McKinsey : CCUS uptake needs to grow 120 times over by 2050

Nov 03 2022

Carbon capture, utilization, and storage can help hard-to-abate industries achieve net-zero emissions. Scaling the industry will require action by governments, investors, and industrial players.

ver the past 30 years, many industry experts have predicted that carbon capture, utilization, and storage (CCUS) technologies would be required to decarbonize industries such as energy, chemicals, cement, and steel production, yet the CCUS industry has struggled to find its footing. Today, however, the nationally determined contributions (NDC) of governments and corresponding industry commitments, technological innovations, and demand for green consumer products have made scaling CCUS not only possible but necessary.

To meet their emissions reduction commitments, governments have begun enacting policies to support the development of CCUS. For example, the recent Inflation Reduction Act (IRA) in the United States includes an enhanced tax credit for the permanent sequestration of CO2, which could rapidly boost adoption and help scale CCUS facilities.

According to McKinsey analysis, CCUS uptake needs to grow 120 times by 2050 for countries to achieve their net-zero commitments3 , reaching at least 4.2 gigatons4 per annum (GTPA) of CO2 captured, with some estimates ranging from 6.0 to 10.0 GTPA. This could lead to CCUS decarbonizing 45 percent of remaining emissions in the industry sector. Even in conservative scenarios, CCUS demand would reach approximately two GTPA by 2050—a 60-fold increase over today’s pipeline of projects.

CCUS is recognized as a necessary and relatively low-risk piece of the decarbonization puzzle, but the technology is not moving fast enough to achieve a 1.5° or even 2.0° pathway. This article explains what the CCUS industry can do to overcome historical challenges and reach the scale required for net-zero emissions. Specifically, we map how the industry can generate revenues and move beyond a subsidy-only business model, and we discuss what governments, investors, and industry players can do to help scale the technology. Future articles will discuss other scaling requirements, such as lowering the costs of implementing CCUS and developing hubs and clusters.

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Issue 90 - Nov - Dec 2022

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