between the cheapest scenarios (coal in China) and the most expensive (low-load plants in developed markets), with the latter facing an unbearable cost burden. Retrofitting an existing powerplant with capture equipment is usually more expensive than adding it to a newbuild, but this difference is rarely make-or-break for project economics. 

The number of CCUS-in-power projects remains limited 

Over the past decade, half the CCUS capture capacity announced has been delayed or cancelled in the course of development. There are currently only two commercial-scale projects in operation, both at coal-fired power plants — the Petra Nova CCS project in Texas and the Boundary Dam Carbon Capture Project in Saskatchewan, Canada. A further five are under construction (three coal, one gas and one biomass), while 139 Mtpa of power capture capacity is in development at pre-FID stage, mostly for gas. 

Stronger incentives are essential to drive greater CCUS uptake in the sector 

The main hurdle to greater uptake of CCUS in power generation is that existing incentives are uncertain and insufficient. No CCUS region has a fiscal regime strong enough to spur widespread adoption in the power sector; in fact, most of the world’s fossil-fuelled powerplants face no regulatory consequences for the pollution they cause, effectively emitting for free. Enhanced incentives will only be driven by owner, customer, governmental, and societal appetites to decarbonise - all of which can change quickly with prevailing sentiment, as recent energy security-driven shifts have shown. 

Capture costs should decline as technology improves and scales 

On a more positive note, capture costs are projected to decline as CCUS technology improves and the broader industry scales — at least for hard-to-abate industries. Incremental learning and cost engineering are driving progressive cost reductions in CCUS, while the development of fundamentally different processes for carbon capture — including oxy-fuelled combustion, metal-organic framework (MOF) sorbents and electrochemistry — could deliver improved performance. We project costs to decrease by 50-60% in real terms between now and 2050, helping reduce reliance on decarbonisation incentives. 

Learn more

Don’t forget to complete the form at the top of the page to download the extract with key charts and data from the report, and visit our Lens Carbon webpage to find out more about the critical insights the platform offers to help shape carbon management strategies.