Exploring Clean Energy pathwaysThe role of CO2storageJuly2019Exploring Clean Energy Pathways Abstract The role of CO2storage PAGE | 1 Abstract Carbon capture, utilisation and storage will be an important part of the portfolio of technologies and measures needed to achieve climate and energy goals. In the International Energy Agency Clean Technology Scenario CTS, a cumulative 107 gigatonnes of carbon dioxide Gt CO2 are permanently stored in the period to 2060, requiring a significant scale-up of CO2storage from today’s levels. This report analyses the implications for the global energy system of CO2storage facilities not being developed at the scale and pace needed to follow the optimised pathway of the CTS. By limiting CO2storage availability to 10 Gt CO2over the scenario period, the analysis provides insights into the additional measures and technologies that would be required in the power, industrial, transport and buildings sectors in order to achieve the same emissions reductions by 2060 as the CTS. The Limited CO2Storage scenario variant LCS finds that restricting the role of CO2storage would result in higher costs and significantly higher electricity demand, with 3 325 gigawatts of additional new generation capacity required relative to the CTS a 17 increase. The main reason is that limiting the availability of CO2storage would require much more widespread use of electrolytic hydrogen in industry and the production of synthetic hydrocarbon fuels. More generally, the LCS would increase reliance on technologies that are at an earlier stage of development. Beyond the scenario period of 2060, constraints on CO2storage availability would also limit the availability of many carbon dioxide removal options, and may therefore not be consistent with the achievement of long-term climate goals. IEA. All rights reserved.Exploring Clean Energy Pathways Highlights The role of CO2storage PAGE | 2 Highlights Limiting the availability of CO2storage would increase the cost of the energy transition. The emissions reduction pathway of the Clean Technology Scenario CTS assumes that CO2storage is widely available to meet globally-agreed climate goals. It requires an additional investment of USD 9.7 trillion in the power, industrial and fuel transation sectors, relative to a scenario that includes only current national commitments. Limiting CO2storage results in an increase of these additional investments by 40, to USD 13.7 trillion, relying on more expensive and nascent technologies. Demand for decarbonised power would expand even further. In the Limited CO2Storage scenario variant LCS, electricity generation would increase by 13 in 2060, or 6 130 TWh, relative to the CTS. This would require additional low-carbon generation capacity of 3 325 GW in 2060, which is nearly half of the total installed global capacity in 2017. In locations where a rapid scale-up of wind and solar capacity are constrained due to land use or other factors, imported hydrogen may become an important alternative. Alternative processes and novel technologies would be required in industry. In the LCS, the production of iron and steel and chemicals would shift more strongly towards non-fossil-fuel-based routes. In 2060, 25 of liquid steel, around 5 of ammonia and 25 of methanol production would use electrolytic hydrogen. The marginal abatement cost to industry in 2060 would double to around USD 500/tCO2, relative to the CTS. This would shift abatement efforts towards other sectors and increase industrial emissions by 4.8 Gt CO2. Cement production has limited alternatives to carbon capture, utilisation and storage CCUS. Two-thirds of emissions from cement production are process emissions and the lack of competitive alternatives to CCUS means that this sector would absorb almost half of the available CO2storage capacity in the LCS. The use of CO2storage in this sector would be around 15 0.7 Gt CO2 lower than in the CTS to 2060, and emissions would increase concomitantly. Synthetic hydrocarbon fuels would become a more important emissions reduction strategy. In the LCS, synthetic hydrocarbon fuels based on biogenic CO2would need to become viable as an alternative to bioenergy with carbon capture and storage. These fuels would require around 4 700 TWh of electricity, replacing 9 of global primary oil and 2 of natural gas demand. Electrolyser capacity additions would average 40 GW per year from today to 2060 in the LCS, which is much higher than the 0.015 GW of new capacity installed in 2018. Carbon capture would retain a role, with increased use of CO2in industry and fuel transation. CO2use would grow by 77 in the LCS relative to the CTS, but remain relatively small. In the LCS, 13.7 Gt CO2would be used to 2060 for the production of synthetic fuels, methanol and urea, with close to one-third of the CO2used from biogenic sources. A dual challenge would emerge for a net zero emissions energy system. Limited