2020 THOUGHT LEADERSHIPTHE VALUE OF CARBONCAPTURE AND STORAGE (CCS)ALEX TOWNSEND
Senior Consultant - Economics
NABEELA RAJI
Research Analyst
ALEX ZAPANTISGeneral Manager - Commercial

CONTENTS
EXECUTIVE SUMMARY

4

1.0 INTRODUCTION

6

2.0 CCS IS AN ESSENTIAL CLIMATE MITIGATION TECHNOLOGY

7

3.0 CCS IS A DRIVER OF EMPLOYMENT AND ECONOMIC GROWTH

13

4.0 CONCLUSION

22

5.0 REFERENCES

23

EXECUTIVE
SUMMARY
The Intergovernmental Panel on Climate Change (IPCC)
and numerous other credible institutions, studies, andgovernments have highlighted the essential role ofcarbon capture and storage (CCS) to economicallyachieving a net-zero emissions global economy. CCS
technologies are particularly important because theyboth avoid CO2 emissions at point sources, as well as
decrease at scale the stock of CO2 emissions already inthe atmosphere through carbon dioxide removal (CDR)
technologies.
The value of CCS is analysed and discussed under two
overarching themes in this report:•

Achieving deep decarbonisation in hard-toabate industry: The cement, iron and steel, andchemical sectors are amongst the hardest to abate
due to their inherent process emissions and hightemperature heat requirements. CCS provides oneof the most mature and cost-effective options for
reducing emissions from these sectors. Several
reports, including from the Energy Transition
Commission and the IEA, have concluded that
achieving net-zero emissions in hard-to-abate
industry without CCS may be impossible and atbest more expensive.

•

Enabling the production of low-carbon hydrogenat scale: Hydrogen is likely to play a major rolein the decarbonisation of hard-to-abate sectors
and may also be an important source of energy
for residential heat demand and flexible power
generation. To reach net-zero emissions, globalhydrogen production will need to grow significantly,
from 70 million tonnes per annum today to 425650 million tonnes per annum by mid-century.
Hydrogen produced using coal or natural gas
with CCS is currently the lowest cost option for
producing low-carbon hydrogen, and will remain
the most cost-effective solution in regions where
fossil fuel prices are low and large resources of
low-cost renewable electricity for electrolysis are
not available.

•

Providing low-carbon dispatchable power: The
rapid decarbonisation of power generation is
crucial to achieving net-zero emissions. CCS
equipped power plants play an important role as
they help ensure that the low-carbon grid of the
future is resilient and reliable. Flexible power plants
with CCS supply dispatchable and low-carbon
electricity as well as grid-stabilising services,such as inertia, frequency control and voltage
control. These cannot be provided by renewablegeneration, therefore CCS complements theincreased deployment of renewables.

CCS is an essential climate mitigation technology.
At the global level, studies such as the IPCC 1.5°C
report and by the International Energy Agency (IEA)
consistently show CCS being deployed at significant
scale to economically meet long-term climate targets.
For example, in the IEA Sustainable Development
Scenario, which is consistent with meeting the goalsof the Paris Agreement, CO2 sequestration globallyusing CCS reaches 2.8 gigatonnes per annum by 2050.
This would require a one-hundred fold increase in thenumber of CCS facilities in operation relative to today.
Studies also demonstrate that excluding CCS from thesuite of technologies used to meet emission reduction
targets will lead to increased costs. Furthermore, theversatility of CCS and its ability to reduce both the flow
and stock of CO2 makes it a strategic risk management
tool for climate mitigation.
At the sectoral level there are four areas where CCS
has a critical role to play in least-cost net-zero emissions
pathways. These include:3

THE VALUE OF CCS

Delivering negative emissions: The deployment ofnegative emissions technologies will be needed tocompensate for residual emissions in hard-to-abate
sectors if net-zero emissions targets are to be met.
CCS provides the foundation for technology-basedcarbon dioxide removal (CDR) solutions including
bioenergy with CCS (BECCS) and direct air capture(DAC). While CDR is not a silver bullet, with every
year that passes without significant reductions in
CO2 emissions, the need to use negative emissions
technologies increases.

•

Enabling infrastructure re-use and deferralof decommissioning costs: Where oil or gas
production fields are at the end of their lives, there
may be opportunities to re-use existing oil and gas
infrastructure by repurposing it for CO2 transportand storage. This could provide a range of benefits,
including reducing the cost of building transportand storage infrastructure and potentially reducing
permitting time. The re-use of infrastructure could
also defer the costs and the environmental impact
of decommissioning, freeing-up resources that canbe invested in other value generating activities.

CCS is a driver of economic growth and employment.

•

Facilitating a just transition by alleviating
geographic and timing mismatches: One of the
key challenges of achieving a just transition isthe disconnect between the geographic spreadof job losses and gains, and the timing of thesechanges. Jobs created in low-carbon industries
may not occur at the same time as job losses inhigh-emission industries. This will reduce the longterm employment prospects of workers in declining
industries over time. CCS facilitates a just transition
by enabling existing industries to make a sustained
contribution to local economies while transitioning
to a net-zero economy.

•

CCS can provide clean growth opportunities, create
and retain jobs, and help ensure a just and sustainabletransition for communities. Its benefits include:

4•

Creating and sustaining jobs: CCS creates newjobs during the construction and the operationof new facilities, as well as in the supply chain. To
reach the levels of deployment outlined in IEA’s
Sustainable Development Scenario, more than
2,000 facilities will be needed by 2050, requiring
at least 100,000 employees in 2050. There will
also be jobs associated with the supply of newmaterials, equipment and professional services. In
addition to creating new jobs, CCS enables highemission industries and the jobs they support tocontinue, thereby avoiding local economic andsocial dislocation that could otherwise occur whilst
meeting climate targets.

•

Supporting economic growth through new netzero industries and innovation spillovers: The
widespread deployment of CCS will create newopportunities in the supply of infrastructure andtechnology, the provision of services and finance,
and the production of low-carbon products.
Emerging evidence suggests CCS could also bea source of high-value innovation spillovers andtherefore play a role in supporting innovation-led
economic growth alongside other technologies.

