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CO2 Capture and Utilisation
What is it?
Carbon capture and utilisation refers to a range of applications through which CO2 is captured and used either directly (i.e. not chemically altered) or indirectly (i.e. transformed) in various products. CO2 is today primarily used in the fertiliser industry and for enhanced oil recovery. New uses such as producing CO2-based synthetic fuels, chemicals and building aggregates are gaining momentum.
What is its role in clean energy transitions?
CO2 use does not necessarily lead to emissions reduction. Climate benefits associated with a given CO2 use depend on the source of the CO2 (natural, fossil, biogenic or air-captured), the product or service the CO2-based product is displacing, the carbon intensity of the energy used for the conversion process, and how long the CO2 is retained in the product.
Where do we need to go?
While some CO2 use could bring substantial climate benefits, the relatively limited market size for these applications means dedicated storage should remain the primary focus of carbon capture, utilisation and storage deployment. However, support for research and development and demonstration can play a key role in the deployment of promising CO2-derived products and services that are scalable and have good prospects to become competitive over time.
Tracking CO2 Capture and Utilisation
Carbon capture and utilisation (CCU) refers to a range of applications through which CO2 is captured and used either directly (i.e. not chemically altered) or indirectly (i.e. transformed) into various products. Around 230 Mt of CO2 are currently used each year, mainly in direct use pathways in the fertiliser industry for urea manufacturing (~130 Mt) and for enhanced oil recovery (~80 Mt).
New utilisation pathways in the production of CO2-based synthetic fuels, chemicals, and building aggregates are gaining momentum. The current project pipeline shows that around 10 Mt of CO2 per year could be captured for these new uses by 2030, including around 7 Mt CO2 in synthetic fuel production. If all announced projects are commissioned, they could reach around half the level of CO2 utilisation for synthetic fuel production by 2030 envisaged in the Net Zero Emissions by 2050 (NZE) Scenario. In addition, to be compatible with the NZE Scenario, all the CO2 would need to come from air or biogenic sources, which is currently only the case for around 4 Mt CO2 per year of planned CCU to fuels capacity for 2030.
CCUS and synthetic fuel policies are being strengthened in the United States and Europe
Countries and regions making notable progress to advance CO2 utilisation include:
- The United States’ 2022 Inflation Reduction Act included major increases to the 45Q tax credit for CCUS, which supports CO2 utilisation by providing tax credits now valued at USD 60 per tonne of CO2 used. In May 2023, the US government also launched the Clean Fuels & Products Shot, which aims to support alternative routes that can reduce the emissions intensity of fuels and chemicals by 85% by 2035, including CO2 utilisation.
- In April 2023, the European Union approved the ReFuelEU Aviation proposal which imposes blending mandates on synthetic fuels for aviation, increasing from 0.7% in 2030 to 28% in 2050, and 3 CCU projects targeting synthetic fuel received funding from the EU Innovation Fund’s latest large-scale call in 2022.
- In Belgium, the first large-scale capture plant converting steel emissions to ethanol was commissioned in December 2022.
- In Canada, the 2022 federal budget proposed an investment tax credit for CCUS projects between 2022 and 2030, valued at 37.5% for utilisation equipment.
CO2 use can bring important climate benefits, but with caveats
CO2 use does not necessarily lead to emissions reduction. Climate benefits associated with a given CO2 use depend on the source of the CO2 (natural, fossil, biogenic or air-captured), the product or service the CO2-based product is displacing, the carbon intensity of the energy used for the conversion process, how long the CO2 is retained in the product, and the scale of the market for this particular use. The use of low-carbon energy is particularly critical for CO2 use in fuels and chemical intermediates, as these processes are highly energy-intensive.
In the NZE Scenario, as fossil fuel use declines, the value of CO2 displacement ultimately decreases and all of the CO2 used needs to be sourced from biomass or the air to achieve climate benefits.
CO2 use can play a role, but does not replace geological storage
While some CO2 use could bring substantial climate benefits, the relatively limited market size for these applications means dedicated storage should remain the primary focus of carbon capture, utilisation and storage (CCUS) deployment.
In the NZE Scenario, over 95% of the CO2 captured in 2030 is geologically stored, and less than 5% is used. With a retention time in the order of millions of years, building aggregates are the only CO2 use application that could qualify as permanent sequestration, in contrast to fuels and chemicals, which typically retain the CO2 for one year and up to ten years, respectively.
CO2 use for synthetic fuels remains the leading new utilisation route
Only a handful of large-scale (> 100 000 t CO2 per year) capture plants using CO2 for the production of fuels and chemicals and yield enhancement are in operation today, with the most recent commissioned at a steel plant in December 2022. Plans are underway for around 15 additional capture facilities targeting CO2 utilisation for synthetic hydrocarbon fuels, through Fischer-Tropsch (FT) synthesis, direct conversion to methanol, or fermentation to ethanol. Together, these large-scale plants could be capturing and using around 7 Mt CO2 by 2030.
An increasing share of the synthetic fuel project pipeline is targeting sources of CO2 which are compatible with a net zero trajectory, including air and bioenergy or waste plants:
- Project Air in Sweden aims to start producing 200 000 tonnes per annum of methanol in 2025, using CO2 captured from a biogas plant and electrolytic hydrogen.
- Highly Innovative Fuels (HIF) global are studying the feasibility of large-scale air-sourced synthetic fuel production facilities, with plants in development in Chile, the United States and Australia.
- In Switzerland, Synhelion started construction of their first synthetic fuel plant using solar-based thermochemical conversion technology and sourcing CO2 from a nearby pulp and paper mill.
Of the circa 7 Mt CO2 in planning, around 4 Mt CO2 would be captured from the air or biogenic sources. This would need to increase to around 13 Mt CO2 to meet the level of low-emission synthetic fuel production in 2030 in the NZE Scenario.
