The global CCUS project pipeline has increased by over 50 percent throughout 2022 and announcements made across all sectors show incredible momentum.
Drawing on insight from the sector, Wood Mackenzie mapped out predictions for the year ahead. The global CCUS pipeline is growing fast.
Some 166 Mtpa of potential CO2 storage capacity will enter development throughout 2023, through a combination of standalone projects and larger hubs. However, only 98 Mtpa of capture capacity is aiming for FID, representing a significant capture-storage gap.
We expect emitters to sign up once hubs are established, although many projects won’t be online until the end of the decade.
Government policy plays a major role in CCUS project economics. It has, in some cases, provided more than 50 percent of the spend to get projects off the ground. This will continue in 2023 – and expand to new regions.
Asia will see more policy momentum, for example, having previously lagged behind other regions. Malaysia and Indonesia will finalize regulations and incentives for CCUS, focusing first on decarbonizing natural gas production. India and Japan will make headway on their respective CCUS roadmaps. Finally, Thailand and China are expected to make strides in their funding framework.
In the US, positive policy moves made in 2022 – not least the landmark Inflation Reduction Act – will enable companies to advance projects in 2023.
Projects moving forward, easing policy and regulation, ever-increasing company, and country net zero targets. Woodmac thinks that the scene is set for more deals with CCUS positions at their center. Location is key in carbon disposal, and companies will want to build positions in the most advantaged CCUS hubs. But doing this organically takes years and dedicated development teams.
“We expect to see a flurry of M&A in 2023 as companies seek first-mover advantages in new geographic locations. Deals to date, such as Chevron-Talos-Carbonvert in the US Gulf of Mexico and E.ON-Horisont Energi in Europe, provide a hint at what’s to come,” Wood Mackenzie concluded.
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