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Time to act as momentum builds for CCUS and hydrogen
2/2/2022
News
This year companies and governments will need to make good on the pledges they made on energy transition technologies, including carbon capture, utilisation and storage (CCUS) and low carbon hydrogen, according to Wood Mackenzie.
In its new report, CCUS and hydrogen: 5 things to look for in 2022, the consultancy points out the huge momentum behind both CCUS and low carbon hydrogen in 2021, with announcements of new projects, policies and investment as COP26 spurred companies’ net zero targets. It highlights key issues for CCUS and low carbon hydrogen in 2022 as companies and governments switch to delivery mode.
The project pipeline for both CCUS and low carbon hydrogen saw record growth in 2021, with companies galvanised by increased net zero targets, new policy support and technology advancements. The CCUS pipeline of announced projects grew seven-fold, with 50 new hub projects globally. The low carbon hydrogen pipeline more than doubled, with green hydrogen projects making up 75% of the announcements, according to the study.
Mhairidh Evans, Principal Analyst, CCUS and Emerging Technologies, and co-author of the report, doesn’t believe the same growth rate for the CCUS and hydrogen pipelines will be seen in 2022. Instead, she sees the coming year to ‘be about maturing projects and securing funding’. About 75% of the CCUS pipeline is in early development. For hydrogen, almost 40% of the project pipeline does not have an estimated date of operation and 25% does not have an estimated capacity, she notes, adding: ‘A mark of success for 2022 will be more projects in advanced development or under construction.’
Wood Mackenzie is tracking 15 CCUS projects aiming for final investment decision (FID) this year. If developed successfully, they will add approximately 35mn t/y of new CO2 capture or storage capacity and will require investment of around $18bn. Large volumes of CCUS are not expected to come online in 2022.
More than $66bn was invested in hydrogen in 2021, with projects looking at every aspect of the value chain from R&D to refuelling infrastructure. The consultancy says more capital flow is needed for hydrogen production projects, requiring an uplift in offtake agreements. This could mobilise the $3.5– $22bn necessary for hydrogen production projects to reach FID in 2022.
According to Evans, in 2022, 33 projects – mainly in Europe and Asia – should begin operation, which will see 0.1mn t/y of low carbon hydrogen and 50,000 t/y of green ammonia enter the market.
Wood Mackenzie sees 2022 as an important year for translating policy into reality, but notes that it ‘is a tough political ask in some countries’ and it expects ‘drawn-out negotiations to mean delays’.
Technology scale-up is seen as crucial to maintain and build momentum for CCUS and hydrogen. Wood Mackenzie expects more technological solutions related to storage and chemical plant design in 2022. Direct air capture (DAC) is expected to edge from wildcard to reality, with drivers including $3bn of funding through the US Infrastructure Bill, growing demand for e-fuels and the burgeoning voluntary carbon market.
