As the world targets net-zero carbon emissions by 2050, investors in the most polluting industries that are unable to fully eliminate carbon emissions from their production processes have incorporated a new phrase in their common vocabulary: carbon capture utilization and storage or CCUS.

In April, oil major ExxonMobil pitched building a $100 billion CCUS facility in Texas oil fields. Miner Rio Tinto announced plans in October to deploy CCUS technology at its aluminum smelt in Iceland. And the Global Cement and Concrete Association has pledged to build 10 industrial-scale CCUS projects by 2030.

Rather than eliminate carbon emissions, CCUS projects capture wayward CO2 to be used or otherwise stored somewhere less damaging than in the atmosphere, such as an underground cavity. In a zero-carbon world, heavy polluters like oil and gas producers, aluminum smelters, and concrete manufacturers are dependent on CCUS applications because carbon emissions can never be fully removed from their businesses.

But CCUS has one crippling drawback preventing its widespread deployment in the real world: the only profitable use of captured carbon is the production of more carbon in the form of oil.

Carbon capture

CCUS is not a new technology. Oil and gas companies have used CCUS for at least 50 years, albeit with limited success, either due to high costs or low efficiency. Dozens of oil and gas makers have abandoned unprofitable CCUS projects in the last ten years. In July, Chevron admitted its carbon capture project in Australia’s Gorgon gas fields, which it had billed as the world’s largest CCUS project when it opened in 2016, had captured less than half the volume of CO2 it promised.

“We’ve been doing carbon capture for about 50 years and the industry has not developed well,” says Yuan Xu, a professor in the department of geography and resource management at the Chinese University of Hong Kong, citing a lack of investment for the chronic failures of CCUS.

According to the International Energy Agency (IEA), less than 0.5% of annual investment in "clean energy" has gone to CCUS, totaling $4.5 billion in 2020. Historically, governments and businesses have been more willing to invest in renewable energy tech than CCUS because renewables provide benefits beyond carbon reduction, such as generating electricity.

And CCUS isn’t easy. Carbon capture facilities are expensive and energy-intensive to run, while transporting carbon to a storage site—such as a dried-up oil field—is a logistical and regulatory nightmare that few businesses are willing to pay for. Without a profit-making angle, companies dismissed CCUS as a zero-gain “public good,” Xu says, rather than a necessity for business.

But now that more governments are mandating companies drastically curb carbon emissions, corporations are taking a second look at carbon capture tech as a means to quickly reduce pollution.

Cap

Carbon taxes—fees local regulators levy on corporations for exceeding a government-set quota on carbon emissions—have altered the cost analysis of carbon capture tech. If the cost of emitting carbon increases, the cost of capturing carbon relative to doing nothing decreases.

Less costly, however, is not the same as profitable. The utilization aspect of CCUS is supposed to make the process more palatable for corporations by providing a return on the investment but, so far, the only profitable use case is using pressurized carbon dioxide to pump more oil out of aging oil fields.

“There's a direct cost of capturing a ton of carbon dioxide and enhanced oil recovery is the only viable use of carbon dioxide today,” says Lionel Kambeitz, executive chairman at Canadian carbon capture firm Delta CleanTech. That’s a Catch 22 for the environment.

In all of 2020, global large-scale CCUS had the capacity to capture 40 million tonnes of CO2—less than half the volume of carbon produced worldwide in a single week. Under a net-zero by 2050 scenario, the IEA predicts global CCUS capacity will need to increase 190 times, to 7,600 million tonnes per year by the middle of the century, meaning the world will have a lot more captured carbon but no great uses for it.

“There has to be the development of an industry to use all these carbon dioxide molecules that we're going to capture,” Kambeitz says.

Utilization

Carbon dioxide already has plenty of industrial uses. Fertilizer manufacturers combine CO2 with ammonia to produce urea, which farmers use to add nitrogen to soil. Slaughterhouses use the gas to kill animals. Beverage makers use the gas to add fizz to drinks. More recent applications include mixing CO2 with cement to create more durable concrete, while chemical makers could use captured carbon for producing plastics—although plastic and concrete degrade the environment, too.

Those businesses need carbon, but not billions of tons of it. According to the IEA, global industry uses only 230 million tonnes of CO2 every year—far less than the 7.6 billion tonnes the group says needs to be vacuumed annually from the skies by 2050. A lot of that excess gas could be sequestered in the ground, but carbon-storage-as-a-service remains a nascent market.

In search for new business models, Delta CleanTech donated carbon to researchers in the company’s hometown of Calgary, Canada who had entered the Elon Musk-funded Xprize competition to design new markets for carbon removal by creating both carbon capture tech and products made from captured carbon. The $100 million prize was launched in February and will announce winners in two years.

“The ultimate goal is scalable carbon extraction that is measured based on the ‘fully considered cost per [tonne]’ which includes the environmental impact,” Musk said, during the competition's launch. The Xprize jackpot, although a useful inspiration, is a fraction of the total funding needed to scale CCUS. According to IEA, the world channeled $4.5 billion of investment into CCUS in 2020 and it will take billions more to achieve scale. But, as with renewables, continued investment will bring the cost down. Investment has reduced the cost of solar panels 85% over the last ten years, to a point where solar is now generally the cheapest form of energy available.

"In the pursuit of net zero, we cannot afford to dismiss CCUS as 'too expensive'," analysts at IEA said in a February report. "There is ample potential for cost reductions—the experience of wind and solar highlights what is possible."