THE VALUE OF CCS

1.0 INTRODUCTION
Several high-profile reports and experts haveemphasised the need to better understand andcommunicate the benefits of CCS. Reports by the Zero
Emissions Platform in Europe, the CCUS Cost Challenge
Taskforce in the UK, and the National Petroleum Council
in the US, all highlight the importance of further exploring
and redefining the value of CCS [1][2][3].
This report aims to inform the discussion on the valueof CCS by providing an overview of recent analyses
published on the topic and completed by the Global
CCS Institute.
The report is structured under two overarching themes.
Section 2 of the report explores the role of CCS as
an essential climate mitigation technology, focussing
on how its deployment reduces the costs and risksof meeting climate targets. Section 3 of the report
describes the broader benefits CCS provides to theeconomy, by providing clean growth opportunities,
creating and retaining jobs, and helping to ensure a justand sustainable transition for communities. Section 4
concludes, with suggestions for future research.

The report focusses on the main sources of value fromthe deployment of CCS. It excludes other, smaller scale
benefits. For example, the potential benefit of improved
air quality from the deployment of CCS at fossil fuelpower plants is not included in the report. The omissionof these benefits does not prejudice the inclusion ofthem in other studies, but reflects that these tend to besmaller in scale and more dependent on the context inwhich CCS is applied.
Throughout the report, country-specific case studies areprovided to shed light on the value of CCS in practice.
The case studies primarily focus on Europe and North
America as these are the regions for which analysis of thesocietal benefits of CCS is most mature and where data
are readily available. However, many of the conclusionsof the report will be relevant to other jurisdictions.

STUDIES SUCH AS THE IPCC 1.5 REPORT AND
IEA’S SUSTAINABLE DEVELOPMENT SCENARIOCONSISTENTLY SHOW CCS BEING DEPLOYEDAT SIGNIFICANT SCALE TO ECONOMICALLYMEET LONG TERM CLIMATE TARGETS.

5

THE VALUE OF CCS

2.0 CCS IS AN
ESSENTIAL CLIMATEMITIGATIONTECHNOLOGY
The primary reason for investing in CCS is to reduce CO2
emissions and mitigate the associated environmental
and economic impacts of climate change. This can beviewed from different perspectives, including from a
global-level and sector-level persepctive.

A global-level perspective
At a global level, Integrated Assessment Models(IAMs) and scenario models provide valuable insights
into the role CCS can play in the transition to a netzero emissions economy. These models explore
the interactions and trade-offs between climate
and socio-economic systems, and present possible
emissions pathways to meet a given climate goal.
IAMs vary in their complexity, coverage, focus andmethodology, and in doing so strike different balances
between lowering energy and resource intensity,
the rate of decarbonisation, and the reliance on
negative emissions technologies. Given this variability,
technologies that feature heavily across models andscenarios are seen as critical to meeting long-termclimate targets [4].
Analysis by the Intergovernmental Panel on Climate
Change (IPCC) and International Energy Agency (IEA)
consistently show CCS being deployed at significant
scale to meet long-term climate targets. For example,
in the IEA Sustainable Development Scenario (SDS),
which is consistent with meeting the goals of the Paris
Agreement, CO2 sequestration globally using CCS
reaches 2.8 gigatonnes per annum by 2050 [5]. This
would require a one-hundred fold increase in thenumber of CCS facilities in operation relative to today [6].

6THE VALUE OF CCS

In the IPCC Special Report on Global Warming of 1.5°C,
nearly all of the 90 scenarios reviewed include CCS
in some form. The average mass of CO2 sequesteredacross all scenarios in 2050 is 10 gigatonnes per year,with higher levels of deployment linked to greater useof negative emissions technologies using CCS [7].
Excluding CCS from the suite of technologies used
to meet emissions reduction targets will increase
costs. There are several low-cost applications of CCS,
such as in gas processing, and ethanol and fertiliser
production, that are cost-effective to deploy today evenunder relatively modest prices on CO2 emissions [8]. As
the value on reducing CO2 emissions rises over timewith tightening climate targets, other applications will
become cost-effective. In the IPCC’s Fifth Assessment
Report (AR5), excluding CCS from the portfolio oftechnologies was found to lead to a doubling in the costof reducing emissions required to limit global warming
to 2°C, the largest cost increase from the exclusion of
any technology [9].
In addition to being part of the lowest cost pathway,
investing in CCS today will reduce the risks associatedwith meeting climate targets. Developing anddeploying a portfolio of climate mitigation measures,
including CCS, reduces the risk to achieving emission
reduction targets due to any single technology notmeeting expectations. By diversifying the technologies
available, the exposure of a given mitigation strategy to
the success or failure of one specific technology will be
reduced.

The versatility of CCS and its ability to reduce boththe flow and stock of CO2 makes it a strategic risk
management tool for climate mitigation. Deploying CCS
at scale in low-cost, low-regret applications today, alongwith investment in pioneering CCS projects in harderto-abate sectors, provides the foundation to deploy it inother applications in the future.

The value of this versatility has been demonstrated
across numerous studies, including for example theCommittee on Climate Change’s (CCC) advice to the
UK Government on options required to achieve its netzero emissions target (Box 1).