Planned commercial CO2 use in synthetic fuel production by CO2 source compared to the Net Zero Scenario, 2022-2030
OpenOther CO2 uses are being deployed at smaller scale
The deployment of other utilisation routes remains limited at large scale (>100 000 t CO2 per year). Only a handful of large-scale capture projects are targeting the use of CO2 for the production of building materials or yield enhancement.
A number of facilities exist on a smaller scale for the production of CO2-based chemicals and polymers:
- Around 75 000 t CO2 per year has been captured from Capitol Aggregates Cement plant in Texas and used for chemicals production by the company Skyonic since 2015.
- US company Twelve announced in 2022 the scale-up of their technology for electrochemical reduction of CO2 into various products, ranging from plastics to fuels.
- Econic Technologies announed partnerships with chemical companies in China and India to scale up their CO2 to polymers technology.
And in the field of mineral carbonation for the production of building materials, aggregates and specialty carbonates:
- Several North American companies, including CarbonCure, CarbonBuilt and Solidia Technologies, lead the development and commercialisation of carbonated concrete production through CO2-curing.
- In Europe, Carbon8 systems deployed its first commercial integrated CO2 capture and recarbonation technology of waste residues (‘’CO2ntainer’’) at Vicat cement plant in France in 2020 for the production of construction aggregates.
- In China, several pilots are converting point-source CO2 into high-purity carbonates, including a 50 000 tonnes per annum barium carbonates demonstrator commissioned by China National Building Material in 2016, and a 2 300 tonnes precipated calcium carbonate plant commissioned by Guodian Electric Power Datong company in 2022.
CCU supply chains can benefit from synergies with fossil-based synthetic fuel production and CCS
While there are only a handful of pilot-scale low-emission synthetic fuel production operating today, much larger fossil-based synthetic fuel plants have been operated for decades by large engineering and oil and gas companies such as Sasol, Shell and Synfuels China. Many components and competences are therefore easily transferrable from adjacent industries.
The extensive use of hydrogen and CO2 for conversion into fuels and chemicals would require the deployment of large-scale transport infrastructure, including pipelines and, in some places, terminals, ships and trucks. Given the low capture capacity of most CCU projects, benefits could be achieved by combining CO2 transport for use in products and for geological storage, especially as part of future CCUS hubs in areas with emissions-intensive industries.
Reducing the energy cost of CO2 conversion and demonstrating the reliability of CO2-based construction materials remain a priority
One of the main innovation priorities for CCU is reducing the energy needed to convert CO2 to fuels and chemicals. Large-scale demonstration of the reverse water-gas shift process is needed, as well as the development of advanced conversion routes such as CO2 electrolysis and plasmosis, and solar-based thermochemical conversion. In building materials there is also a need for long-term trials of CO2-cured concrete in structural applications to demonstrate its performance and reliability.
Smaller-scale CO2 use opportunities can also support the demonstration of novel CO2 capture routes, such as membranes and direct air capture, by providing a revenue stream. These early demonstrations can contribute to refining and reducing the cost of technologies for carbon capture and storage and CO2 use and support the future deployment of both.
Policy incentives for low-emission fuels and materials are supporting CCU development
Mandates and public procurement for low-emission products, low-emission standards and tax credits are supporting the development of CCU projects:
- In the European Union, the ReFuelEU Aviation proposal which was voted as part of the ‘’Fit for 55’’ legislation package in April 2023, imposes blending mandates for synthetic aviation fuels, increasing from 0.7% in 2030 to 28% in 2050.
- In the United States, CO2 utilisation routes can benefit from the 45Q tax credit, now valued at USD 60 per tonne of CO2 used under the 2022 Inflation Reduction Act, providing emission reductions are verified. CO2 utilisation in synthetic fuels could receive further support through the Clean Fuels & Products Shot announced in May 2023, which aims to support alternative routes that can reduce the emissions intensity of fuels and chemicals by 85% by 2035.
- In Canada, the Standard on Embodied Carbon in Construction, which took effect in December 2022, requires that new construction projects report their emissions and use concrete which is 10% less emissions intensive than the regional average
Venture capital investment in CCU continues to grow
The increasing interest in CO2 conversion technologies is reflected in the growing amount of private and public funding that has been channelled to companies in this field. Corporate goals and quotas for low-emission fuels and materials are boosting CO2 use for sustainable aviation fuels and building materials.
In 2022, global venture capital (VC) investment in utilisation companies reached nearly USD 500 million, making up around 20% of total VC investment in CCUS. US companies dominate investment, totalling around 80% of the cumulative total in the 2015-2022 period. Even though fuel production is the leading utilisation application for large-scale capture facilities, investment is well distributed among utilisation routes, with fuels, chemicals and building materials each making up around a third of the total.
Governments are also funding CCU companies and commercial projects
Public funding is targeting the RD&D of various CCU applications, as well as specific commercial projects:
- In the European Union, three large-scale CCU projects were selected for funding under the EU’s Innovation Fund 2021 funding call: the Carbon2Business project at Laegerdorf cement plant in Germany (EUR 110 million), Project Air in Sweden (EUR 97 million), and the Hyskies project in Sweden (EUR 80 million), as well as the small-scale CO2ncreEAT project in Belgium (EUR 4 million).
- The Green Fuels for Denmark programme to produce e-methanol and e-kerosene from biogenic CO2 and renewable hydrogen received DKK 600 million (Danish kroner) (EUR 81 million) of government funding in December 2022.
- Governments around the world are providing grants supporting R&D development and engineering studies for CO2 mineralisation projects, including in the United States, Australia and Canada.
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Lead authors
Mathilde Fajardy
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