Global oil and gas consumption is expected to rise over the next decade despite ambitious emission targets and tight regulations – and carbon capture, utilization and storage (CCUS) will be instrumental in meeting that demand while also accelerating the clean energy transition.

The biggest obstacle to rollout of CCUS projects around the globe is time itself. Between slow regulatory approvals, complex cross-border negotiations, and drawn-out construction timelines, CCUS infrastructure has been a start-stop development. But the landscape could change rapidly over the next decade, as over 500 CCUS projects in the development pipeline begin to break ground.

Challenges facing United States (U.S.) stakeholders

  • Legal uncertainty surrounding pore space: The property rights of pore space, the empty space between geologic formations where carbon is often captured, remains unclear in many states. U.S. courts have generally granted pore rights to those who own the surface estate, but not always. In situations where the mineral rights owner has been granted an easement, for example, the court has ruled in their favor, against established precedent.
    Today, however, leases are increasingly being used to grant pore space access in place of easements. This has generated additional uncertainty concerning the length of such leases, who maintains responsibility for stored carbon after those leases end, and whether a lease must consider state and local regulations with respect to length of time for sequestration. Because of this uncertainty, those aiming to invest in carbon storage facilities will have to rely on local due diligence and expert counsel to draft leases and secure pore space rights.
    Federally, surface and minerals are owned by the same person and (presumably) will not be split – so these considerations may differ. But federal courts have yet to settle on a single approach.
  • Permitting issues abound: The Environmental Protection Agency (EPA) has been slow to approve the mounting backlog of permits for Class IV wells, which are necessary for permanent carbon sequestration. This delay has pushed legislators into action. Earlier this year, for instance, U.S. Senator Joe Manchin introduced the Building American Energy  Security Act – legislation aimed at speeding up energy project permits, which recently received support from the White House. Should this bill, or others like it, get the green light from Congress, it would spur the development of dozens of CCUS projects over the next decade.
  • Long-term liability: Companies are responsible for injection wells during the life of a CCUS project, which can last up to 50 years – and sometimes longer. But the regulatory patchwork between various U.S. states means it’s often unclear who assumes liability after the company’s lease expires. If state governments aren’t willing to assume responsibility for carbon storage projects once operations wind down, then investors could be on the hook for maintaining those wells for decades.

Considerations for United Kingdom (UK) and European Union (EU) stakeholders

  • Stymied cooperation between countries: Sequestered carbon has been largely stored beneath the European seabed, often in the North and Adriatic seas, to take advantage of natural processes that redistribute CO2 across the deep ocean. But restrictions laid out by the London Protocol have made it difficult for landlocked EU countries to export their carbon for storage. A 2009 amendment allowing for the transborder export of carbon has only been ratified by 10 nations – 36 approvals are needed for it to become legally binding. Energy leaders should look to capitalize on other bilateral agreements that allow for the export of CO2, such as the trailblazing pact between Belgium and Denmark that enables permanent offshore carbon storage.
  • EU regulatory framework: The CCS-Directive of the European Union, which was optional to be implemented by the Member States, has not been implemented in a number of countries, including, for example, Germany. However, this is necessary to establish the required legal framework.
  • Government support and regulation in the UK: The country’s Department for Energy Security and Net Zero has selected eight CCUS projects, across a mix of technologies, to negotiate for government assistance in Phase 2 of its Track-1 initiative. These projects will connect into the existing Track-1 clusters (comprising a T&S storage network and initial carbon capture projects), awarded in Phase 1. Selection enables projects to access initial capital grant funding and long-term price support, either under an economic license model (for T&S Networks) or (otherwise) government-backed Contracts-for-Difference. The UK Government is still consulting on the legislative and regulatory framework that will underpin these business models, and acceleration of that process from here will be key to realising the UK Government’s ambition to capture 20-30 Mt CO2 per year by 2030.

A solution in lockstep with clean fuel and renewables

CCUS is most successful when deployed by companies with existing infrastructure for energy production and industrial processing. Its contribution to the clean energy transition will be historic, especially as the production of low-carbon fuels and renewables heats up, and research into the alternative uses of carbon advances.

Take a renewable natural gas project, for example. By converting methane from agricultural use or feedstock into less potent CO2, and storing it as an injectable, some companies are now achieving negative emissions. CCUS is also playing a key role in blue hydrogen production, which uses natural gas to split hydrocarbons, generating carbon emissions that are later stored. This pairing could prove crucial to meeting the EU’s production target of 10 million tons of clean fuels by 2030.

Though investing in CCUS can require significant upfront capital and time investment, it will undoubtedly play a vital role in clean energy production in the next decade and beyond.

CCUS is most successful when deployed by companies with existing infrastructure for energy production and industrial processing.