BOX 1:THE ROLE OF CCS IN ACHIEVING THE UK’S NET-ZERO TARGETIn June 2019, the UK became the first major economy
in the world to pass laws to reach net-zero emissions
by 2050. To support this decision, the UK Government
requested advice from the independent Committeeon Climate Change (CCC) on the date for achieving
net-zero emissions, how emissions reductions might
be achieved, and the cost and benefits of pursuing a
net-zero target. The response provided by the CCC
was published in May 2019 in its Net-Zero: The UK’s
Contribution to Stopping Global Warming report [10].
The CCC separated the mitigation options required
to meet net-zero emissions into Core options,
Further Ambition options and Speculative options.
Core options include low-cost, low-regret measuresthat make sense under most strategies to reduce
emissions by at least 80 per cent by 2050 relative to1990 levels.
Further Ambition options include more challenging
and more expensive options that collectively would

get the UK close to the net-zero target. Speculative
options were also considered, to bridge the gap
between the emissions reductions in the Core andFurther Ambition options and those required to reachnet-zero. Each option was assessed based on its
feasibility, cost, impact on affordability, energy security
and competitiveness, and consistency with existing
policies.
CCS features in all of the options presented by the
CCC and across multiple sectors, demonstrating thevalue it provides in the UK as a versatile emissions
reduction technology (Figure 1). In the report, 75 to
175 million tonnes of CO2 per annum is estimatedto be captured and stored in 2050 in the Core andFurther Ambition options. This includes CCS on power
plants to provide firm low-carbon power, in industry
to reduce process emissions, with the production ofhydrogen for heat, power and fuel, and with bioenergy
to provide negative emissions through bioenergy withcarbon capture and storage (BECCS).

Figure96%1: CCS in the CCC’s advice to the UK Government on reaching net-zero
80%

100%

%

96%
100%
80%

EMISSIONSEMISSIONSREDUCTIONSREDUCTIONSRELATIVE TO
RELATIVE TO
1990 LEVELS
1990 LEVELS

80%

CCS IN CORE OPTIONS• CCS with fossil fuel power generation• Low-cost industry applications
CCS IN CORE OPTIONS• CCS with fossil fuel power generation• Low-cost industry applications
96%

96%

CCS IN FURTHER AMBITION OPTIONSCCS IN FURTHER AMBITION OPTIONS• Additional CCS with power generation• Additional CCS with power generation• Highercost industry applications• Higher costindustry applications• CCS withproduction• hydrogen
CCS withhydrogen production• BECCS• capture
BECCS• Direct air(limited)• Direct air capture (limited)100%

CCS IN SPECULATIVE OPTIONS• Additional BECCS
100%• At scale direct air capture

CCS IN SPECULATIVE OPTIONS• Synthetic fuels• Higher capture rates• Additional BECCS• At scale direct air capture• Synthetic fuels• Higher capture rates

7

THE VALUE OF CCS

A sector-level perspective

The cement, iron and steel, and chemical sectors arealso amongst the hardest to abate:

Looking at the challenges from a sector perspective
can provide further compelling evidence of the value
CCS offers as a climate mitigation tool. There are fourareas where CCS has a critical and valuable role to playin the least-cost net-zero emissions pathways. Theseare explored in more detail below, and include:•

One-quarter of industry emissions are process
emissions that result from chemical reactions
inherent to production processes. For example,
in cement production, 65 per cent of emissions
come from the calcination of limestone, a chemical
process underlying cement production [11]. Theseemissions cannot be avoided by switching toalternative fuels.

•

One-third of energy demand by industry is used
to provide high-temperature heat. Switching fromfossil to low-carbon fuels to generate this heatwould require significant modifications to facilities[11]. Further energy efficiency improvements inthese facilities are also likely to be limited as highenergy costs have already incentivised monitoring
and reductions in energy use [12].

•achieving deep decarbonisation in industry;•enabling the production of low-carbon hydrogen atscale;•

providing low-carbon dispatchable power; and•delivering negative emissions.

Achieving deep decarbonisation inindustry
To meet long-term climate targets, industrial production
will need to be transformed. Industry accounts for 40
per cent of global energy demand and a quarter ofglobal CO2 emissions (Figure 2).
The cement, iron and steel, and chemical sectors
are the largest source of industrial emissions. These
industries provide a range of products that are vital to
everyday life. The iron and steel and cement sectors
provide the foundation materials for the construction
sector and infrastructure which supports economic
growth. The chemicals industry produces a range ofhigh-value products, including plastics, rubbers, fibres,
fertilisers, soaps, pharmaceuticals and glass. Demand
for the goods produced by industry is expected to growin the future, driven by a growing population, increased
living standards and economic growth.

8

THE VALUE OF CCS

CCS provides one of the most mature and costeffective options for reducing emissions from processes
and high-temperature heat demand. Several reports,
including from the Energy Transition Commission
and the IEA, have concluded that achieving net-zeroemissions in industry without CCS may be impossible
and at best more expensive [12][11].

Figure 2: CO2 emissions by industry and proportion that are process emissions
OTHER

PROCESS CO₂ EMISSIONSENERGY RELATED CO₂ EMISSIONSBUILDINGS

TRANSPORT

100%

2.8

8.0

OTHER INDUSTRY
2.0

80%

ALUMINIUM

Direct
CO2 Emissions(GtCO2 in 2017)

IRON AND
STEEL

2.1

1.1

CHEMICAL AND
PETROCHEMICALPULP AND PAPER

Enabling the production of
low-carbon hydrogen at scale

The advantages of low-carbon hydrogen production
through gas reforming and coal gasification with CCS
centre around the maturity of technologies, scale andcommercial viability:
Low-carbon hydrogen has been produced throughgas reforming and coal gasification with CCS for
almost two decades. The first CCS facility withhydrogen production, the Great Plains Synfuel Plant
in North Dakota in the United States, commenced
operation in 2000 [15].

THE VALUE OF CCS

20%
10%

CEMENTCHEMICALS:AMMONIA•

Scaling up low-carbon hydrogen production
with CCS is currently far less challenging thanscaling up the use of electrolysis. Commercial
scale hydrogen production facilities with CCS are
already operating, with five low-carbon hydrogenproduction facilities with CCS operating globallyand three under construction. These facilities havea total production capacity of 1.5 million tonnes ofhydrogen per annum. The largest facility produces
over 1,000 tonnes of low-carbon hydrogen per day[6].

•

Hydrogen produced using coal or methanewith CCS is currently the lowest cost option for
producing low-carbon hydrogen, with costs of
US$1.50-2.40 per kilogram compared to US$4.007.45 for hydrogen produced using electrolysis [13][16][17].

