Scaling the CCUS Industry to Achieve Net-Zero Emissions

November 07, 2022

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(McKinsey) ... According to McKinsey analysis, CCUS uptake needs to grow 120 times by 2050 for countries to achieve their net-zero commitments , reaching at least 4.2 gigatons per annum (GTPA) of CO₂ captured, with some estimates ranging from 6.0 to 10.0 GTPA. This could lead to CCUS decarbonizing 45 percent of remaining emissions in the industry sector. Even in conservative scenarios, CCUS demand would reach approximately two GTPA by 2050—a 60-fold increase over today’s pipeline of projects.

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CCUS is recognized as a necessary and relatively low-risk piece of the decarbonization puzzle, but the technology is not moving fast enough to achieve a 1.5° or even 2.0° pathway. This article explains what the CCUS industry can do to overcome historical challenges and reach the scale required for net-zero emissions. Specifically, we map how the industry can generate revenues and move beyond a subsidy-only business model, and we discuss what governments, investors, and industry players can do to help scale the technology. Future articles will discuss other scaling requirements, such as lowering the costs of implementing CCUS and developing hubs and clusters.

An overview of CCUS: Will it finally arrive?

MOST POPULAR INSIGHTS

There are three main types of technological carbon capture today (with many more in development): industrial-point-source CCUS, direct air capture (DAC), and bioenergy with carbon capture and storage (BECCS).

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That said, several challenges must be overcome before industrial-point-source CCUS can reach scale, especially around policy and regulatory support, cost, and public acceptance. Based on the current CCUS project pipeline, approximately 110 million tons per annum (MTPA) of CO₂ are expected to be captured annually by 2030. To achieve the net-zero commitments pledged by 64 governments at COP26, approximately 715 MTPA are required by 2030 and 4,200 MTPA by 2050.

Our research shows that more than 25,000 global industrial CO₂ emitters across 11 industrial sectors could be decarbonized through CCUS. These facilities are distributed all over the world, with China, Europe, India, and the United States accounting for more than 60 percent of industrial-point-source emissions. The highly distributed nature of emissions means that these challenges will be solved not through the formation of a small number of decarbonization hubs but by deploying capital at scale across a large number of projects around the world.

Doing so, however, requires tackling the following underlying challenges:

Policy is uneven and uncertain.

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Revenue streams are not well established, making business cases challenging.

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Projects are large and unproven.

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Cost benefits of scaled projects come with coordination complexity.

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Controversial public perception.

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New investments will depend on four future revenue streams

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Subsidies and regulatory interventions

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Willingness to pay for lower-carbon-intensity products

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Valuation of CO₂ as a feedstock

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Voluntary carbon market

How Direct Air Capture Succeeds: A Framework for Effective DAC Hubs (Carbon 180)

Setting DAC on Track: Strategies for Hub Implementation (Carbon 180)

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Scaling the CCUS Industry to Achieve Net-Zero Emissions

An overview of CCUS: Will it finally arrive?

MOST POPULAR INSIGHTS

New investments will depend on four future revenue streams

Subsidies and regulatory interventions

Willingness to pay for lower-carbon-intensity products

Valuation of CO₂ as a feedstock

Voluntary carbon market

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