CCUS technologies: A closer look at risks and opportunities

Carbon Capture, Utilization, and Storage (CCUS) technologies are crucial, as CO2 reductions alone won't get us to #netzero2050. The need for CCUS was clearly spelled out by the IPCC. Especially the so-called 'hard-to-abate" industries, such as cement and steel, will need to continue to use traditional energy sources for a time. But their CO2 emissions can be captured, safely transported, and finally stored (or reused).

We heard from three experts in the field. Michele Cibrario, Swiss Re Energy Upstream Underwriter; Lu Meng, Swiss Re Institute Sustainability Underwriting Data Analyst, and Ole Rygg, Group Managing Director at Wells, ABL Group.

Lu Meng, a decarbonization expert at the Swiss Re Institute, offered introductory insights. Carbon is either captured directly at the source, or from the atmosphere.

There is a considerable amount of movement with regard to CCS projects, with thirty facilities around the globe already operational – and with many more in various development phases (take a look here). However, the task ahead is daunting. The aforementioned thirty facilities capture 42.5 million tons per year. As Lu Meng showed, to reach the world's net zero goals, facilities around the world will need to have been scaled to enable capture and storage of 7.6 gigatons. While this represents a dramatic increase, Lu Meng said that, thanks to the abundant global storage capacity, it is absolutely feasible.

As carbon capture from the air is, at this point, still in early stages of scaling, the focus of the webinar was on the capture of CO2 directly from sources such as industrial complexes. Lu Meng then talked about existing technologies, transportation (which is similar to the transportation of natural gas) and the rationale and challenges of storing carbon deep underground.

Ole Rygg is internationally renowned as an expert within blowout prevention and well killing. With his dedication to risk assessments and safety aspects of well operations, and with carbon storage drilling essentially mirroring oil drilling, Rygg's expertise is invaluable for the growing CCUS industry.

As already mentioned by Lu Meng, the utilization of captured CO2 will remain a very minor part of this emerging industry – an expected 95% will go into underground storage. Below image gives a good sense of what this essentially entails from source to transportation to storage.

Rygg said that, across Europe alone, there are currently seventy-two CCUS projects, some of them operational, many of them in various stages of development. He highlighted one project that has been, surprisingly, operational since 1996. Sleipner, a natural gas field in the North Sea, is known as the world's first offshore CSS implementation.

The reason for Sleipner's early capture of CO2, and storing it far below the seabed, was simple: taxes. The country of Norway had introduced CO2 taxes in 1991, which had led the natural gas producer to find and implement a carbon capture and storage solution long before much of the rest of the world had even heard of such technologies. As Ole Rygg mentioned, the further incentivize carbon capture, Norway plans another considerable tax increase by 2030.

Next up Rygg introduced the so-called Longship – Northern Lights project. This venture exemplifies the degree of technological know-how and sheer scale required to make #netzero2050 a reality. This project will capture carbon at various industrial plants, from where the CO2 will be shipped in liquified form to a receiving terminal. From that onshore terminal, a 100-kilometer-long pipeline will deliver the CO2 to the place where it is sent deep underground below the seabed – via a vertical pipeline that is 2.6 kilometers in length. Just about everything about this project is staggering.

As more sites become operational and as technologies further develop, it is doubtless that this will cross-fertilize effects. Not only will the know-how transfer infuse and propel projects around the world forward, the very existence of more and more such carbon capture and storage facilities will lead to ever more benefactors. The Longship project already plans to operate not only for Norwegian industrial plants, but to also pick up CO2 from the Netherlands (in what they call a cross-border CCS project).

What I found particularly interesting from Ole Rygg's presentation was that the know-how gained by the fossil fuel industry over the course of the past hundred years, now assists in mitigating the climate crisis. The oil and gas industry knows how to drill wells – and people like Rygg know all about well integrity. Existing knowledge and standards are now applied to carbon capture technology and wells for storage.

Rygg had a great many more insights to share, from transportation to storage, and projects like CStore1 and Moomba in Australia. I can only recommend watching the recording for all the fascinating details.

The webinar's third speaker was Michele Cibrario, who brought the topic back to the re/insurance industry focus. He began by saying that the insurance industry has a long history and experience with oil wells and, as such, insurance considerations are similar. There are of course the new technologies that need to be factored in but, overall, his message was that the approach to insurance does not change. As complex as some of the risks undoubtedly are, an insurer's 'energy package' means comprehensive coverage.

Cibrario highlighted one distinct difference between the risk coverage of the oil and gas industry and the emerging carbon storage industry – that difference is time. With oil and gas – from exploration to well depletion – there is a time frame of fifty years at most. Once a well is depleted, it is plugged and abandoned. The safe storage of carbon, however, will require risk protection for hundreds of years.

The coming years will see changing tax schemes and more regulation. These will create additional pressure for the fossil fuel industries and, at the same time, accelerate development of CCUS technologies and facilities. Cibrario concluded by affirming Swiss Re's role as a risk protection partner on the path to a more sustainable future that will come about, in part, because of new and upscaled carbon capture technologies.