Hydrogen is likely to play a major role in the
decarbonisation of hard-to-abate sectors and may also
be an important source of energy for residential heat
demand and flexible power generation. To reach netzero emissions, global hydrogen production will needto grow significantly, from 70 million tonnes per annum
today to 425-650 million tonnes per annum by midcentury [13][12][14].
The three main technologies used to produce lowcarbon hydrogen today are gas reforming with CCS,
coal gasification with CCS, and electrolysis poweredby renewables. Each technology offers its own benefits
and will play a role in the global energy transition.

40%

0%

POWER

9

60%

30%

CEMENT

•

70%

50%

2.2

13.1

90%

While the costs of hydrogen produced via electrolysis
are expected to fall, low-carbon hydrogen produced
using CCS is and will remain the most commercially
viable option in the near-term. Even under ambitious
assumptions on electrolysis, producing hydrogenwith CCS will continue to be a cost-effective solution,
particularly in regions where large resources of lowcost renewable electricity are not available.

Providing low-carbon, dispatchable
power generation
The rapid decarbonisation of power generation is
crucial to achieving net-zero emissions. Electricity
generation accounts for around a third of global
CO2 emissions, making it the largest source of CO2
emissions globally [5]. Demand for electricity is also
forecast to increase significantly due to rising living
standards and the electrification of transport and heat,for example with the deployment of electric vehicles.
The rapid deployment and reduction in costs ofrenewable technologies has spearheaded the transition
to a low-carbon electricity grid. In turn, this has reduced
the amount of dispatchable power required fromfossil fuel sources. However, the intermittent nature ofwind and solar generation creates many challenges
for electricity systems that must immediately deliverelectricity in response to changes in demand [18]. This
reality means that a combination of renewables anddispatchable power generation will be required todeliver reliable, affordable and low-carbon electricity inthe future.
CCS equipped power plants provide several services
to the grid and electricity consumers that cannot beprovided by renewables. Flexible power plants withCCS can ramp power up and down, as-needed, to meetdemand. They also provide essential grid-stabilising
services such as inertia, frequency control andvoltage control. The inertia of huge spinning physicalcomponents, such as generators, motors and turbines
in conventional fossil fuel powered plants, slow down
the rate of change in system frequency and provide
sufficient time for the system to respond to changes indemand. In doing so, they ensure system voltage andfrequency remain within very tight tolerances [18][19].
The importance of these wider grid services for reliable
electricity supply means that a holistic assessment ofvarious power generation technologies is necessary.
Historically, decisions relating to the optimal technology
mix for the future electricity system have been
structured around the levelised cost of each technology.
While useful for comparing generation costs fortechnologies of a similar type, the levelised cost ofgeneration is not fit for purpose when determining the
optimum technology mix for a low-emissions electricity
system. This is because the costs of electricity supply

10

THE VALUE OF CCS

not only encompasses the costs of generation, but also
costs of grid services and transmission and distrubutionof electricity. These total system costs, which vary
according to the technology mix in the grid, yield adifferent picture about the costs of a power technology
in comparison to the levelised cost of generation [21].
Decisions relating to the optimal technology mix forthe future electricity system can benefit from holistic
valuation metrics which provide new insights. For
example, studies utilising the Systems Value metric,
which takes a whole systems perspective whencalculating the value of a technology, demonstrate
how the value of CCS to the system increases as thepenetration of renewables increases [18][19][21]. Suchfindings demonstrate how the ability to provide ancillary
services while supplying dispatchable, low-emissions
electricity make CCS equipped power plants a highly
valuable and economically competitive option which
complements the deployment of other low-carbon
sources of electricity.

Delivering negative emissions
The deployment of negative emissions technologies
will be needed to compensate for residual emissions in
hard-to-abate sectors if net-zero emissions targets areto be met.
CCS provides the foundation for BECCS, one of the few
negative emissions technologies that can be deployedat sufficient scale to deliver the goals of the Paris
Agreement and achieve net-zero emissions by midcentury. There are a number of commercially successful
BECCS facilities in operation today. The largest, theIllinois Industrial CCS facility, captures one million
tonnes of CO2 a year from the production of ethanolfrom corn [15].
CCS also provides the basis for direct air capture(DAC), a suite of negative emissions technologies
that use chemicals to directly capture CO2 from theatmosphere. The CO2 captured can be permanently
stored underground, using the same technology
as other CCS facilities. DAC is at an earlier stage ofmaturity than BECCS, but there are notable examples
of DAC projects in operation today using technologies
developed by Climeworks, Carbon Engineering and
Global Thermostat, for example.

BECCS and DAC, like other negative emissions
technologies, are not without their challenges andtrade-offs.1 For example, DAC is highly energy-intensive
owing to the low concentration of CO2 in the air, withcosts of between $600-$1,000 per tonne of CO2 forfirst-of-a-kind projects. The cost of DAC is expected
to fall over time, but most studies suggest costs willremain between $100-$300 per tonne of CO2 when
deployed at scale [23]. Scaling up BECCS will require
the development of supply chains for sustainablebiomass from the waste products of agriculture andforestry, and potentially significant areas of land for thecultivation of energy crops.
While it is theoretically possible to reach net-zeroemissions without BECCS, and without CCS, it will
be extremely challenging. One of the four illustrative
pathways in the IPCC Special Report on Global
Warming of 1.5°C demonstrated how temperaturerises could be limited to 1.5°C without CCS [24]. This
would require a rapid reduction in energy intensity ofaround 5 per cent per year between now and 2040.
In contrast, energy intensity has been falling at a rateof only 1.6 per cent since 1990 [5]. Even in the IEA

Sustainable Development Scenario, which assumes all
economically viable energy efficiency opportunities are
pursued, energy intensity improves only by 3.6 per centyear-on-year from 2018 to 2040 [5]. Achieving net-zeroemissions without BECCS therefore looks infeasible.
Negative emissions technologies are not a silver bullet,
but with every year that passes without significant
reductions in CO2 emissions, the need to rely on
negative emissions technologies in reaching the goalsof the Paris Agreement increases. The development
and deployment of CCS, which provides the foundation
for scalable negative emissions technologies, will be
critical for achieving net-zero emissions.

