Carbon Capture and Storage Market size is forecast to reach $25.3 billion by 2026, after growing at a CAGR of 29.2% during 2021-2026. The emerging demand for CO2 injection technologies for enhanced oil recovery (EOR) and stringent government standards for GHG emissions are the key factors driving the market growth. Also, reduced coal consumption in developing markets, development of renewable energy, technical developments in industrial units to reduce emissions, and comprehensive deployments of carbon capture and storage(CCS) technologies such as pre combustion, post combustion, oxy-fuel combustion, and others, are driving the carbon capture and storage industry. Furthermore, the rising industrial development, along with growing investment in the implementation of emission control machinery, would generate major business opportunities and would drive the carbon capture and storage market industry in the forecast era.
Impact of COVID-19
The carbon capture and storage market is mainly used across power plants and natural gas production plants where COVID-19 had a marginal effect in the year 2020. However, owing to the lockdown imposed on different countries, commercial sectors such as chemical plants, cement plants, and others were impacted, which also plays a very vital role in the carbon capture and storage industry. However, the lockdown triggered a slowdown in the forthcoming programs, which had a very minor impact on the development of the carbon capture and storage market growth.
Carbon Capture and Storage Market Segment Analysis – By Type
Capture technology held the largest share in the carbon capture and storage market in 2020. Carbon capture involves the capturing of CO2 from its source of emissions. It can be extended to any large-scale emission operation, including coal-fired power plants; the processing of gas and oil; and manufacturing industries such as cement, iron, and steel. The cost of capturing CO2 depends heavily on the technical, economic, and financial factors associated with the design and operation of the production process, as well as the design and operation of the CO2 capture technology. Pre combustion, post-combustion, oxy-fuel combustion, and industrial separation are some of the widely used capture technologies. Thus, the rising demand for capture technology for capturing CO2 from various end-use industries is estimated to drive the carbon capture and storage market growth in the forecast period.
Carbon Capture and Storage Market Segment Analysis – By End Use Industry
The oil and gas sector held the largest share in the carbon capture and storage market in 2020 and is projected to grow at a CAGR of 27.9% during the forecast period 2021-2026. Increasing demand for crude oil and natural gas across various industries has driven the oil and gas segment growth. Carbon Capture and Storage (CCS) aids the oil and gas sector to remove greenhouse gasses from the environment. Carbon dioxide deposited in the underground, underwater, or offshore geological deposits use CCS technologies for improved oil recovery that has been developed in the oil and gas industry. Moreover, rising investments in the upstream oil industry to meet growing energy requirements will significantly stimulate the implementation of carbon capture and storage projects. For instance, the International Energy Agency (IEA) stated that the global upstream investment amounted to USD 505 billion in 2019, which was 6 percent higher than in 2018.
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Carbon Capture and Storage Market Segment Analysis – By Geography
North America region held the largest share with 54% in the carbon capture and storage market in 2020. The major factors driving the industry penetration in the North American region are the strict regulatory framework for a cleaner environment coupled with the increasing need for carbon dioxide in enhanced oil recovery processes due to the increasing number of matured oilfields. Along with the public attention on minimizing emissions from industrial plants, including the chemical, and cement sectors, a positive outlook towards the oil and gas sector would boost the demand for carbon capture and storage industry across the area North American region. According to the Federation of American Scientists (FAS) Organization, the U.S. has adopted FUTURE Act (Further Capital Carbon Capture, Utilization, Technology, Underground Storage and Reduced Emissions) to promote trapping of carbon dioxide from industrial and power sources in the EOR under the 45Q Clause. Also, as per the U.S. Department of Energy, the tax credit for Section 45Q will expand to $50 per metric ton for geologic storage and $35 per metric ton for EOR by 2026. Thus, the demand for the carbon capture and storage market is therefore anticipated to increase in the forecast period because of the mentioned factors.
