High carbon allowance prices spur interest in CO2 capture and storage

Carbon allowance prices of around EUR 50/t are increasing interest in CO2 capture and storage technologies, according to Aker Carbon Capture. Carbon allowances traded above EUR 50/t for the first time in history this week. 

Carbon allowance prices have risen steadily in recent weeks and months, and have at least temporarily settled at around EUR 50/t. For a number of companies, such a price already makes a difference in their decision-making, and they are beginning to consider the commercial use of carbon capture and storage or utilisation technologies (CCUS technologies).

However, it is not only allowance prices that are increasing interest in CCUS technologies – a number of countries and companies have their own decarbonisation targets, forcing them to consider different ways of meeting them. For some, carbon storage may be one option.

Carbon allowance prices are not expected to decline. The European Union has adopted a number of measures, particularly the Market Stability Reserve, intended to ensure market balance and shield the market from larger price fluctuations.

Higher emissions targets for 2030 will further reduce the number of allowances in circulation. A return of carbon allowance prices below EUR 10/t, where they stood between 2012 and 2017, is therefore now difficult to imagine. A consistently high carbon allowance price is the foundation for investment in CCUS technologies.

According to a representative of Aker Carbon Capture, northern Europe is currently the most promising market. For example, HeidelbergCement announced at the end of last year that it would launch CCUS at its Brevik site in Norway, where it will be possible to store up to 400,000 tonnes of CO2.

However, CCUS technologies are needed especially in the Middle East, China and India. These countries lack suitable incentives and subsidy programmes that would enable the development of CCUS technologies.

Bjorn Otto Sverdrup, quoted by S&P Global, said that the current gas and oil giants are best positioned to develop CCUS technologies, adding that they will be extremely important and necessary in the future transformation of the energy sector.