CCS HAS A CRITICAL ROLE TO PLAY IN
ACHIEVING DEEP DECARBONISATION IN
HARD-TO-ABATE INDUSTRY, ENABLING
THE PRODUCTION OF CLEAN HYDROGENAT SCALE, PROVIDING LOW-CARBONDISPATCHABLE POWER AND DELIVERINGNEGATIVE EMISSIONS.

1

11

Other negative emission technologies that do not require CCS include afforestation, reforestation, soil sequestration, enhanced weathering and ocean alkinisation.

THE VALUE OF CCS

3.0 CCS IS A DRIVER
OF EMPLOYMENTAND ECONOMICGROWTH
CCS can provide clean growth opportunities, create
and retain jobs, and help ensure a just and sustainabletransition for communities. The broader benefits of CCS
deployment are discussed in this section of the report.

Creating and sustaining jobs
The deployment of CCS creates jobs in the construction,
operation and maintenance of CCS facilities. It also
supports employment at the industrial plant at which
CCS is applied and in the associated supply chain.
As large infrastructure projects, the constructionof large-scale CCS facilities requires a substantial
construction workforce. While the numbers vary
by facility type and stage of construction, there are
generally several hundred and often thousands ofpeople involved in the construction of a CCS facility
at any point in time. For example, 1,700 people were
employed at peak construction for the Boundary
Dam CCS facility in Canada [25].2 Similarly, around2,000 people were estimated to be employed atpeak construction for the Alberta Carbon Trunk Line[26]. These jobs are temporary, lasting only for theconstruction phase of the projects development, but
provide employment opportunities for a mix of low andhigh skilled workers.
The operation of a CCS facility on the other handrequires a relatively small number of workers, butthese jobs are long-lived, lasting for the duration of thecapture plants operation. For example, data collectedfrom carbon capture facilities currently operatingsuggests around 20 people are employed in theoperation of a capture plant. The individuals typicallywork shift patterns and include a combination ofmanagers, operators, maintenance personnel and lab
technicians.
The number of people employed in the construction
and operation of CCS facilities will need to increasesignificantly if long-term climate targets are met. For
example, to reach the levels of deployment outlined in
the IEA Sustainable Development Scenario (SDS), over
2,000 CCS facilities would need to be in operation
by 2050, requiring a build rate of 70-100 facilities per
year. This would require around 70,000 to 100,000
construction workers and 30,000 to 40,000 capture
facility operators globally. The operation of thetransport and storage network would require additional
workers. In Europe alone, an additional 10,000 could
be employed in a centralised transport and storage
industry in the North Sea.3
The deployment of CCS also enables high-value
industries to continue to make a sustained contribution
to economies by enabling them to make the transition toa net-zero economy [27]. The iron and steel, chemicals,
refinery, cement and other industrial sectors employ
millions of people globally, are large, local employers,and provide a range of products that are essential to
everyday life (Figure 3). These industries often co-locate
in regions with good access to infrastructure such as
port and rail, and the necessary inputs to production
such as energy resources, feedstocks and skilled

Some construction workers will have been involved in other upgrades to the power station undertaken at the same time as the installation of capture equipment.
Based on analysis published by SINTEF [39]. For consistency, the job estimate presented is based on the low scenario in the SINTEF report in which CCS deployment globallyreaches 1.8 gigatonnes of CO2 per year in 2050. This is slightly below the estimated deployment of CCS in the IEA SDS.

2
3

12

THE VALUE OF CCS

workers. This results in the local communities in which
they are based being particularly dependent on themfor employment.
In the absence of CCS, high-emissions industries
will become incompatible with net-zero emissioncommitments causing those industries, and thecommunities that rely upon them, to go into decline.

CCS enables those industries and the jobs they support
to continue, as well as creating new jobs as is discussed
elsewhere in this report. While it is difficult to quantify
the impact of CCS on jobs in industrial areas, it is clearthat by converting high-emissions industries to lowemissions industries, CCS can play an important rolein avoiding local economic and social dislocation thatmight otherwise result from meeting ambitious climate
targets.

Figure 3: Global employment in selected sectors and employment at a typical plant

6 million

Iron & steel

1 million

Cement<1 million

Aluminium

4 million

Paper & pulp

3 million

Refined petroleum products

15 million

Chemicals & petrochemicals

INTEGRATEDSTEEL MILL
(4 mt/yr)

REFINERY(250,000 b/day)
AMMONIA
PLANT(1,500 t/day)

1,500 - 2,500

COAL FIRED
POWER PLANT(1 GW)

50 - 100

100 - 200

PULP MILL(800,000 adt/yr)
100 - 200

INTEGRATEDCEMENT PLANT(1.25 mt/yr)

200 - 400

Source: Global CCS Institute analysis of published reports, national statistics and company level reporting.
Size of bubble indicates number of employees at a typical plant [28][29][30][31][32][33][34]13

THE VALUE OF CCS

700 - 1,500

As well as being a source of a large number of jobs
to local communities, emissions-intensive industries
provide high paid jobs, an important measure of job
quality [35]. This is demonstrated by the positive wage
premium in these industries, which is equal to theaverage wage paid by a specific industry minus theaverage wage in the region or country the industry is
located. In the US for example, workers in refining,chemicals, cement, and iron and steel sectors are paid
significantly more than the average wage in the state
they are located (Figure 4).

The factors contributing to this wage premium are
numerous, and could include the capital intensity of
the industry, the concentration of profitable firms, andthe compensating wage required to reflect the risks of
the job.4 The trends are similar for the UK, except forthe cement sector where wages are slightly below theaverage in the country.

Figure 4: Wage premium in emissions-intensive industries in the UK and US
USA (ALL EMPLOYEES)CEMENTFOSSIL FUEL ELEC GENERATIONFERTILISER
IRON AND STEEL
Wages lower than US State average

Wages higher than US State average

REFINERIES
-100

-50

0

50

100

150

200

WAGE PREMIUM (%)

UK (FULL-TIME EMPLOYEES)CEMENTELEC GENERATIONFERTILISER
IRON AND STEEL
Wages lower than UK average

Wages higher than UK average

REFINERIES
-75

-50

-25

0

25

50

75

100

200

WAGE PREMIUM (%)
Source: Global CCS Institute analysis of Quarterly Census of Employment and Wages (US) and Annual Survey of Hours and Earnings (UK) [36][37]4Differences in the cost of living in which the industries are based could also influence the results, although this is partly controlled for in the US analysis by comparing wages tothe state average rather than national average.