availability of CO2storage would increase the challenge of direct abatement in key sectors and, in parallel, constrain the possibility for carbon dioxide removal or “negative emission” technologies. In a carbon-neutral energy system, these technologies can compensate for residual emissions that are difficult to abate directly. IEA. All rights reserved.Exploring Clean Energy Pathways cutive summary The role of CO2storage PAGE | 3 cutive summary Carbon capture, storage and utilisation play a critical role in achieving climate goals Carbon capture, utilisation and storage CCUS technologies offer an important opportunity to achieve deep carbon dioxide CO2 emissions reductions in key industrial processes and in the use of fossil fuels in the power sector. CCUS can also enable new clean energy pathways, including low-carbon hydrogen production, while providing a foundation for many carbon dioxide removal CDR technologies. In the Clean Technology Scenario CTS, the central decarbonisation scenario in this analysis, CCUS deployment reaches 115 gigatonnes of CO2Gt CO2 by 2060, with 93 of the captured CO2permanently stored. The level of deployment in the CTS would require a substantial and rapid scale-up of CCUS from today’s levels, with 18 large-scale projects currently capturing around 33 million tonnes of CO2Mt CO2 each year. Limiting the availability of CO2storage would increase the cost and complexity of the energy transition CO2storage is a critical component of the CCUS opportunity. To better understand the value of CCUS as part of a portfolio of climate mitigation technologies, a variant of the CTS was developed that limits CO2storage availability to 10 Gt CO2in the period to 2060 – the Limited CO2Storage scenario variant LCS. This increases the cost and complexity of achieving the same emissions reductions as the CTS, particularly for key industrial sectors such as cement production. At USD 13.7 trillion United States dollars, the additional investment needs of the power, fuel transation and industrial sectors in the LCS would be 40 USD 4 trillion higher than the additional investments needed to achieve the CTS, relative to the baseline Reference Technology Scenario RTS. Limiting the availability of CO2storage would result in the marginal abatement costs for the industrial sector doubling in 2060 relative to the CTS, from around USD 250 per tonne of CO2tCO2 to USD 500/tCO2, due to reliance on more expensive and novel technology options. In the power sector, the marginal abatement costs in 2060 would increase from around USD 250/tCO2in the CTS to USD 450/tCO2. The effects would be felt across the energy system The higher marginal abatement costs in the sectors directly reliant on CCUS would result in a shift of mitigation activity across the energy system. In the LCS, the cumulative CO2emissions from the fuel transation sector would increase by 55 17 Gt CO2 relative to the CTS, in industry by 2 4.8 Gt CO2 and in the power sector by 2 5.7 Gt CO2. This would require IEA. All rights reserved.Exploring Clean Energy Pathways cutive summary The role of CO2storage PAGE | 4 additional efforts to reduce emissions in the buildings and transport sectors, with emissions 15 and 6 lower respectively, relative to the CTS. In the buildings sector, these efforts would include a further acceleration of the phase-down of fossil-based heating technologies. Aggressive deployment of very high-efficiency technologies light-emitting diodes, heat pumps and air conditioners would need to start immediately and scale-up faster than in the CTS. In the transport sector, behaviour changes and a major policy push would be needed for a 8 increase in rail activity and a 16 increase in bus activity in 2060 in vehicle kilometres travelled relative to the CTS, alongside increased electrification and reduced activity from smaller passenger light-duty vehicles. Freight truck activity would also be 9 lower in 2060. Limiting CO2storage would drive new power demand Even with strong efficiency measures, significant new investment would be required in the power sector in the LCS, with an additional 6 130 terawatt hours TWh of electricity generated in 2060 relative to the CTS a 13 increase. This would require additional generation capacity of 3 325 gigawatts GW, which is nearly half of the installed global capacity in 2017. Almost all of this additional capacity would be wind and solar photovoltaics PV, with 25 higher capacity in 2060 in the LCS. Such a rapid and widespread scale-up of these technologies may have implications for land use, permitting, and infrastructure development in some regions. For example, approximately 173 000 additional onshore wind turbines would be required assuming an average size of 5 MW in the LCS compared with the CTS. Where domestic renewable capacity is constrained, importing hydrogen-based fuels may be a viable alternative. Most of the increase in power demand