Carbon Capture and Storage Market Drivers
Increasing Demand for Carbon Capture and Storage in Power Generation
The key sources of CO2 emissions around the world are the use of fossil fuels and natural gas for the manufacture of electricity. Globally, nuclear and renewable sources cannot completely satisfy the energy production requirements. Hence, sustainable use of fossil fuels (coal in particular) is required. Thus, in this case, carbon capture and storage (CCS) is considered a crucial option for controlling global warming by reducing carbon dioxide emissions. Capturing and storing carbon (CCS) absorbs CO2 using different techniques and uses or preserves it to prevent its release into the environment. CCS can also prevent greenhouse gasses from entering the atmosphere. Also, the integration between CCS technologies (Pre combustion, post combustion, oxy-fuel combustion) and power generation plants currently needs a demonstration at a commercial scale to reduce both technological risks and high capital and operating cost. Thus, the growing demand for carbon capture and storage in the power generation industries is estimated to raise the market growth over the forecast period.
Rising Investments and Adoption of Carbon Capture and Storage Technology in Various Countries Will Drive The Market Growth
The line-up of carbon capture and storage projects in countries such as the U.S., Australia, and China is expected to create an immense opportunity for the companies operating in the carbon capture, utilization, and storage ecosystem. For instance, in July 2020, the United States Department of Energy (DoE) unveiled funding of USD 11.5 million for the Flexible Carbon Capture and Storage (FLECCS) project. The purpose of the project is to enable new natural gas generator systems along with the rehabilitation of existing units with essential carbon capture and storage (CCS) needs. Other than Australia and China, South Korea and India are also focusing on adopting carbon capture and storage. For instance, South Korea has already taken a step toward carbon capture and storage in the Korea CCS 1&2 project, which is currently in an early development stage and is expected to be operational by 2021. Thus, the rising investments and adoption of carbon capture and storage by various countries are expected to drive the carbon capture and storage market growth during the forecast era.
Carbon Capture and Storage Market Challenges
The High Cost of Carbon Capture and Storage Can Hinder The Market Growth
The cost of carbon capture and storage, covering both initial costs, and ongoing operating and repair costs of carbon capture and sequestration facilities, is greater than the cost of non-carbon capture and sequestration using the same fuel and net power generation. The cost of carbon capture and sequestration covers all components of the value chain: the capture of CO2 at the factory, its transport, and storage. The performance penalty incurred by the energy consumed in capture processes and the addition of capture-specific equipment is the key cost driver of the CO2 capture operation. Hence, the rising cost of carbon capture and storage will further create hurdles for the carbon capture and storage market growth in the forecast period.
Carbon Capture and Storage Market Landscape
Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the carbon capture and storage market. Major players in the carbon capture and storage market are Mitsubishi Heavy Industries, Ltd., Exxon Mobil Corporation, Aker Solutions, Royal Dutch Shell, Linde PLC, Hitachi, Ltd., Honeywell International, Inc., JGC Holdings Corporation, Halliburton, and Schlumberger Limited among others.
In November 2020, Baker Huges acquired Compact Carbon Capture (3C), a leading organization in carbon capture technology development. With this acquisition, Baker Hughes’ strategic contribution to lead the energy transition by supplying carbon-intensive sectors such as oil and gas and larger industrial operations with decarbonization solutions will get supported.
North American region dominated the carbon capture and storage market due to the growing emphasis by countries such as U.S., Canada, and Mexico on lowering CO2 emissions from the industrial and power plants.
Increased industrialization rates, combined with increasing investment in the development of production facilities, have increased the global implementation of Carbon Capture and Storage (CCS) projects. Several government initiatives to minimize greenhouse gas emissions through key economic sectors, with the involvement of regulators, would further boost the development of the carbon capture and storage industry over the projected timeframe.
The rising R&D activities conducted by the Carbon Capture Program administered by the Office of Fossil Energy and implemented at the National Energy Technology Laboratory for both pre combustion and post-combustion technologies to provide step-change reductions in both cost and energy requirements will drive the market growth over the forecast period.
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