14

THE VALUE OF CCS

In addition to supporting employment directly at the
CCS facility and industrial plant where it is located,the deployment of CCS can support jobs indirectlyin the supply chain. These multiplier effects can belarge. For example, in the UK, the refinery, cement,
petrochemicals, iron and steel industries all rank within
the top 30 per cent of industries by employment
multipliers [38]. The indirect jobs supported in the
supply chain are more geographically dispersed andtherefore less likely to be additional than the direct
employment effects. Nevertheless, they provide a
useful indication of the overall contribution of CCS to
local and regional employment.
Several studies have estimated employment multipliersfor CCS-related industries to calculate the total
employment effects of large-scale CCS deployment.
For example, SINTEF estimate the deployment of
CCS in Europe could provide 150,000 jobs in 2050, of
which 60,000 to 70,000 would be indirectly employedin supply chains [39]. A recent study for the UK foundhigher multipliers, with the large-scale deploymentof CCS to capture 75 million tonnes of CO2 per year
estimated to support 68,000 jobs directly and 158,000
jobs indirectly in supply chains [40]. Turner et. alextend this analysis to job quality, demonstrating the
deployment of CCS could generate economic value by
supporting higher than average wages in supply chainsin Scotland [41].

Supporting economic growththrough new net-zeroindustries
The widespread deployment of CCS will create newopportunities in the supply of infrastructure andtechnology, the provision of professional services andfinance, and the production of low-carbon products.
The prospect of growth in these markets will stimulateinnovation as companies compete for market share,
which in turn generates economic growth. Emerging
evidence suggests CCS could be a source of highvalue innovation spillovers, and therefore a provider ofinnovation-led growth (Box 2).

15

THE VALUE OF CCS

There are several examples of industries associatedwith CCS that are anticipated to grow in the future,providing new employment opportunities:•

The Hydrogen Council estimate the hydrogen
economy in 2050 could account for 18 per cent of
final energy demand, with annual sales of US$2.5
trillion, providing employment for 30 million people[42]. In Europe, the market could reach EUR 820
billion, providing employment for 5.4 million highly
skilled workers [43]. This market would be served
by low-carbon hydrogen produced using different
types of production processes, including CCS.

•

The
deploymentofnegativeemissions
technologies in line with the rates suggested in
Integrated Assessment Models will offer new
employment opportunities, particularly in thegrowing of biomass feedstock, and the supply
chains for waste biomass from agriculture andforestry.

•

The development of carbon capture and utilisation(CCU) technologies could provide sustainable
employment opportunities, where the climate
benefits can be demonstrated. Interest in themarket has grown in recent years, with over $1
billion of investment in CCU start-ups over the past
decade [44].

Some studies extend this analysis to focus on theexport potential of these new industries, which could
provide an additional source of economic growth.
Countries that have a comparative advantage today inthe provision of CCS-related products and services, andhave a healthy CCS facility pipeline, will be best placed
to take advantage of this opportunity.

BOX 2:

UNLOCKING CLEAN GROWTH THROUGH INNOVATION
The development and deployment of technologies
generates knowledge and innovation which areimportant drivers of productivity and economic
growth. The spillovers generated by the dispersion
and diffusion of knowledge created by deployment
can be large, with some studies suggesting thesocial returns from research and innovation can be
more than double the returns to the original investor[45]. Given the important role they play in propelling
economic change, understanding the spillover
effects of different technologies is increasingly the
focus of research.
New research by the Grantham Institute attempts
to provide this broader perspective for the maintechnology sectors, including climate mitigation
technologies like CCS [46][47]. Using informationfrom over one million patent applications aroundthe world, they estimate the spillover value for major
technology sectors for a given country. The metricdraws on the approach used by Google to rank
the relevance of webpages, ranking innovations
based on the number of citations to them in otherpatent applications. When combined with monetary
estimates per citation, this provides a dollar estimateof the value per innovation for each technology.
The results of this analysis suggest CCS is one of thehigher value, but lower volume technologies whenit comes to spillovers (Figure 5). For Germany, theUS and the UK, the value per CCS innovation is 17,
35 and 50 per cent respectively above the averagevalue of innovations in those countries across thesectors assessed. This signals that investment in
CCS could provide above average benefits whenit comes to innovation, knowledge and associatedeconomic growth. The number of innovations related
to CCS are lower than average, but similar to othertechnologies like geothermal, building efficiency andmarine energy technology. The largest source ofinnovations are artificial intelligence, biotechnology
and ICT given their economy-wide applicability.
CCS could, therefore, play a role in supporting
innovation-led economic growth alongside otheremerging, high-value technologies.

Figure 5: Number and spillover value of CCS innovations relative to other sectors

