FROM AMBITION
TO ACTION
Japan CCS Forum 2022

Jarad Daniels
CEO, Global CCS InstituteCCS IS AN ESSENTIAL TOOL FOR REACHING
NET-ZERO, ALONGSIDE OTHER TOOLSAchieving deep decarbonisation in hard-to-abate
industry.
Enabling the production of low-carbon hydrogen atscale.
Providing low carbon dispatchable power.
Delivering negative emissions.

THE DEMAND DRIVERS FOR CCS
Demand for CCS is being driven by:• Net-zero commitments from governments andbusinesses driving emission reductions andremovals.
• Need for low-carbon footprint commodities andenergy.
• Economic drivers including growth, prosperityand a just transition.

CCS: AMBITION TO ACTION• In 2022, the pipeline of operational and under development commercial CCSfacilities continued to grow for the 5th year in a row.
• The capture capacity of CCS projects in the project pipeline is 244 million tonnes
per annum (mtpa) – a 44% increase from 2021.
• Policy and funding support for CCS continued its momentum, predominantly inNorth America and Europe, whilst project progress was notable in the APAC region.
• Despite the progress in 2022, to achieve net-zero emissions CCS capacity mustincrease more than a hundredfold by 2050.

GROWTH IN 2022

CCS FACILITIES - OPERATINGOperational

CCS FACILITIES – IN DEVELOPMENT

THE GLOBAL STATUS OF CCS
SIGNIFICANT DEVELOPMENTS IN THE PAST 12 MONTHS• 4 new facilities in operation.
- Including first commercial DACCS and post-combustion gas facilities.
- New operational facilities are in Canada, China, Iceland, US.
• 11 new facilities in construction.
• 75 mtpa of new capacity added to the pipeline.
• Major policy progress: Canada, Denmark, US.
• Major new project progress : Australia, Iceland, Indonesia, Malaysia, UK.
• Additional countries with new CCS facilities in development for the first time:
Germany (trans-shipment hub), Finland, France, and Timor-Leste.

EVOLUTION OF STORAGE• 9 of the 30 facilities currently operating use
dedicated geological storage with theremainder using EOR.
• 70% of the commercial CCS projects indevelopment aim to use dedicated geologicalstorage (deep saline formations, depleted oiland gas fields).
• Operational facilities, on average, can injectaround 1 mtpa CO2. That average could morethan double within a decade. Many storagesites associated with the development of CCS
networks generally have rates of around
5 Mtpa.

* Analysis of 108 facilities in development with dedicated storage sites

INFRASTRUCTURE DEVELOPMENT• Networks continue to be a predominant model of development.
• For the Longship project, two dedicated 7,500 m3 CO2 carrier ships underconstruction.
• Subsea pipelines in Europe under assessment (from Belgium and Germany toNorwegian North Sea).
• In Iceland, storage in basalt rock formations being further developed.
• Storage licensing rounds: Australia, Canada, Denmark, UK.
• The Hydrogen Energy Supply Chain (HESC) pilot project demonstrated the transportof liquid hydrogen from Victoria in Australia to Kobe in Japan in February 2022.

CARBON DIOXIDE REMOVALCAUTION – ECONOMIC MODELLING• CDR continues to gain momentum and isviewed as critical to net-zero.
• Engineered-CDR costs, specifically ofDACCS, are currently relatively high but
projected to fall over time.
• The extent to which costs fall will
determine deployment.
• CDR can play an important role in drawing
down historical emissions even after wereach net-zero and provides a safety net.

Source: Williams, Eric 2022, Global CCS Institute Thought Leadership Report. The Economics of Direct Air Carbon Capture & Storage.

FINANCE AND INVESTMENT• Corporate financing model has traditionally been CCS financing approach, but
unsustainable if CCS is to be deployed at scale – private finance with government
incentivization is key.
• Taxonomies emerging in various jurisdictions – efforts to adopt common principles key to aconsistent approach.
• Carbon Markets – compliance and voluntary – becoming increasingly important.
Convergence expected.
• ESG-related reporting remains important to commercial activity:• Demand for detailed disclosure remains critical for investors.
• Companies with significant emissions under pressure to report.
• Although CCS not excluded, a clearer reporting pathway would be beneficial.

