Carbon Capture Utilization and Storage in Climate and Energy Strategies

Published on 3rd March 2020

OPEC is dedicated to identifying balanced, equitable, inclusive and common-sense solutions to the challenges posed by climate change. We believe that the oil and gas industry can and must be part of the solution to climate change. The science is clear on the gravity of this issue, and we are actively engaged in multilateral processes that aim to address this global challenge.

Yes, greenhouse gas emissions need to be reduced, but we must not place ourselves in a position where we are forced to choose one energy type over another. The fact is, with a global population estimated to increase by 1.6 billion – from 7.6 billion in 2018 to 9.2 billion in 2040 – the world will require all energy types to meet rising energy demand in the long term.

With this in mind, the focus must be on developing and implementing cleaner energy technologies across the value chain, enabling us to meet the world’s burgeoning energy needs in a sustainable and efficient manner.

In doing so, however, we must be inclusive and equitable in our decisions, and not forget our fellow citizens who, day in and day out, struggle for access to energy the rest of the world takes for granted. Here, I am referring to the serious scourge of energy poverty. The facts are sobering: there are more than 800 million people around the world who lack access to electricity and almost three billion who live without modern fuels for clean cooking.

Let me be clear: nobody should be left behind in the energy transition. Sustainable Development Goal number seven of the United Nations ensures access to affordable, reliable, sustainable and modern energy for all people – not just for a select group.

OPEC is a co-author of the UNFCCC, the Kyoto Protocol and the Paris Agreement and fully supports the multilateral approach to addressing climate change. The core elements of the UNFCCC, particularly equity, historical responsibility and national circumstances must be considered at all junctures moving forward.

Energy poverty and climate change are two sides of the same coin. Thus, it is our firm belief that a well-coordinated and balanced approach with the participation of global stakeholders across the value chain will be essential to effectively addressing the complex issue of climate change while also meeting the unique energy requirements of those in developing nations.

Establishing a circular carbon economy would enable industry to combat climate change through the recovery and recycling of carbon emissions.

I must commend the efforts of Saudi Arabia, which is a leading advocate for harnessing technology to address climate change. This was evident at last October’s Future Investment Initiative in Riyadh, when HRH Prince Abdul Aziz Bin Salman gave a prolific speech outlining Saudi Arabia’s transformative efforts. We published this speech in the OPEC Bulletin. If I may, your Highness, I would like to share an excerpt: “For us, transformation begins from within. The Kingdom is putting its resources behind the Circular Carbon Economy by investing heavily in new energy and efficiency solutions for the world. In fact, Saudi Arabia is reforming its entire energy ecosystem.”

According to the Global CCS Institute, CCUS is one of the few technologies that is able to adequately displace CO2 from coal and gas-fired power stations and the only technology capable of decreasing large-scale emissions from diverse industrial sources. It is also a technology that can be retrofitted to many existing facilities, enabling them to operate cleanly for the remainder of their lifecycles. CCUS is also beginning to prove itself as a commercially viable solution, and is thus seen as a win-win proposal for many industry players.

As of 2019, there were an estimated 51 large-scale CCS facilities around the world. These include 19 that are operational, four that are under construction and 28 that in are various stages of development. Geographically, these facilities are located in the Americas, Europe, the Middle East, Central Asia and in the Asia Pacific region.

The total capture and storage capacity has risen by 34% since 2017, which equals 97.5 million tonnes of CO2 per year. To date, more than 260 million tonnes of anthropogenic CO2 have been safely captured and permanently stored globally.

According to the IEA’s most recent report on CCUS, three-quarters of the COcaptured today in large-scale facilities comes from oil and gas operations, and the industry accounts for more than one-third of overall spending on CCUS projects.

OPEC and its Member Countries are joined by the IPCC, the IEA, international oil companies and many other industry leaders in highlighting the critical role that CCUS must play in meeting global emissions reduction goals.

Several OPEC Member Countries have been active in CCUS projects, and I would like to briefly highlight some of their impressive endeavours. Some of these country-specific projects will be further elaborated upon in various sessions today.

First of all, in Saudi Arabia, the Uthmaniyah demonstration project in the Eastern Province of the country was launched in 2015 with the goal of capturing 0.8 million tonnes per year of CO2 at the Hawiyah natural gas processing plant and transporting it 85 kilometers by pipeline to the depleted Uthmaniyah area of the Ghawar field. The project is run by Saudi Aramco, which describes it as “one of the Middle East’s largest CO2 capture and storage demonstration projects.” The plant has the capability to capture and process an impressive 45 million standard cubic feet of CO2 per day.

In the United Arab Emirates, the Abu Dhabi National Oil Company has ambitious plans to increase its carbon capture programme six-fold by using Enhanced Oil Recovery technology at its maturing fields. The company’s commercial-scale Al Reyadah facility has the capacity to capture 800,000 tonnes of CO2 per year. ADNOC’s goal is to increase this capacity six-fold to reach 5 million tonnes of CO2 per year by 2030.

In the Islamic Republic of Iran, we also see great progress being made with CCUS. The massive AMAK project, which is the country’s largest gas gathering and treatment project, averts the flaring of around 180 million cubic feet of gas per day, dehydrates it, injects into the pipeline and, finally, it is processed for further consumption.

Since 2004, Algeria has also been a pioneer in CCUS with its cutting-edge In Salah project. The Krechba gas treatment plant, located about 1,200 kilometers south of Algiers, successfully stores CO2 in analogous carboniferous sandstone wells.

