The role of CCUS in low-carbon power systems
About this report
Meeting climate and energy goals requires a fundamental and accelerated transformation of power systems globally. Decision makers collectively must support a rapid shift to low-carbon generation while meeting strong growth in power demand, driven by increased energy access in developing economies and electrification of end-use sectors. Carbon capture, utilisation and storage (or “CCUS”) technologies can play an important role in this transformation in three ways:
First, retrofitting carbon capture technologies is an important solution to avoid the “lock-in” of emissions from the vast fleet of existing fossil-fuelled power plants while also providing plant owners with an asset protection strategy for recent investments. This is of particular relevance in Asia, where the average age of coal-fired power plants is just 12 years.
Second, increasing variable renewable generation requires dispatchable energy for flexibility and resource adequacy. Batteries and other forms of energy storage are being further developed and deployed, but carbon capture, utilisation and storage technologies are also part of the portfolio of low-carbon technologies able to meet the growing need for flexibility (to manage both short-term and seasonal variations). These strategies offer a technological hedge against innovation uncertainty in the power system transformation.
Third, through its combination with bioenergy, carbon capture technologies can enable negative-emission power plants, which may be critical for offsetting emissions in harder-to-abate sectors and to support “net-zero” climate goals. Today, only two large-scale CCUS facilities are operating in the power sector. But experience from these first-of-a-kind plants highlights the potential to reduce costs significantly and improve technology with further research, development and deployment. Policy makers are urged to provide targeted policy support, including capital grants, public procurement and tax credits, to kick-start near-term investment in CCUS-equipped power plants.
First, retrofitting carbon capture technologies is an important solution to avoid the “lock-in” of emissions from the vast fleet of existing fossil-fuelled power plants while also providing plant owners with an asset protection strategy for recent investments. This is of particular relevance in Asia, where the average age of coal-fired power plants is just 12 years.
Second, increasing variable renewable generation requires dispatchable energy for flexibility and resource adequacy. Batteries and other forms of energy storage are being further developed and deployed, but carbon capture, utilisation and storage technologies are also part of the portfolio of low-carbon technologies able to meet the growing need for flexibility (to manage both short-term and seasonal variations). These strategies offer a technological hedge against innovation uncertainty in the power system transformation.
Third, through its combination with bioenergy, carbon capture technologies can enable negative-emission power plants, which may be critical for offsetting emissions in harder-to-abate sectors and to support “net-zero” climate goals. Today, only two large-scale CCUS facilities are operating in the power sector. But experience from these first-of-a-kind plants highlights the potential to reduce costs significantly and improve technology with further research, development and deployment. Policy makers are urged to provide targeted policy support, including capital grants, public procurement and tax credits, to kick-start near-term investment in CCUS-equipped power plants.
Highlights
- Carbon capture, utilisation and storage technologies have important roles to play in decarbonising global power systems, which today are dominated by fossil fuels, and in supporting the transition to net-zero emissions.
- Owners of existing plants as well as those under construction can retrofit carbon capture technologies to protect their assets and avoid the potential “lock in” of emissions, in particular in Asia with a large and relatively young fleet of existing fossil-fuelled plants.
- System operators can benefit from CCUS-equipped power plants, which help integrate growing shares of renewables into the power system by providing short- and long-term flexibility.
- Combining these technologies with bioenergy enables negative-emission power plants that can offset emissions in harder-to-abate sectors and support “net-zero” climate goals.
- Significant cost reductions and technology improvements have already been achieved for these technologies, with further improvements anticipated through research, development and deployment.
- Targeted policy measures, like the 45Q and 48A tax credits in the United States, will be critical to realise the potential of carbon capture technologies in power generation.