From Niche to Necessity: Why CCUS is poised for breakout growth

Carbon Capture, Utilization, and Storage (CCUS) technology emerged in the 1970s and the first large-scale projects launched in the 1990s. Yet 30 years later, it remains a niche market for industrial purposes and, in recent years, has been eclipsed by renewable energy and even nuclear power in terms of reducing CO₂ emissions and combatting climate change.

I believe this is about to change. A growing urgency among countries, industries and companies to accelerate decarbonization and the emergence of a new class of customers – large technology firms – willing and able to pay for reliable clean energy is set to help the CCUS market scale. And just in time: as the International Energy Agency has stated, CCUS technology will be critical for the world to reach net zero emissions by 2050 and needs to play a particular role in decarbonizing hard-to-abate sectors like cement, steel and chemicals.

Until now, it is worth remembering, the only companies able to make CO₂ capture work economically have been industrial firms with an onward use for the captured CO₂ – as a raw material to produce urea or methanol, for instance – and that could therefore generate revenue from it. Almost all of the 18 operational CO₂ capture facilities constructed by Mitsubishi Heavy Industries (MHI) Group, the world leader in this sector, have been built for petrochemicals customers.

Hello, Hyperscalers

Meanwhile, those aiming simply to lower their emissions could not make the numbers work due to the still-high costs of CCS systems. This is no longer the case, however. Every time I visit the United States, I am struck by the soaring demand for clean electricity to power the data centers being built by Microsoft, Google, Amazon and other hyperscalers, who have all set stringent emissions targets – with most seeking to achieve net zero by 2030.

Not only do they need lots of power; they need it now; and they need a reliable supply of it, since they cannot afford to have their servers go down, even for a few seconds. As a result, intermittent renewables are not a viable option, while renewables coupled with battery storage are very expensive, particularly over the 25–30-year life of a data center. Nuclear power is an alternative, but a reactor may take a decade or more to plan and build. Which means a modern gas turbine combined cycle (GTCC) plant with a CCS system, is often the best choice both in terms of speed and lifetime cost.

Even so, such new builds are costly, according to independent, third-party data, with the CCS element increasing the base cost of the GTCC plant by more than 50% in general. This makes public support essential until the market matures – just as government subsidies for renewables successfully scaled that industry. Reassuringly, the US administration has reaffirmed the 45Q tax credit for CO₂ capture, while support will decline for other clean energy technologies.

Turning FEEDs into FIDs

The UK government has gone even further, fully underwriting the decarbonization of the country's leading industrial clusters. This produced, last December, the first Final Investment Decision (FID) for a major CCS system at the Net Zero Teesside cluster in northeast England. The Japanese government is also determined to press ahead and this led to July’s Front End Engineering Design (FEED) order to MHI for the country’s largest CO₂ capture plant operated by Hokkaido Electric Power’s Tomato-Atsuma power station. This project is backed by JOGMEC, a government agency, with plans to securely store the captured CO₂ in sub-sea aquifers.

As momentum accelerates, I expect the numerous customer enquiries – 30-40 – that our CCUS business, part of MHI’s GX (Green Transformation) Solutions, is working on to turn into FEEDs – currently around five – and then to progress to FIDs and hence firm orders.

While large CO₂ capture installations take around three years to construct, modular systems, like MHI’s ‘CO₂MPACT^TM’ series are much quicker to build and install, since they are smaller and more than 90% of the equipment is standardized, prefabricated and delivered in what amounts to a large container. Currently, we are seeing demand for such systems from several industries that want to demonstrate potential onward uses for the captured CO₂ – for example, by using it to grow tomatoes, strawberries or melons.

Building the value chain

As the CCUS market grows and discovers new use cases, MHI’s current 70% market share will no doubt decline because only a few CO₂ capture plants have been delivered all over the world, even as our absolute revenues grow rapidly. We intend to limit that decline by continuing to improve our CO₂ capture technology, which I believe is the most efficient of the chemical liquid absorption technologies that are based on amine at present. We will continue to expand our product range and business opportunities, not only with modular CO₂ capture systems but also by developing onboard CO₂ capture systems for Floating Production Storage and Offloading (FPSO) vessels used in the oil industry.

Most importantly, MHI will participate in the entire CCUS value chain. That includes transport, with Mitsubishi Shipbuilding developing liquefied CO₂ carriers; and compressors from Mitsubishi Heavy Industries Compressor Corporation that help store the gas at either end of its journey. And we are working with external partners as well. ExxonMobil and MHI are jointly providing an “end-to-end solution” for the CCUS value chain, combining MHI’s CO₂ capture technology, ExxonMobil’s CO₂ transportation and storage capabilities, as well as early phase development services from initial stage of project development to project execution and plant operation.

All of these initiatives give me confidence that CCUS will play a vital role in mitigating global warming, and when it does, we will witness the moment at which it starts to make a significant contribution to the planet’s decarbonization.