There are also significant opportunities for Angola and Equatorial Guinea to employ CCUS in their depleted oil and gas fields, and Angola has the added CCUS opportunities using its deep saline aquifers.

These are just a few of the examples of the excellent efforts being made in OPEC countries to reduce their carbon footprints and increase their operational efficiencies while also diversifying their economies.

In the private sector, action is also being taken by international corporations, which have stepped up their efforts to address climate change.

At the beginning of this year, Microsoft announced its lofty aims to go carbon negative by 2030. This means the company would remove more CO2 from the atmosphere than it emits. Over and above this, by 2050, it has pledged to reach an even higher target of removing from the environment all of the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

As part of these ambitious plans, the company announced a new four-year, $1 billion Climate Innovation Fund to help, as the company describes it, “stimulate and accelerate the development of carbon removal technology”. A portion of these funds will be devoted to further developing and refining CCUS technologies, helping advance the overall CCUS industry and accelerate efforts towards reaching the broader climate goals.

International oil companies are also introducing proactive measures. Just two weeks ago, BP released its goals to become a net-zero company by 2050. These ambitious targets include net zero emissions across the company’s operations, net zero carbon in its oil and gas production, as well as a 50% cut in carbon intensity of its products. To achieve this, the company will fundamentally transform its organization and the way it does business.

On the policy front, CCUS is seen as an integral part of any strategy to limit global warming and meet the temperature target of well below 2 degrees celsius in line with the Paris Agreement’s long-term goal.

Industrialized countries are putting this option on the table as a means of meeting their mitigation contributions. For example, the European Union has defined CCUS as one of seven technological tools to reach the goal on climate neutrality by 2050. And last week, the New York Times published an article entitled “The Republican Climate Agenda” which elaborates the new US House Republican climate agenda, which calls for tax breaks to encourage the development of technology for CCUS from coal and gas plants.

So, clearly, we are seeing positive momentum for the growth and support of CCUS, however there are still some hurdles to be overcome going forward.

Article 6 of the Paris Agreement remained an unresolved issue from COP24 in Katowice, and was then placed on the agenda for COP25 in Madrid. One of the concerns is in paragraph 4 of Article 6 on the transition of activities from the Kyoto Protocol and provisions for Clean Development Mechanism (CDM) activities. There is a need to ensure that CCUS projects would be eligible for the new mechanisms created under Article 6.4. 

On the margins of COP25, discussions also took place on the governance, regulatory frameworks, technical aspects and socioeconomic value of CCUS and CO2 removal.

Looking ahead to COP26 in November of this year to be held in Glasgow, what some are calling a “grand coalition” is being developed to help bring together stakeholders from across the industry to enhance synergies and build consensus on the importance of leveraging all viable technologies, especially CCUS, to help reduce greenhouse gas emissions.

These developments point to the dire need for ongoing promotion of CCUS in all multilateral platforms. Indeed, this will be crucial to securing the future growth of this technology.

Another challenge will be to ensure adequate financing of CCUS projects. Experts estimate that approximately 2,000 large-scale facilities are required to meet global emissions reduction targets by 2040. This equates to hundreds of billions of dollars in required investments.

According to the latest IEA study on CCUS, 35% of overall CCUS capital expenditures, often backed by public funding, have been allocated to oil and gas companies. These include recent commissions for projects related to Chevron, CNPC, and Shell.

To date, the majority of funding comes from the public sector, so it will be crucial going forward for private sector financing to be significantly enhanced to ensure the large-scale deployment of CCUS. In this regard, members of the Oil and Gas Climate Initiative recently announced their plans to launch a new initiative to attract large-scale CCUS investment at industrial hubs around the world. This financing would logically extend to public-private partnerships aimed at the development of innovative solutions for CCUS.

Finally, a word on the Green Climate Fund, which was set up in 2010 by the UNFCCC as the world’s largest dedicated fund helping developing countries reduce their greenhouse gas emissions; We hope this important Fund will make CCUS an integral part of their project portfolio for mitigation efforts in the years to come.

OPEC is fully supportive of CCUS and any other technological solution that will help mitigate the effects of climate change. However, I do think it is important that we do not get caught up in the false narratives of the prophets of doom — those that say the oil industry is on its last lap, and that peak oil is upon us.

We need to understand that the scale and complexity of climate challenge means that no single energy source can solve the problem.

The fact is, the oil and gas industry − with its extensive know-how and deep technological expertise − is uniquely positioned to be a solutions-provider in our common goals of reducing the environmental footprint. And indeed, as I have touched on earlier, great steps are already being made to provide clean energy technologies and greatly improved fuel efficiency standards.

Of course, more can be done, and more will be done, but it will be key that our industry’s capacity for technological innovation be fully leveraged within this process.

OPEC, its non-OPEC partners of the Declaration and Charter of Cooperation, along with the entire global oil industry, will have a role to play in providing viable and effective solutions for a sustainable energy future.

In September of this year, OPEC will celebrate its 60th Anniversary with a special commemorative ceremony to be held in Baghdad, Iraq, the sacred birthplace of the Organization.

In preparing for this landmark occasion, it has been a year of reflecting back on all that has been achieved. At the same time, we must continue to look forward and prepare for what lies ahead. In doing so, one main priority will be to successfully meet the world’s future energy needs in a sustainable and fair manner. This will be vitally important for the future we are building for our children and our childrens’ children.

By HE Mohammad Sanusi Barkindo,

OPEC Secretary General.

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