Industrial Deep Decarbonization Pushing the Transition Toward a Low-Carbon Future
Globally, combating climate change is increasingly recognized as a key agenda of governments, industrial stakeholders, research institutions, and related players. Extreme weather patterns causing the melting of glaciers and rising sea levels are becoming more frequent, constantly threatening global livelihoods.
Climate change, a serious global challenge, calls for immediate and combined international efforts, with all nations working in unison to develop and adopt novel technologies while adhering to sustainability protocols. Efforts such as the Paris Agreement and United Nations’ Sustainable Development Goals (SDGs) are the key pillars for global nations to adopt stringent regulatory guidelines and fast-track developments accelerating industrial decarbonization.
To realize a cost-effective, low-carbon future, two trends are widely observed: First, enabling decarbonization by adopting emission-reduction technologies and, second, switching to cleaner alternative fuels to reduce the over-dependence on fossil-fuel resources.
Carbon Capture Utilization and Storage (CCUS) and Low-Carbon Fuel Technologies Identified as GameChanging Solutions Enabling Industrial Decarbonization
Carbon capture, utilization, and storage projects can reduce global greenhouse emissions on a large scale and are viewed as the most promising routes to achieve deep decarbonization in the industrial sector. CCUS involves the capture of polluting CO2 emissions from point sources such as industrial emitters as well as non-point sources such as atmospheric CO2.
The captured carbon can be subjected to permanent storage in underground geological formations or utilized by processing it to manufacture low/zero-embodied carbon products. The Center for Climate and Energy Solutions estimates that 26 large-scale carbon capture and storage projects are currently active globally, with 21 more in early development and 13 in advanced development, reaching front-end engineering design (FEED).
Technologies based on chemical capture processes, including liquid absorption and solid adsorption, are being adopted in various large-scale carbon capture and storage projects (CCS). Membrane-based capture is a promising alternative but is often energy-intensive.
CCU technologies efficiently transform the captured carbon emissions into a range of value-added products, including fuels, chemicals, and polymers, which can be used in several industries. Implementing CCU technologies enables stakeholders of energy-intensive industries to potentially reduce greenhouse gas emissions, achieve carbon neutrality and generate additional revenue streams.
Breakthrough technologies based on direct air capture (DAC) enabling the capture of CO2 from nonpoint sources are also gaining traction and increasingly deployed at a small scale. Additionally, industry conglomerates like Exxon Mobil, Toshiba, General Electric, and Saudi Aramco have continuously advanced DAC technology capabilities and cost-effectiveness via research and development (R&D) activities, as shown by their strong IP activity in the past five years.
CCUS is still an evolving concept when computing the overall economics of the processes as the costs can vary vastly, depending on the type of CO2 source, purity levels, available volume, transport distances, storage conditions and utilization processes. The IEA estimates that the CO2 capture costs are $15-$25 per ton of CO2 for industrial processes with pure/concentrated CO2 streams (ethanol production or natural gas processing facilities) and $40-$120 per ton of CO2 for processes with dilute streams (cement production or power plants).
Direct capture of CO2 from the atmosphere is more expensive (up to $350 per ton of CO2) than point-source capture processes. The commercialization status of various technologies also contributes to the variation in capture costs.
Low-carbon fuels are energy sources that have a lower emission footprint than fossil fuels. Among the various low-carbon fuels being widely discussed today, hydrogen technologies are expected to be at the forefront of decarbonizing the energy consumption of industries, followed by other renewable energy sources such as solar heat and biofuels.
The hydrogen economy, specifically green hydrogen generated via renewable energy-driven water electrolysis, has witnessed enormous support across the globe, with many developed nations forming favorable policies paving the way for green hydrogen adoption in the global energy mix. The current green hydrogen infrastructure, which is constantly undergoing cost reductions and efficiency improvement, still has high CAPEX. Whereas fossil fuels (particularly natural gas) continue to be a dominant fuel mix for the power sector of several countries, the integration of natural gas reforming with carbon capture (i.e., blue hydrogen) provides a huge growth opportunity for the development of the hydrogen economy in the near future.
The use of hydrogen as a low-carbon fuel encompasses the hydrogen economy, wherein hydrogen can be used for various applications, such as Power-to-X (energy storage, mobility, or as a feedstock to generate specialty chemicals like ammonia, methanol, etc.). Ammonia is considered a cost-effective medium for hydrogen storage, as ammonia has several desirable characteristics, including high energy density, ease of handling, and enhanced safety.
Active Collaboration among Industry Stakeholders: A Roadmap for Industrial Decarbonization
Government policies of several countries from the European Union increasingly favor adopting the hydrogen economy and CCUS technologies. The European Green Deal provides necessary investments to accelerate the large-scale deployment of green hydrogen production and CCUS technologies. There are global trends to explore partnerships with either private industrial stakeholders or governments to leverage large-scale CCS opportunities.
Several underground geological sites based on saline and basalt formations in various regions have been identified to permanently store the captured CO2, backed by real-time monitoring and verification technologies to ensure that the injected CO2 is permanently stored within these formations.
Countries with limited access to these geological formations have signed a memorandum of understanding (MOU) with other countries to share storage sites to permanently store captured CO2. Additionally, there are many ongoing technology developments within the CCU value chain expediting the commercialization of CCU facilities, making them more modular, economically scalable, and cost-competitive in the long run.
The large-scale adoption of low-carbon fuel alternatives will enable nations to achieve ambitious climate targets across multiple sectors like power generation, oil and gas, and transportation.
Out of all the low carbon fuel alternatives, blue hydrogen—hydrogen produced by integrated steam methane reforming (SMR) and a carbon capture process—is likely to emerge as a promising option in the near term. However, in the long run, the green hydrogen production cost will likely become competitive with fossil fuel-based alternatives, driven by technological advancements leading to efficiency improvements in electrolyzers and decreasing renewable electricity costs.
Frost & Sullivan believes that policy-level changes and long-term partnerships between governmental agencies, venture capitalists, and start-ups will serve as a key driving factor accelerating the adoption of cost-effective, emission-reduction technologies. CCUS technologies that mitigate harmful emissions and enable a circular economy, along with low-carbon fuel such as hydrogen technologies, are expected to play the most critical roles in decarbonizing the global industrial sector.
Authored By: Shrinivas Tukdeo, Research Director, TechVision, Frost & Sullivan