Value of CCS
innovations
relative toother sectors

+50%
+35%
+17%
AVERAGE IN EACH COUNTRY

-50%

-50%
-78%

16

THE VALUE OF CCS

Number of CCS
innovations
relative toother sectors

Extending the lifetime ofinfrastructure and deferring
decommissioning costs
The deployment of CCS will require the construction of
infrastructure to transport and permanently store CO2.
This will require large capital investment, particularly for
projects storing CO2 in offshore storage reservoirs.
Where oil or gas production fields are at the endof their lives, there may be opportunities to re-use
existing oil and gas infrastructure by repurposing it forCO2 transport and storage. This could provide a rangeof benefits, including reducing the cost of building
transport and storage infrastructure and potentiallyreducing permitting time. An example of where this isbeing put into practice is the Acorn project in Scotland,
which plans to re-use both onshore and offshore
pipelines, providing an estimated saving of £548 million
relative to the cost of building a new pipeline [48].
The re-use of infrastructure could also defer the costs
and the environmental impact of decommissioning,
freeing-up resources that can be invested in othervalue generating activities. Over time, the deferral of
decommissioning costs combined with learning andinnovation could result in lower decommissioning costs
overall, assuming other cost drivers remain stable [49].
The costs of decommissioning are projected to reach$85 billion globally between 2019 and 2028 (Figure6). In the North Sea alone, which accounts for justunder a half of the total forecast decommissioning
expenditure, 2,624 wells, 1.2 million tonnes of platform
topsides and 660,000 tonnes of substructures are
due to be decommissioned in the next ten years [50].
Since decommissioning costs are eligible for tax relief
in some jurisdictions, the deferral of decommissioning
costs would benefit taxpayers as well as the operator[51].
The largest component of decommissioning costs is
associated with the decommissioning of wells. In theUK, which has been the focus of most decommissioning
activity in recent years, around a half of the total costsof decommissioning are associated with wells [50]. The
remainder is split between removing platform topsides
and jacket structures (18 per cent), decommissioning
subsea infrastructure, including pipelines (9 per cent),
and the costs of project management and operating
platforms after production has ceased (17 per cent)(Box 3).

17

THE VALUE OF CCSWhile the opportunity to defer decommissioning costs
is significant, not all oil and gas infrastructure will besuitable for repurposing for CO2 transport and storage[49]. There are a range of commercial, technical,
operational and regulatory risks that could discourage
the re-use of particular aspects of infrastructure. The
business case for re-using infrastructure ultimately restson whether the cost savings of re-purposing assets
outweigh the potential risks and costs of remedial work
associated with using older infrastructure.
The opportunity to re-use infrastructure will ultimately
vary on a case-by-case basis, with some infrastructure
asset types being more suitable for re-use than others:•

Pipelines provide the most promising prospect
for re-use and deferring decommissioning costs,
although they account for a relatively small
proportion of total decommissioning costs. To
determine whether a pipeline is suitable for reuse, a full integrity and lifetime extension study will
be required. These studies will identify whether
there are any issues with corrosion or otherintegrity concerns that would make the pipeline
unsuitable for re-use. In general, pipelines that are
relatively new, are appropriately located, and areof a sufficient size and pressure rating, would besuitable for re-use [53].

•

Oil and gas wells may be suitable for CO2 injection.
Design standards and operational criteria for oil andgas production wells differ to those of CO2 injection
wells, meaning remedial action will be required tomodify the well equipment [54]. Operators would
need to weigh up the additional costs of remedial
work and any other risks associated with using
existing wells against the time and potential costsavings of drilling a new well. The re-use of wells
is being considered for the Porthos project inRotterdam [55].

•Platforms could technically be used for CO2
injection, but it may not be economic to do so. The
more complex process and safety systems requiredfor oil and gas production are unnecessary andunsuitable for CO2 injection, and would need tobe removed if the platform were to be re-used.
These modifications are expensive as they require
modification work to be undertaken offshore.
Several reports have suggested that CO2 injection
operations could be easily housed on smaller,
unmanned installations [55].

Figure 6: Global forecast decommissioning expenditure from 2019 to 2028 [52]Rest of World
Malaysia
VietnamDenmark

UK

Australia
Netherlands
Indonesia
China
Nigeria

GlobalDecommissioning
Expenditure2019 to 2028:$85 Billion

AngolaUS
ThailandNorwayThere may be other commercial considerations that
operators will factor into their decisions on whether torepurpose infrastructure, and which assets to re-use.
For example, there may be an opportunity for costsavings in the near-term as a result of the coordinationof decommissioning activity with nearby fields reaching
the end of their lifetime at similar points in time.
Changes to long-term decommissioning plans may
also result in penalties being incurred by the operator,
dampening the case for re-use. An operator may also
not want to enter the CO2 transport and storage market
as a result of the fragmented value chain and different
risk profile associated with CO2 infrastructure relative tohydrocarbons.

18

THE VALUE OF CCS

BrazilIn summary, the re-use of infrastructure can provide
cost savings and defer decommissioning costs.
This activity is likely to be reserved for specificcircumstances, mainly with the re-use of pipelines.
While this accounts for a relatively small proportion of
the total decommissioning costs, it could still provide
material cost savings that benefit both operators and, insome jurisdictions, taxpayers.

BOX 3:

THE BREAKDOWN OF DECOMMISSIONING COSTS BASEDON UK DATAThe UK is forecast to be the largest decommissioning
market over the next decade, owing to a large
portion of the North Sea basin, rather than individual
fields, maturing at similar times. While every
decommissioning project will be different, evidenceof the breakdown of decommissioning costs in
the UK can provide insight into where the greatest
opportunity to defer decommissioning costs may lie.
Oil and Gas UK compile estimates of the
breakdown in decommissioning costs in theirannual Decommissioning Insight report [50].
The latest report, published in 2019, shows well
decommissioning accounts for almost half of thetotal cost of decommissioning. The next largest
component is the removal of platform topsides
and jackets, followed by operator costs related tothe project management of the decommissioning
project. The decommissioning of pipelines and othersubsea infrastructure make up a relatively small
proportion of decommissioning costs, at around 9
per cent.

At a regional level, the breakdown of
decommissioning costs differs due to the different
nature of decommissioning projects. For example, theproportion of costs attributed to project management
is much higher in the Central and Northern North
Sea regions compared to the Southern North Sea, as
projects tend to be larger and more complex. As aresult, operator costs in these regions account for 17
to 20 per cent of the total cost of decommissioning,
compared to 9 per cent in the Southern North Sea.
Similarly, there are material differences in the costsof removals across regions, partly due to some fields
already having incurred well decommissioning costs.
However, the overall picture remains the sameacross all regions, with well decommissioning
costs accounting for the largest proportion of
decommissioning costs, followed by removalsof topsides and jacket structures, and thedecommissioning of subsea infrastructure.

