What are the main barriers to scaling up CCS projects in the power sector?

1 Technical challenges

One of the technical challenges of CCS is the high energy and cost requirements of capturing CO2 from the flue gas of power plants. Depending on the type and efficiency of the capture technology, CCS can reduce the net power output of a plant by 10-40% and increase the levelized cost of electricity by 30-80%. Moreover, CCS requires a reliable and safe transportation and storage infrastructure for CO2, which may not be available or accessible in some regions. To address these technical challenges, more research and development is needed to improve the capture efficiency, reduce the energy penalty, and optimize the integration of CCS with different power generation technologies.

2 Economic challenges

Another barrier to scaling up CCS projects is the lack of sufficient financial incentives and support for CCS deployment. Currently, the cost of CCS is not competitive with other low-carbon alternatives, such as renewable energy, energy efficiency, or nuclear power. Moreover, the carbon price in most markets is too low to reflect the true social cost of CO2 emissions and to create a business case for CCS. Furthermore, CCS projects face high capital and operational costs, long payback periods, and uncertain returns on investment, which deter private investors and lenders from financing them. To overcome these economic challenges, more public funding, subsidies, tax credits, and loan guarantees are needed to reduce the risk and cost of CCS projects. Additionally, more stringent and consistent carbon pricing and regulation are needed to create a level playing field for CCS and other low-carbon options.

3 Regulatory challenges

A third obstacle to scaling up CCS projects is the lack of clear and consistent regulatory frameworks and standards for CCS across different jurisdictions. CCS projects involve multiple stakeholders, such as power plant operators, CO2 transporters, and storage site owners, who need to comply with various laws and regulations regarding environmental protection, health and safety, liability, property rights, and monitoring. However, these laws and regulations may vary widely across different countries and regions, creating uncertainty and complexity for CCS project developers and operators. Moreover, some countries and regions may lack the necessary legal and institutional capacity to regulate and oversee CCS activities, which may raise public concerns about the potential risks and impacts of CCS. To address these regulatory challenges, more harmonization and coordination of CCS policies and regulations are needed at the international, regional, and national levels. Additionally, more capacity building and stakeholder engagement are needed to ensure the effective and transparent governance of CCS projects.