Bet on Carbon Capture, Utilization and Storage as a Vehicle to Reach Climate Goals

CCUS is a high growth market in the coming decades.

Waqar Syed, MBA

The Paris Climate Agreement, which has been adopted by almost every country in the world, has an ambitious target of lowering global greenhouse gas (GHG) emissions. As a result, governments around the world have drafted regulations to penalize emissions. Additionally, several major investment firms have started using the carbon footprint of a company as a criterion in their investment decisions. But energy-intensive industries—oil and gas, power, cement, steel mills, chemicals—create high-paying jobs and are a key driver of economic activity for many regions and these trends can have serious implications for Alberta and Texas, as they are highly reliant on such industries. Fortunately, carbon capture, utilization, and storage (CCUS) provides a path to lowering GHG emissions in energy-intensive industries, preserving not only existing jobs, but also creating new ones.

Significant New Investment Likely in CCUS through 2030 and Beyond
The Intergovernmental Panel on Climate Change (IPCC) estimates that the cost of achieving Paris Climate Agreement goals will be twice as expensive without CCUS. Exxon Mobil Corporation estimates that CCUS could be a US$2 trillion revenue opportunity by 2040, while the International Energy Agency (IEA), in its Sustainable Development Scenario (SDS), estimates CCUS capacity increasing from 40 million metric tonnes per annum (mmtpa) to 840 mmtpa by 2030 and to 5,600 mmtpa by 2050. We estimate that global CCUS investments could be in the US$375 billion to US$650 billion range by 2030.

CCUS Is Especially Important for Alberta
Owing to its large industrial base, Alberta contributes about 53% of Canada’s facilities-based GHG emissions, while the oil and gas sector contributes 18% of Canada’s total GHG emissions. The Government of Canada has proposed raising the carbon price from C$50/tonne in 2022 to C$170/tonne in 2030 and the planned Clean Fuel Standard (CFS) targets carbon intensity (CI) reduction of the entire supply chain of fuels sold/produced in Canada. These measures should raise the operational costs for Alberta-based large emitters. Fortunately, Alberta’s oil and gas sector has the know-how and infrastructure (pipelines and storage) to provide CCUS solutions to the industrial base of Alberta and its neighbours. In the process, CCUS could become a substantial revenue opportunity for Alberta-based CCUS solution providers, while those investing in carbon capture in their facilities should benefit from carbon credits. We estimate that CCUS could be a high-growth industry in Canada through the end of the decade, and while estimates of the size of CCUS investments can vary sharply depending on final regulations, we estimate the revenue opportunity in CCUS to be in the C$8 billion to C$45 billion range in Canada by 2030.

Waqar Syed, MBA 720-683-6705

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