Figure 7: Breakdown of decommissioning costs in the UK
100%
90%
80%

18%

• Removal activities for the topsides• Removal activities for the substructures

70%
60%

REMOVALS

7%

2%• Debris clearance• Monitoring requirements

PREPARATION, ISOLATION& CLEANING

9%

50%
45%
40%
17%
30%
20%
10%
0%

19

THE VALUE OF CCS

SITE REMEDIATION& MONITORING• Pipeline decommissioning• Mattress decommissioning• Subsea structure decommissioning

WELL DECOMMISSIONING
2%
OPERATOR COSTS• Project management services
throughout preparation of
decommissioning programme• Operational expenditure after
cessation of production

SUBSEA INFRASTRUCTURETOPSIDES & SUBSTRUCTUREONSHORE DISPOSAL• Onshore waste handling• Deconstruction• Decontamination

Facilitating a just transition•

Earlier this year, the EU launched the Just Transition
Mechanism to ensure the transition towards a
climate-neutral economy happens in a fair way.
The mechanism provides targeted support to theregions most affected by the transition and aims
to mobilise at least EUR 100 billion over the period2021-27 [57].

•

In Canada, the government launched a Task Forceon the Just Transition for Canadian Coal Power
Workers and Communities, formed of experts
from unions, environmental groups, industry andthe community. The Task Force consulted with
Canadian coal communities and has provided
recommendations to government on managing thejust phase out of coal in those communities [58].

•

In Scotland, the Scottish Government establishedthe Just Transition Commission to advise on its
transition to a net-zero economy by 2045. Within
the next year, the Commission is required to reportto Scottish Ministers, providing practical, realistic
and affordable recommendations for action [59].

•In Australia, the Latrobe Valley Worker Transfer
Scheme was agreed in 2018, involving the state
government, unions and businesses to manage
the closure of several coal-fired power plants in
the region. The scheme helps workers at coal-fired
power plants find work in other organisations in thearea [60].

CCS has a vital role to play in the just transition to a netzero economy, by enabling the growth of low-carbon
industries and supporting employment in existing
industries.
The transition to a net-zero carbon economy will
boost prosperity, but there will be winners and losers.
For example, the International Labour Organisation
estimates that action to meet the goals of the Paris
Agreement will create 24 million jobs but will also leadto job losses of around 6 million [56]. Managed well,
the transition to a net-zero economy will prevent theimmense human and economic costs of climate change,
increase growth and jobs, and reduce inequality. Donepoorly, and it could result not only in stranded assets,
but also stranded workers and communities in thoseregions most at risk of job losses.
One of the challenges of achieving a just transition isthe disconnect between the geographic spread of job
losses and gains, and the timing of these changes.
Jobs created in low-carbon industries may not occur
at the same time as job losses in emission-intensive
industries. This will reduce the long-term employment
prospects of workers in declining industries over time.
One of the advantages of CCS in this context is thatit provides employment opportunities at the timeand place where they are most likely to be needed
to support the just transition to a net-zero economy.
CCS enables existing industries to continue to makea sustained contribution to local economies whiletransitioning to a net-zero economy. Inefficient anduncompetitive industrial plants will still close, but
supporting the longevity of the most innovative firms
will help achieve a fair transition.
No single organisation can deliver the just transition
alone. Governments have a leading role to play, by
linking climate, macroeconomic, industrial, labourand regional policies under a whole-government
approach. Governments can also act as a central
point for convening industry and community groups to
identify the best options for managing the transition foreach region. There are several different examples ofgovernment-led initiatives underway to support a justtransition:

20

THE VALUE OF CCS

Most effort to date related to the just transition has
focussed on managing the near-term challenges
associated with the phase-out of coal. In the future,
the commissions, task forces and funding mechanisms
established to manage the just transition will needto expand their focus to consider a broader rangeof sectors, which some are already doing. These
sectors will include natural gas production, iron andsteel, cement, fertiliser and petrochemicals. CCS
must be considered within these initiatives, given theadvantages it provides by supporting communities thatare highly dependent on emission-intensive industries.

4.0 CONCLUSION
The deployment of CCS is essential to meeting climate
targets at the lowest possible cost. However, as
demonstrated in this report, the benefits of CCS go far
beyond just reducing emissions. CCS can provide clean
growth opportunities, create and retain jobs, and help
ensure a just and sustainable transition for communities.
For policymakers, the report highlights the need to take
into account the broader benefits of CCS to ensure its
important role is appropriately reflected in country-levelstrategies to meet the goals of the Paris Agreement.
This will require a mix of quantitative and qualitative
metrics, rather than focussing on a single metric.

The report also identifies several areas where analysis
could be built upon to improve the evidence baseon the value of CCS. For example, extending theanalysis completed for the IPCC Fifth Assessment
Report to include 1.5°C scenarios could provide further
compelling evidence of the criticality of CCS in meetinglong-term climate targets at the lowest possible cost.
In addition, a greater focus on the additionality of jobs
created and supported by investment in CCS, drawing
on the advantages of CCS identified in this report, could
enhance its value in the context of a just transition.

THE BENEFITS OF CCS GO FAR
BEYOND JUST REDUCING EMISSIONS.
CCS CAN PROVIDE CLEAN GROWTHOPPORTUNITIES, CREATE AND RETAIN
JOBS, AND HELP ENSURE A JUSTAND SUSTAINABLE TRANSITION FORCOMMUNITIES.

21

THE VALUE OF CCS

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Copyright © 2020 Global CCS Institute
The Global CCS Institute and the author believe that this document represents a fair representation of the current state of law in the key areas andjurisdictions considered, however its content should not be construed as, or substituted for, professional legal advice. The Global CCS Institute has tried
to make information in this publication as accurate as possible. However, it does not guarantee that the information in this publication is totally reliable,
accurate or complete. Therefore, the information in this publication should not be relied upon when making investment or commercial decisions,orprovided to any third party without the written permission of the Global CCS Institute. The Global CCS Institute has no responsibility for the persistence or
accuracy of URLs to any external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites
is, or will remain, accurate or appropriate. To the maximum extent permitted, the Global CCS Institute, its employees and advisers accept no liability(including for negligence) for any use or reliance on the information in this publication, including any commercial or investment decisions made on thebasis of information provided in this publication.

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THE VALUE OF CCS