in the LCS would be driven by the industrial and fuel transation sectors, in particular due to greater reliance on electrolytic hydrogen. In 2060 in the LCS, around 9 of global electricity generation would be used for the production of synthetic hydrocarbon fuels, supported by dedicated, off-grid renewable electricity generation. This would require a massive scale-up in the production of hydrogen and the related infrastructure for hydrogen transport or further conversion in synthetic hydrocarbon fuels or ammonia. Limiting availability of CO2storage means that power generation with CO2 capture would almost vanish in the LCS relative to the CTS, which has around 615 GW of CCUS capacity attached to coal, gas and biomass facilities in 2060. Coal-fired power plants would be phased out more rapidly in the LCS, at an average of 60 GW of capacity per year in the period 2025–40 compared with an average of 45 GW per year in the CTS. The earlier retirements would result in lost revenue of around USD 1.8 trillion between 2017 and 2060. Major technology shifts would be needed in industry In the LCS, the production of iron and steel and chemicals would shift more significantly towards non-fossil fuel-based routes and more novel technology options. In 2060, 25 of liquid steel, around 5 of ammonia and 25 of methanol production would rely on electrolytic hydrogen. In the case of steel, this process is yet to be tested at scale, although pilot trials are planned. IEA. All rights reserved.Exploring Clean Energy Pathways cutive summary The role of CO2storage PAGE | 5 Two-thirds of emissions from cement production are process emissions, and the lack of competitive alternatives to CCUS would see this sector absorb almost half of the available CO2storage capacity in the LCS. Relative to the CTS, the use of CO2storage in this sector would be reduced by around 15 0.7 Gt CO2 in the period to 2060, and the emissions from the cement sector would increase concomitantly a 1 cumulative increase in cement emissions. Synthetic hydrocarbon fuels would make inroads CCUS is a lower-cost emissions reduction option in the fuel transation sector and contributes almost half of the emissions reductions achieved in the sector in the CTS. This includes supporting the sector to become net carbon negative by 2060 through the deployment of bioenergy with carbon capture and storage BECCS. With limited CO2storage, synthetic hydrocarbon fuels based on biogenic CO2would be required at greater scale as an alternative to BECCS. In the LCS, these fuels would require around 4 700 TWh of electricity and replace 9 of global fossil primary oil demand and 2 of natural gas demand. Achieving net zero emissions would become more challenging Limiting the availability of CO2storage would increase the challenge of direct abatement in key sectors, such as cement production, and in parallel would constrain the deployment of CDR or “negative emission” technologies. In a carbon-neutral energy system, these technologies are needed to compensate for residual emissions that are difficult or too expensive to abate directly. In many pathways that limit future temperatures to 1.5C, global emissions become net negative in the second half of the century and this will rely on significant deployment of CDR technologies and CO2storage. An ongoing constraint on CO2storage beyond 2060 is therefore unlikely to be consistent with long-term climate goals. IEA. All rights reserved.Exploring Clean Energy Pathways Findings and recommendations The role of CO2storage PAGE | 6 Findings and recommendations Policy recommendations  Support the development and deployment of carbon capture, utilisation and storage CCUS as part of a least-cost portfolio of technologies needed to achieve climate and energy goals.  Accelerate pre-competitive exploration and assessment of CO2storage facilities in key regions to ensure future availability of storage.  Establish policy and regulatory frameworks for CO2storage that provide certainty and transparency for investors and the broader community.  Facilitate planning and investment for multi-user CO2transport and storage infrastructure capable of servicing a range of industrial and power facilities.  Support research, development and demonstration to improve the perance and cost-competitiveness of technologies that may be important where CO2storage availability is limited, including CO2use, electrolytic hydrogen and synthetic hydro-carbon fuels produced from hydrogen. CCUS technologies play a critical role in achieving climate goals Achieving climate goals will require a transation of global energy systems of unprecedented scope, speed and ambition. CCUS technologies are expected to play a critical role in supporting this transation as part of a least-cost portfolio of technologies and measures Figure 1. CCUS offers a solution for deep emissions reductions from key industrial processes, including the produ