CCS DEVELOPMENTS IN NORTH AMERICATHE UNITED STAGES• Inflation Reduction Act (IRA)• Significant enhancements to 45Q• Multiple early analyses suggested the IRA could increase the deployment ofCCS by 13-fold, or well over 110 Mtpa, by 2030 compared to existing policy.
• CHIPS and Science Act: $1bn for CO2 removal R&D.
• Bipartisan Infrastructure Law: $12bn for carbon management approaches.
CANADA• CCUS Strategy under development.
• 2022 Federal Budget included CCUS investment tax credit (2022 – 2030).
• Move to mandatory climate-related financial disclosures across broad spectrum of
the economy as part of net-zero 2050 strategy based on TCFD framework.

CCS DEVELOPMENTS IN EUROPE• More than 70 commercial facilities in various stages of development across Europe –almost doubling from 2021.
• THE EU through the Innovation Fund to invest in 11 CCS and CCU projects,
supplemented by individual member state policies.
• NETHERLANDS allocated €2bn SDE++ subsidy to capture facilities in the Port ofRotterdam network.
• DENMARK allocated €5bn for CCS projects over 10 years under Energy Technology
Development and Demonstration Project.
• The UK aims to establish 4 CCUS networks by 2030 capturing 20-30 mtpa, with £1billion allocated to support CCUS development. First two recipient clusters announced inlate 2021.

CCS DEVELOPMENTS IN THE MENA REGION• 3 facilities in operation in the region, capturing 3.7 Mtpa CO2, equivalentto ~10% of global capture capacity.
• CCUS in MENA region being driven by high-level policy and international
market expectations:• NDCs and net-zero commitments• Potential to take a significant share of low-carbon hydrogen market• Low-carbon industrialization plans• Kingdom of Saudi Arabia, United Arab Emirates, and Egypt haveannounced VCMs and carbon trading schemes.

CCS DEVELOPMENTS IN ASIA PACIFIC

CHINA
Great need for CCS. High-level policy support through inclusion in “1+N”. Energy SOEs driving
development yet require enhanced policy and technology support.
JAPANStrong support, limited domestic storage, reliant on imports of low-carbon energy and export of captured
CO2. Looking for strong regulatory regimes in countries for storage.
INDONESIA
Focus remains on economic development as a priority. CCUS regulatory framework is in development
and the anticipated carbon pricing mechanism will launch its first phase later this year.
MALAYSIA
Ambitions to become a regional storage hub for CCS. Announced a carbon tax and development of aregulatory framework in late 2021.
AUSTRALIA
CCS projects now eligible to generate financial returns through the Emissions Reduction Fund. Regulatory
frameworks being developed at the state level (WA, NT). Oil and gas continue to drive deployment.

INTERNATIONAL POLICY AND REGULATION• Publication of IPCC Working Group III Report: ‘Mitigation of Climate Change’highlights the effectiveness and viability of CCS.
• 21 countries included CCS in their Nationally Determined Contributions (NDCs) withmore expected.
• More than 80% of countries that submitted Long-Term Low-Emission Development
Strategies (LT-LEDs) included CCS.
• Trend toward closer regional cooperation, particularly surrounding transboundary
storage activities (e.g., North Sea, Southeast Asia).

REALISING CCS AT SCALE GLOBALLY
Define the role of CCS and CDR in meeting national climate
strategies and plans, set and communicate targets.
Create a long-term, high value on the storage of CO2.
Support the identification and appraisal of geological storage
resources.
Develop specific CCS laws and regulations.
Identify opportunities for CCS networks and facilitate theestablishment of transport and storage infrastructure.
Enable investment in CCS through appropriate policy and market
mechanisms.

NET-ZERO BY 2050 REQUIRES STRONGACTION BY 2030
• Although the increasing deployment of CCS isencouraging, we are far short of the scale required toachieve net-zero.
• The installed capacity of CCS needs to increase by atleast 100-fold by 2050 to meet our climate targets.
• Reaching the required scale for CCS will require us all towork together: Governments to put in place supportive
policy; private sector to build, own and operate; andfinancial sector to provide capital.

NOVEMBER 2022

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